A story in mX yesterday afternoon highlighted an unnecessary law against so-called rent auctions:
Brisbane’s rental squeeze is forcing prospective tenants to offer landlords extra cash to secure a place to live.
As competition for properties in the inner city heats up, Tenants’ Union of Queensland co-ordinator Penny Carr said many renters were “up-bidding” above the advertised rental price in order to nab a home.
The practice becomes illegal in Queensland when potential tenants are asked to take part in an informal auction to see how much they are prepared to pay to have their application approved.
“People do it quite often, whether they are baited into doing it or feel like it’s the best way to get the property they want,” Carr said…
…Under laws introduced in 2009, agents must advertise a fixed rental price, can’t ask for offers or put a property up for rent auction.
This law is silly and should be repealed. It will result in inefficient outcomes because some people will miss out on rental properties they really like and are willing to pay a higher rent than other people for. If there is a problem with rents being too high in the inner city, it is not due to rent auctions, but limited supply of rental properties relative to demand, possibly due to constraints on development in the inner city. Rent auctions are merely a symptom of relative under supply, and are obviously not the cause of the under supply and consequent high rents.
A good start to addressing any rental supply shortfall would be for Brisbane City Council to review its heritage protection to determine the extent to which it is constraining development in the inner city – development which could boost the supply of rental accommodation and put downward pressure on rents.
The impacts of heritage protection on inner city development were previously discussed in a guest post by my colleague and friend Brad Rogers:
I’ve also discussed constraints on inner city development previously: