NSW banned rental bidding in 2018. The law prohibits agents and landlords from inviting prospective tenants to offer more than the advertised rent, soliciting rental bids, or accepting any offer above the advertised amount. The penalties can reach $22,000 for individuals and $110,000 for corporations.

Despite this, rental bidding still happens regularly in tight markets like Sydney’s inner suburbs. The practices are often subtle enough to avoid obvious law breaking while achieving the same outcome as overt bidding.

Understanding how illegal bidding manifests and what your rights are helps tenants avoid being exploited and potentially report violations.

The Obvious Violations

Some agents still engage in obvious rental bidding that clearly violates the law:

Direct solicitation: “There’s a lot of interest in this property. Would you be willing to go higher than the advertised rent?” This is explicitly illegal.

Auction-style processes: Telling applicants there are competing offers and inviting them to submit their “best and final” rental offer. This is illegal bidding.

Accepting offers above advertised rent: A property is advertised at $650/week. The agent accepts an application offering $700/week. This violates the law even if the agent didn’t solicit the higher offer.

When these happen, tenants should report them to NSW Fair Trading. Whether anything actually happens varies, but egregious violations sometimes result in penalties.

The challenge is proving it happened. Agents who engage in obvious bidding rarely document it. It’s verbal conversations, vague suggestions, conversations claimed to be “misunderstood.” Without recording or witnesses, enforcement is difficult.

The Subtle Workarounds

More commonly, agents use practices that achieve bidding outcomes while maintaining technical compliance or plausible deniability:

Vague interest signals: “There’s been a lot of interest in this property.” This isn’t technically soliciting higher offers, but it creates pressure for tenants to offer more. Agents know some tenants will interpret this as an invitation to bid higher.

Sequential advertising: Listing at $600/week, receiving applications, then relisting at $650/week claiming “pricing review.” Taking new applications at the higher price while keeping original applicants hopeful creates competition without technically running a bidding process.

Tenant-initiated offers: The law prohibits soliciting higher offers but doesn’t prohibit accepting them if tenants offer unprompted. Agents signal heavy competition, tenants panic and offer more, agent accepts while claiming they never solicited it.

Preference indicators: “The landlord is looking for someone willing to commit long-term.” “Properties in this area typically rent for more than advertised.” These statements don’t directly solicit higher rent but nudge tenants toward offering more.

Application form design: Application forms that ask “What is the maximum rent you’re willing to pay?” effectively invite bidding while the agent claims they’re just collecting information.

These practices are harder to prove as violations. The agent can claim they were simply informing tenants about market conditions or accepting unsolicited offers. Whether these constitute illegal rental bidding would require Fair Trading investigation and potentially court interpretation.

The Economics That Drive It

Rental bidding happens because market conditions make it profitable and enforcement is weak.

In tight rental markets with dozens of applications per property, agents know desperate tenants will offer more to secure housing. The incentive to facilitate this—even illegally—is strong. Higher rents mean higher property management commissions.

Landlords pressure agents to maximize rent. An agent who consistently rents properties at advertised rates when competitors get above-asking offers loses landlord clients.

The probability of getting caught and penalized is low. Most tenants don’t know rental bidding is illegal or how to report it. Of those who report, many violations are unprovable. Fair Trading’s capacity for investigation and prosecution is limited.

The risk-reward calculation favors violating the law in many market contexts.

What Tenants Should Do

If you encounter possible rental bidding:

Know the law: Rental bidding is illegal in NSW. Agents cannot solicit, encourage, or accept offers above advertised rent. This applies to any form of bidding, not just explicit auctions.

Document everything: Save all communications from agents—emails, texts, voicemails. If conversations happen verbally, take notes immediately with dates and details. Documentation is essential for complaints.

Don’t offer more: Even if other tenants are offering more, offering above advertised rent contributes to the problem. It also shows agents that illegal practices work, encouraging continuation.

Ask direct questions: “Is the landlord considering offers above the advertised rent?” “Are other applicants offering more?” If the agent says yes or responds ambiguously, that’s probably a violation you can report.

Report violations: Submit complaints to NSW Fair Trading through their website. Include all documentation. While individual complaints might not result in action, patterns of complaints against specific agents can trigger investigations.

Consider the property history: Check if the property was recently advertised at a lower rent then pulled and relisted higher. This pattern suggests the agent tested the market then increased asking rent, which isn’t technically illegal but indicates they’re maximizing rent aggressively.

The Reporting Process

Complaints about rental bidding go to NSW Fair Trading:

You can submit online through the Fair Trading website, providing details about the property, agent, interactions, and evidence. The process is relatively straightforward.

Fair Trading investigates complaints based on severity and evidence quality. Complaints with clear documentation are more likely to be investigated than vague allegations.

If Fair Trading finds evidence of violations, they can issue warnings, impose penalty notices, or prosecute serious cases. Prosecution is rare but does happen for repeated or egregious violations.

The process takes time—months typically. Don’t expect immediate action or even direct feedback on complaint outcomes. Fair Trading doesn’t always inform complainants about investigation results.

The Landlord Liability Question

While most focus is on agents, landlords can also violate rental bidding laws if they directly solicit higher offers from tenants or instruct agents to conduct bidding.

In practice, landlords are prosecuted less often because they’re typically less sophisticated about skirting laws and interactions with tenants are more often through agents. But landlords who directly manage properties and engage in rental bidding face the same penalties.

Why the Law Hasn’t Eliminated Bidding

The 2018 rental bidding ban hasn’t eliminated the practice because:

Enforcement is reactive: Fair Trading investigates complaints rather than proactively monitoring rental markets. Without complaints, violations continue unnoticed.

Proof requirements: Many violations happen in verbal conversations that are hard to prove. Without recording or witnesses, it’s the tenant’s word against the agent’s.

Subtle workarounds: As described earlier, agents have found ways to create bidding pressure without overtly violating the law’s letter.

Limited penalties: While maximum penalties are substantial, actual penalties for first-time violations are typically much lower. The deterrent effect is limited.

Market pressure: In extremely tight markets, some tenants will offer more even without solicitation. This tenant-driven bidding is hard to prevent through laws targeting agent behavior.

Stronger enforcement would require proactive monitoring, undercover investigation, stricter penalties for violations, and broader definitions of what constitutes soliciting higher rent. None of these seem likely in current political and regulatory environment.

The Broader Rental Crisis Context

Rental bidding laws address symptoms of rental market dysfunction—extreme competition for scarce properties. As long as rental supply is inadequate for demand, pressure toward bidding exists regardless of legal prohibition.

Long-term solution requires increasing rental supply, limiting rent increases, strengthening tenant protections generally. Rental bidding laws help but don’t solve underlying imbalances.

That said, enforcing existing protections matters even while broader reforms are needed. Allowing illegal exploitation of tenants in crisis markets makes bad situations worse.

What Actually Works

From tenant advocacy perspective, three approaches have some effectiveness against rental bidding:

Widespread awareness: The more tenants know rental bidding is illegal, the less likely they are to participate and the more likely they are to report violations. Education campaigns help.

Organized reporting: Individual complaints are easy to ignore. Organized reporting campaigns where multiple tenants report the same agent or patterns creates pressure for enforcement.

Public naming: Some tenant advocacy groups publicize agents repeatedly involved in rental bidding allegations. This reputational pressure can influence behavior even when official enforcement doesn’t.

None of these eliminates rental bidding, but they create friction that reduces prevalence compared to doing nothing.

Rental bidding remains a problem in NSW rental markets despite being illegal since 2018. Understanding how it happens, knowing your rights, documenting violations, and reporting to Fair Trading are the main tools tenants have to fight it. Broader enforcement improvements and rental market reforms would help more but require political will currently lacking.