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Tender processes on rentals - ethical or unethical? - 19th Jan 2018

Tender processes on rentals - ethical or unethical?

As students flock back to cities in the lead-up to the academic year, landlords are cashing in with innovations which encourage bidding wars among applicants, The Spinoff's Don Rowe writes.

The nightmare that is renting in this country continues to bring new horrors, with reports from Wellington that landlords are explicitly operating tender processes on their rentals in a bid to drive up prices.

Oliver Clifton, a fourth-year student at Victoria University, recently viewed a flat on Kelburn Parade: five bedrooms at $1110 per week. On receiving the application forms he was shocked to find the landlord requiring tenants to submit the maximum they'd be willing to pay above and beyond the listed price as the house was in "high demand".

"I thought it was kind of outrageous," he says. "It was a pretty straightforward flat viewing, pretty standard – but then we saw the question about maximum rent and everybody thought it was an outrageous thing to ask.

"I thought it might even be illegal – I don't know how the tenancy rules work. But there was definitely a general consensus that it was grossly unethical."

Ethically questionable, maybe, but legally sound. In response to questions from The Spinoff around the practice, which came to light following Clifton's tweet on Thursday, MBIE's acting general manager of housing and tenancy services, Steve Watson, says "There is nothing in the Residential Tenancy Act (RTA) that precludes the tenant indicating what they would be willing to pay for a rental property."

In fact, according to the MBIE, asking tenants to indicate a weekly rent actually removes the landlord from the rent setting equation, and allows the prospective tenant to be an active participant in the setting of "market rent". Empowering, right?

One Wellington professional, who we'll call Jane – she wished to remain anonymous for fear of landlord retribution – felt far from empowered at a viewing in Hataitai.

"We went to a nice house where there were a lot of people obviously in a similar position to us," she says. "As we walked in to register there was a spreadsheet where you could put your name and phone number, and then I saw a column where you could list your maximum rent that you were willing to pay."

The column was full of replies indicating tenants would pay much more than the $800 listed price, but when Jane attempted to apply for the house online, that box was nowhere to be seen, leading her to believe the rental company was cross-referencing the two documents to screen applicants. In short, tendering bids.

Across the ditch in Victoria, a state currently in the midst of overhauling their tenancy laws, apps like Rentberry which facilitate these bidding wars have become the target of a crackdown announced last year in an effort to protect tenants.

At home, our own Government has unwittingly become a participant in the process of "setting market rent", as landlords across Wellington immediately lifted rents to match the increases in student allowance introduced this year.

Read the full article here.

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