Education Centre

Tenants to Tender

 Tenants to Tender

Our Beenleigh office is trialing a new system where rental properties are listed without a price for the first week of marketing.  Prospective tenants will now tender for tenancy at this agency. 

Prospective tenants on our database will be invited to submit their tender and decide the maximum they are willing to pay for rent on a property that suits their needs. 

Rental demand is so high in our office that this new system is the only way to be fair to tenants and landlords.

There are distinct advantages listing property without a price which include;

• Good tenants will be able to submit themselves as a package.  For instance if two tenants bid on a property the tenant with a better track record could be approved at a lower rent.  That’s how a tender process works; a successful applicant is viewed on the merits of the whole package

• A tender is an alternative to bidding at auction.  At auction emotion rules and people feel pressure to pay more then they can afford

• Tenants decide independently the maximum they are willing to spend on rent.  Tenants are in control of their budget and don’t feel pressured into submitting prices they can’t afford

• Investors can have faith that returns will rise to match the value of their investment.  For a long period Queensland property returns have languished at about 3%-4%. 

Queensland Minister for Housing, Robert Schwarten’s, response to tenants tendering

Robert Schwarten, QLD Minister for Housing, is responsible for the Residential Tenancies Act.  A system such as tenant’s tendering would be regulated by the Housing Minister.

The Government response to this innovative idea is troubling in many aspects. 

On the 23/2/2007 Mr Schwarten said he is considering regulating the rents that can be charged on Queensland homes (see press release here).  

The Minister also said on Channel 10 News (28/03/2007 Brisbane) that our agency’s attempts to introduce tenant tendering would prod him to ban, through legislation, the listing of rentals without a price.  

It is worth noting the Government is very concerned by unscrupulous agents who lie to tenants in advertising a property at (for instance) $280 a week only to turn around on application and say, “Four others have applied, you better up your price”. 

Tenants tendering is not an auction.  It’s an open system ensuring tenants take control of their rental needs. 

The Minister need note; your idea of price fixing will lead to rental shortages.  Confidence in property investment will plummet. 

What this agency has done is a bold move; “no price, work out your budget and see how you go”.  Like it or not, rental prices are moving faster than agents can keep up.  A system such as tenants tendering was bound to happen and no matter what the Minister tries he won’t be able to stop this type of honest system eventuating. 

Next time you see Minister Schwarten ask him, “When returns were low and it was a tenants market, why didn’t the Minister intervene to stop tenants submitting applications LOWER then asking price, thus protecting investor returns?”