Online rental marketplaces – where would-be tenants go head to head with offers for properties – are becoming an inevitable reality for Australian renters, with the upcoming launch of two Aussie-specific apps.
Live Offer, by US-based real estate tech company Property Connect, and Australian start-up Rentwolf will both roll out platforms in coming months in Australia.
It follows an announcement by controversial US rent-bidding start-up Rentberry that it will launch in Australia this year, with tenant unions slamming the idea as an exercise in rent inflation.
Australia’s two largest rental markets, Sydney and Melbourne, are already competitive and expensive, with Domain Group data showing Sydney’s median asking house rent increased $25 a week to $550 in the 12 months to March, while Melbourne’s median weekly house rents rose $20 to $420. A recent study showed tenants in both cities are going extreme measures to make ends meet against a backdrop of rising rents, including pawning items or going without meals.
Landlord insurance specialists have also spoken out since Rentberry’s announcement, raising fears renters will financially over-commit themselves in the process of a “rent auction”.
“Impulsive, eBay-style bidding on rental apps like Rentberry may see Australian tenants fall into financial difficulty when vying for their preferred rental property,” said Carolyn Parrella, executive manager of Terri Scheer Insurance. “Tenants who use these apps could be lulled into the thrill of the chase and get caught up in the bidding process and commit to paying a rental amount that they can’t afford in the long term.”
There were concerns such apps encouraged renters to pay more than the market rate for rental properties, Ms Parrella said, which could end up putting renting out of reach for many tenants.
But the former Australian property manager behind Rentberry’s Australian competitor, Live Offer, says his site will create a much fairer market value rent than its US rival.
“The approach Rentberry has taken is trying to get as much disruption as possible and they’ve rubbed people the wrong way,” Property Connect founder and chief executive Tim Manson said. “I’ve seen companies come and go in this space and where they falter is they don’t offer enough features for the renter.”
Mr Manson, who is quick to distinguish Live Offer as “not a bidding system but an offer system”, began working on the idea as a property manager in Sydney about ten years ago, after receiving phone calls from upset tenants who had missed out on properties.
“They were saying either, ‘we would have paid more, we would have stayed longer, we would have moved in sooner’ – it was just not very transparent,” he said. “Currently, you put an application in and you hope for a call back, but that process is just so outdated and unwarranted with technology because now we have the ability to offer up much more visibility and much more information for the renter.”
Live Offer will allow a renter to come through from a listing site, onto a platform where they can input their preferred rent amount and other desired lease terms, such as how long the lease will be and when they can move in. A property manager inputs the landlord’s preferred rent (although not a reserve rent) and preferred lease terms, and a back-end algorithm ranks the best offers. The algorithm also takes into account a renter’s creditability, including their credit history.
“When renters apply, they input their offer, and as they inputting, they see in real time how they are placed against other applicants,” Mr Manson said, adding that other factors, such as when you can move in or how long the lease is, can outweigh the weekly rental amount.
“We provide tips and tricks, an advice engine, to suggest how you can get the property by not pushing up the rent, [but] by putting a more preferred term in, such as a moving date … Competitors that have come out that are just purely bidding, they’re people from technology having a go at trying to push up rents. We’re not about that and we’re not about knocking out agents.”
Mr Manson said rent bidding had been happening for a long long time all over the world. “But it’s being done in a very non-transparent way. What we’re trying to do is bring it above table and provide all the information to all those involved.”
Australian-owned RentWolf has also announced its launch in Sydney in May, and is described by founder and chief executive Chris Martino as a “revolutionary” automated rental marketplace.
“We make data accessible to landlords and renters so they can make informed decisions about leasing and managing a property, and facilitate direct connections between landlords and tenants,” Mr Martino said. “We facilitate the relationship between landlords and tenants by providing tenant application profiles and landlords with automated leases, payments and property maintenance system.”
Rentwolf provides a system that allows tenants to broaden their “value proposition” beyond a financial offer, he said, and landlords to understand the value of their yield.
“We believe this provides an even middle ground. For example, a tenant no longer has to compete with other high offers. They can show the marketplace the value that they have with their own rental history, experience and profile.”
Both the Tenants Union of New South Wales and Victoria are pushing to make rent bidding illegal. In Victoria, Consumer Affairs is also reviewing the topic in its refresh of the Residential Tenancy Act.
“Rental bidding is one of a wide range of issues being looked at,” a Consumer Affairs Victoria spokesman said. “The aim is for any recommended changes to be introduced into, and passed by, Parliament in 2018, with implementation to follow.”
The story Our rent revolution? More rent bidding apps to launch down under first appeared on The Sydney Morning Herald.