Student's shock at landlord's question: 'How much are you willing to pay?'

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".

In bold? Sureeeeely a not ok question pic.twitter.com/YpD8VXnVgT

— Olly (@CliffhangerC) January 12, 2018

"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.

Reports from Wellington that landlords are explicitly operating tender processes on their rentals in a bid to drive up prices.

"I've been to a lot of flat viewings over the last wee while and my understanding is that basically everywhere is going up," says Clifton. "Most flats have had a rent hike this year – I know most flats go up a little bit every year anyway, but there have been significant increases this time."

Jane says after spending her life in Wellington the recent rent hikes have been astronomical, even for someone with a job and references.

"I've lived in four or five flats here and the increases I'm seeing, especially in the inner-city in places like Newtown, student areas, is just crazy. It has been a very sudden increase."

Clifton and his ilk are more vulnerable still.

"I'm lucky to be from a middle-class background with some support from my parents," he says. "But for lots of my friends it's becoming very hard to get by. $200 a room has become the new cheap. Finding a flat that's liveable for that much is pretty hard. Everyone will need to either get more part-time work or spend everything they have on rent."

Because what tenants aren't free to do is escape the market altogether – already flat viewings across the city are attracting hordes of applicants, thronging in the streets and clamouring for a place to sleep as much as a full month before university begins for the year.

"I was at one the other day and there were people everywhere streaming up and down the street. Someone came out and asked us what was going on their street because apparently there'd been like a hundred people walking up and down. It's been pretty hectic."

The heightened demand in Wellington is in part the result of artificial accelerants.

"Most property managers only want one-year tenancies so they can raise the rent without worrying about being taken to the tribunal," says Robert Whitaker from the Wellington renters' advocacy group Renters United. "And even if they were, so long as landlords can prove it's market rent, even if it's at the highest end of the scale, they'll generally be okay. Add to that the fact that most tenancies end around January to March, the demand becomes pretty extreme.

And with that demand comes options for landlords and barriers for tenants. Finding a flat as an affluent white student is one thing, but the process becomes exponentially harder if your ethnicity or disabilities trigger a landlord's conscious or unconscious bias.

"If a landlord receives 40 applications for a property in two hours, by what measure are they even going to shortlist their selections?" says Whitaker. "How much unconscious bias comes into play at that point? It's already difficult enough for someone with a disability to find suitable housing in Wellington, let alone in the current climate."

And here's the kicker – once you secure your potentially deadly property after a secret bidding war, you're now beholden to some of the weakest tenancy protection laws in the western world.

Sleep tight!

This story was originally from The Spinoff and republished with their permission.