Rental auctions to begin – UPDATED

johnboy 31 October 2006 38

[First filed: September 27, 2006 @ 11:27]

The Canberra Times reports that Peter Blackshaw is planning to start auctioning his client’s rental properties.

He says it’s going on informally already and he’d like to formalise it so that he can get a cut rather than his agents taking a backhander.

If you’re opposed to the practice you know who not to do business with.

UPDATED: The Daily Telegraph has picked up the story and is hailing Blackshaw’s world-first practice, while also mentioning the grave reservations held by many experts in the field.

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38 Responses to Rental auctions to begin – UPDATED
VYBerlinaV8 VYBerlinaV8 11:20 am 02 Nov 06

I would have thought all bidders will be required to pre-register and complete the appropriate background checks, which can then be done once allowing them to bid on a range of properties. As for bid suppression, the answer is to use a reserve price.

KandyA KandyA 11:17 am 02 Nov 06

is their going to be an asking price? I think with a little community support and possibly some liberal bullying, (likely involving threatening people with pointy sticks), I may be able to procure your next available proprety for the princely sum of $10 a week through a succesful bid suppression campaign.
No doubt there will be some legal barrier to this outcome, but none to desparate tennants overbidding each other and driving rental prices through the roof, in an already over compensated market.
Fuck this, Im moving in next to that guy in the rocks next to CSIRO

andy andy 7:47 pm 01 Nov 06

the thing is though, will the successfully bidder still be subjected to standard application processes, where if the rental amount is too high a proportion of their income, they are deemed not suitable ?
Will the property then go back to auction ?
Will the investor have to pay new auction fees ?
What if the sanity checks aren’t done, and the tenant just can’t pay the rent.
the investor spends ages trying to get rent out of them, going through the tribunal, and it’ll end up costing them more, by the time the tenan actually vacates.

PigDog PigDog 9:48 am 01 Nov 06

How on earth is auctioning a rental un-ethical? Ebay must be more of a den of sin than I though! Auctioning Mp3 players! Hitler would be kicking himself for not thinking of it.

But seriously, if it is more than acceptable to auction houses for millions of dollars, I don’t see how auctioning the $200 a week rent can be so bad? Why can’t a landlord get the most profit from there investment as they can.

As a landlord I try to look after the tenants (saves money in the long run). But I also want them paying as much money as I can get out of them. I don’t know anyone who has an investment that isn’t trying to maximise the return.

Binker – I love it when it comes to quoting legislation on the RiotACT!

VYBerlinaV8 VYBerlinaV8 8:49 am 01 Nov 06

…and because they wreck the place, those costs are rolled up into the rental.

Trying to milk tenants for all they’re worth is just too much trouble. Also, if you look after your tenant, you don’t feel so bad kicking them out on the street when they screw up.

ant ant 9:48 pm 31 Oct 06

Tenants being milked for every buck do resent it, and their resentment is expressed in various ways. The recent complaints by Jindabyne people about the behaviour of winter kids highlights this. Those vandalising kids are paying huge bucks to live in shambolic digs, as the locals gouge them for all they’re worth. So they feel no compunction in wrecking the place.

aich jay aich jay 5:57 pm 31 Oct 06

Unethical, Schmethical. It’s a matter of legality.

Binker, I’m not sure that bit of the Act applies to starting renatl, only to rent increases for existing tenants. However, we had a dispute with our Real Estate agent (who will remain unnamed) when we had to break our lease (we had to show them the act they’re supposed to be working under and point out the bit where their practices were in contradiction to the Act) – from memory there is a bit about a property being available at the advertised rent, but I don’t have a copy of the Act, so maybe you can find it.

If the RT Act doesn;t cover it, it could fall under the Trade Practices Act – anyone here who works for the ACCC want to venture an opinion?

Binker Binker 12:51 pm 28 Sep 06

s68 (1) The tribunal must allow a rental rate increase that is in accordance with the standard residential tenancy terms unless the increase is excessive.

(2) For subsection (1)—
(a) unless the tenant satisfies the tribunal otherwise, a rental rate increase is not excessive if it is less than 20% greater than any increase in the index number over the period since the last rental rate increase or since the beginning of the lease (whichever is later); and

(b)unless the lessor satisfies the tribunal otherwise, a rental rate increase is excessive if it is more than 20% greater than any increase in the index number over the period since the last rental rate increase or since the beginning of the lease (whichever is later).

“index number” means the rents component of the housing group of the Consumer Price Index for Canberra published from time to time by the Australian statistician.

Heavs Heavs 12:12 pm 28 Sep 06

That’s 100% incorrect S4anta. Rent can only be increased once in a 12 month period.
In theory the lessor can increase the rent by any amount they choose. However if it is challenged by the tenant at the Tribunal the onus is generally on the lessor to show why the increase is not excessive in the circumstances. Tribunal has a whole stack of cases on their website dealing with rent increases.

biogaz78 biogaz78 11:52 am 28 Sep 06

Caf: I have been assured by my agent that they can still only increase rents once every 12 months, even if youre on a periodic lease.

There is a complicated formula for working out the maximum rent increase allowed … for example on a $300 weekly rent the agent may increase rent to around $322 without any justification. I think rent can be increased by more than what the formula determines, however they need to provide suitable justification and risk being taken through the tribunal.

S4anta S4anta 10:59 am 28 Sep 06

Caf – yes they can. each time to roll onto a new month you are essentially signing onto a new contract each time.

In regards to this post, seeing as I have a few joints floating about, currently being rented by undesirables displaced from the fires, I say bring it on.

caf caf 10:38 am 28 Sep 06

Does anyone know – if you go onto a month-to-month lease, can the agent raise the rent every month if they want to?

VYBerlinaV8 VYBerlinaV8 10:31 am 28 Sep 06

I believe rental increases are capped, something like 10% per year?

biogaz78 biogaz78 9:06 am 28 Sep 06

If surety of income was so important then why did my landlord raise my rent by $10 knowing that by doing so I wasnt going to sign another 12 month lease? Because they raised the rent i decided to go on to a periodic lease, if they didnt raise my rent I would have signed on for another 12 months.

The simple answer is that agents know the market is so tight that they can replace tenants at a moments notice. It also means they can raise the rent by pretty much whatever they like every year and the poor tenant will be forced to pay it.

VYBerlinaV8 VYBerlinaV8 8:58 am 28 Sep 06

Vic makes a good point – it’s an approach I use too. Surety of rental income is worth a lot, more than $10 a week, especially if the tenants do the right thing (and plenty don’t).

Ultimately, the property market is cyclic, for both renters and owners. In time, the rental market will ease a bit (but not for several years, I suspect). Renters be aware: things will get worse for you before they get better.

Special G Special G 6:31 am 28 Sep 06

Vic has a good point. A long term tenant paying less rent although looking after the place is a better option.

As for jacking up the price by $10 – you may get an extra $520 in the year but what if that costs you 1 or 2 weeks with the place empty to get it.

Pandy Pandy 11:25 pm 27 Sep 06

Vic, you are a gentelman.

Vic Bitterman Vic Bitterman 10:19 pm 27 Sep 06

I’ve given this some thought, based upn the arguments above. never even considered this before!

I’m against an auction system for rental properties, and will never use it for mine – and I have 7 of them in the Canberra region!

Yes, my properties are my eventual retirement nest eggs, but I appreciate at the same time that they are home to families, who want security.

In my investment strategy at least, the highest bidder is not necessarily the one who occupy one of my preoperties. I’ll gladly take on someone who will take care of my houses and treat it as their own. That is better than an extra $10 per week, or whetever it will be.

ant ant 10:19 pm 27 Sep 06

Blackshaw was the one who originally pioneered wholesale auctioning of properties, rather than it being a tactic. He’s about making money money money. Interestingly, quite a few big-name real estate agents in town once worked for him, including the chap who did the biggest deal the other week.

Very rotten time to be a renter. I wish people trying to milk bucks from other people would get out of the property market.

cranky cranky 9:51 pm 27 Sep 06

If an official auction takes place, are the participants liable to pay various fees/duties etc to our disgustingly avaricious town rulers, over and above the normal imposts of a rental lease?

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