Rental bidding startup seems good for landlords. Tenants? Not so much.

Renting in Sydney is already no fun.
Image: Chameleons Eye/REX/Shutterstock

Finding a place to rent can be hellish, but does transferring that process online make it better? One startup argues yes, but tenancy advocates are doubtful.

Alex Lubinsky, the CEO of the Californian company Rentberry, is aggressively confident about the usefulness of his product. He even characterised the heavy criticism levelled at it in the U.S. as “good publicity.”

His site allows prospective tenants to make offers against others to secure properties. While Lubinsky would prefer those offers be called “custom submission,” it’s not hard to see why it’s been called an “eBay-style” platform on which tenants will rush to outbid each other, potentially pushing prices to new heights. 

If the landlord accepts, the tenant then pays Rentberry A$25, although the company has floated changing that to a percentage model.

The startup launched in 10 cities across the U.S. in 2016, and is now rolling out to at least 1,000. First reported by Domain, Rentberry has announced its intention to launch in Australia. With no set launch date, Lubinsky said he also has his sights set on Canada and the UK.

There’s plenty to fix about renting, no doubt. Attending a house inspection, filling out a form and rushing to the real estate agent’s office all in one day is de rigueur. Some automation wouldn’t hurt. And it’s not uncommon in Sydney for potential renters to offer the landlord a little more rent each month to secure a lease.

Ned Cutcher, ‎senior policy officer at the Tenants Union of New South Wales, acknowledged such a situation is happening “on the sly.” Still, he doubts Rentberry is the solution.

“This idea sells itself on making that transparent, but I don’t think that’s the right response,” he said. “The secret business of pushing up rents doesn’t not push up rents by taking the secret out.”

Lubinsky claimed the site in fact had the opposite effect over nine months in its 10 launch cities, saving tenants 5.1 percent on rent. 

However, Toby Bozzuto, CEO of the real estate development company Bozzuto Group, told the Wall Street Journal those numbers might be helped along by an oversupply of apartments across the U.S. In Australia, the situation may be different. Sydney, for example, is reportedly dealing with oversupply in some suburbs and undersupply in others.

“I’m not convinced of how encouraging people to bid up a price brings that price down.”

Tenants saved money because landlords want the most qualified, trustworthy people as their renter, Lubinsky argued. “When somebody submits an application, landlords, they are not eager to take the highest bidder. Everyone knows this, but people disregard this and say, ‘oh, it’s all about money’ — well, it’s not,” he said.

Cutcher, however, was was unconvinced. “Scarcity is a key factor. If you’ve got more people who are looking for properties than there are available, the only real impact this can have is pushing rents up,” he said. “I’m not convinced of how encouraging people to bid up a price brings that price down.”

Rentberry also forces transparency on the renter that’s not expected of the landlord. There are fears, raised by Grist, that user profile pictures could allow landlords to racially discriminate against prospective tenants. Lubinsky, for his part, dismissed that, suggesting users could use cartoon avatars if they wished.

In the U.S., the company also supplies the applicant’s credit score and background check results to the landlord, but he could not disclose which companies it would be working with in Australia to provide those details.

The tenants, of course, don’t see quite as much information about their landlord. What if they’re notorious for letting properties fall into disrepair, for example? Lubinsky suggested the ability for tenants to review and rate landlords after they leave will take care of that.

Either way, as many have noted, it’s clear landlords have the power. If they chose to use Rentberry, tenants may be forced to follow them there.

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