There is no law that says how a landlord should decide how much rent to ask for. It’s generally set based on what the going rate is for similar tenancies in the same area.
This is known as “market rent”. For information about market rent and how to challenge rent levels when you consider the rent to be excessive, see challenging rent levels.
Rent price must be advertised
The landlord must state the amount of the rent when advertising a rental property (s 22F RTA).
Rental bidding is illegal
Landlords cannot invite or encourage prospective tenants to pay more rent for a property than is stated in the advertisement or offer (s 22G RTA). If a landlord does this they are committing an unlawful act.
This law has been introduced to stop the practice of rental bidding, where landlords would ask or encourage prospective tenants to say how much rent they were willing to pay to secure the tenancy. This had the effect of putting potential tenants in an uncertain and difficult position, especially in areas where good quality rentals are in short supply and competition is stiff.
Negotiating rent levels
In most cases a tenancy starts with the landlord asking for a certain amount to be paid in rent and the tenant accepting this as part of the terms of the agreement. The idea of negotiating the rent to a lower level at the start of a tenancy isn’t something that many prospective tenants consider doing, but in some circumstances it may be both reasonable and worthwhile.
Landlords might be willing to give discounts to tenants who agree to longer tenancies, or have excellent references from previous landlords for being tidy and paying rent on time.
Whether a tenant will be successful in negotiating a lower rent will depend partly on their negotiating skills, but also on how difficult or easy it is to find a rental property at the time. If there aren’t many rental properties available, landlords are less likely to negotiate a discount. In places where there are a large number of properties for rent, tenants may be able to negotiate a reduction in rent.
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