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Rent bidding banned in Seattle — for now

Amid concern about the growing use of the services jacking up student rents in the University District, the Seattle City Council Monday voted unanimously to temporarily ban so-called “rent bidding” in the city.

Monday’s vote will ban the use of services like Rentberry for apartments in the city for one year to give officials time to study the impact the services could have on Seattle affordability. The Office of Housing, Office of Civil Rights, and Seattle Department of Construction and Inspections are now on the hook for a report on the services.

The services work by creating “transparent” rental auctions where potential tenants have “the ability to submit custom offers.”

Last month, CHS reported on the few Capitol Hill properties utilizing the services and the concerns raised about the practice in the Bay Area real estate market. One report on the Rentberry service quoted the company’s founder taking credit for raising rents 5% above listing prices in the already ultra-expensive San Francisco and San Jose markets.

Under the moratorium approved Monday, the Seattle ban can be extended by the City Council if it is determined officials need more time to evaluate the services.

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9 thoughts on “Rent bidding banned in Seattle — for now

  1. Wow this is scary stuff. What’s to prevent international bidders from stuffing the bids and then subletting back to locals for an even higher premium? Glad someone is putting the brakes on this before it gets out of hand.

    • 1. A no-sublet clause could be written into leases.
      2. If speculators outbid all would-be residents, there would be a vanishingly small pool of people who could sublet in the first place.

      The result of this ban on bidding will be even higher initial rents, possibly with incentives to give the illusion of discounts for the first year (1 month free, free TV, etc). We still need to build, not whine, our way out of our housing shortage.

    • The same thing that prevents anyone – whether or not they’re outside the US – from doing so now: it would be a time-consuming, low margin, high risk business. Just the few weeks it would take to place a new sublet tenant would consume all gains for a year or more. Also, many landlords prohibit subletting or require permission to do so.

      The reason you don’t see anyone renting properties explicitly to sublet them doesn’t have anything to do with bidding or international bidders. That doesn’t exist because it’s a poor business.

    • FYI, subletting is a common practice in markets that have rent control. Once a person has a rent control apartment they pretty much will never give it up… even if they move to the other side of the planet. I had a friend in the upper east side who had a sublet (lessee 3) of a sublet (lessee 2) of a rent control apartment (lessee 1) which he then sublet again (lessee 4). Yes life can be like a Seinfeld episode.

      Some funny situations arouse such as the person he was subletting from (lessee 2) had a stipulation that she could use the apt one week a year if she gave three months notice. For the first 9 years of his sublet she never called it in, but in year ten she did. Of course at this point my friend had moved elsewhere and had sublet the apartment. He call his sublet tenant (lessee 4) and could not get a hold of her, so went over the apartment only to find that it had been sublet again (lessee 5). It was hard for him to be mad and they just had to figure it out. So lessee 5 couch surfed at friends for a week and my friend was in the apt when his lessee 2 showed up. He had to hide all the photos of lessee 5 and her boyfriend. Freaking hilarious.

      Rent control, like any system, gets abused to maximum.

  2. If there were locals willing to pay an even higher premium, why would they have not out-bid these hypothetical international bidders?

  3. We have entered a realm where the very idea that landlords may rent their property for a price people are willing to pay is deemed unacceptable, and the force of the State is utilized to prevent this otherwise ratonal outcome. Rest assured, if a website offering tenants the opportunity to rent properties for less through bidding or other means were feasibly offered, our city council would facilitate it’s expansion by whatever means possible. It is not the means they object to but it’s outcome. Meanwhile, I get to figure out how to comply with the positively idiotic effects of the first in time law set to take effect shortly.

    • If it’s really as terrible as you make it seem, you would probably have long sold your property for what’s likely a good amount of profit. There’s regulations on pretty much every type of business transaction in this country, so why should landlords be special?

      “Rest assured, if a website offering tenants the opportunity to rent properties for less through bidding or other means were feasibly offered, our city council would facilitate it’s expansion by whatever means possible.”

      Why should the City and State’s goal be to maximize the profits of landlords to the detriment of its residents? If there was a tool to lower the rent costs for residents, then yes the government should be on board with that.

  4. Rent bidding is incomparable with Seattles first in time ordinance. Why is the council putting a moritorium on something that is already illegal?