An Australia-first proposal to make rent bidding transparent has been shelved amid fears it could cause even worse inflation.
Designed to help level the playing field for tenants and prevent rents spiralling, a ban on secret rent bidding would spark legal rental auctions and further push up prices, a NSW inquiry into the proposal heard late last week.
Similar concerns from upper house crossbench MPs led the NSW government to park the ban in order to pass other rental changes through the parliament later this month.
Fair Trading Minister Anoulack Chanthivong acknowledged on Wednesday there would be questions on how the ban could be implemented but said it shouldn't "put a handbrake on areas where there is broad agreement".
The NSW Tenants' Union, Homelessness NSW and the NSW Council of Social Service warned the proposal to ban secret rent bidding would make the situation worse by "encouraging a transparent, regulated rental auction process".
Real Estate Institute of NSW chief executive Tim McKibbin also said it could produce "adverse outcomes" and potentially push more landlords to the short-term rental market, reducing stock for tenants.
Greens housing spokeswoman Jenny Leong said no one had asked for the change.
“Now that we have dealt with this distraction, we can get onto the job of desperately needed rental reforms - that means working with the government to deliver portable bonds and end unfair, no grounds evictions," she said.
The Greens will also escalate a push for an emergency two-year rent freeze to address the "rental crisis".
Independent MP Alex Greenwich said the move to pause the proposal was an "appropriate step to ensure that the government is able to consult with the sector ... to make sure we get it right".
Mr Greenwich, whose electorate has more renters than any other, pointed towards the ACT where property owners must justify rent increases.
When pressed as to where the opposition stood in relation to rent bidding, fair trading spokesman Tim James said "price fixing is not the answer".
"To have the government step in and intervene in a marketplace in such an intrusive manner - it's not going to reflect the needs of the marketplace."
The median cost of a Sydney rental property rose 13 per cent in the past year while the median unit surged by a record 19.1 per cent or $106 per week.
The NSW government's legislation will still have an effect on rent bidding by banning third-party platforms and owners from soliciting bids as well as empowering the new tenant advocate - the NSW Rental Commissioner - to gather pricing data from agents.
Legislation to ban no-fault evictions and make it easier for tenants to have pets will be introduced later.
Currently, a landlord can evict a tenant without grounds with 30 days' notice at the end of their fixed-term lease, or with 90 days’ notice during an ongoing lease.
