Rentberry, a controversial Silicon Valley start-up that allows tenants to bid against each other for rental properties, will launch in Australia this year, amid fears it would jack up rates in Sydney and Melbourne’s already pricey rental markets.

Alex Lubinsky, co-founder of Rentberry, stated that Rentberry would open up the rental market to all. Tenants unions in NSW, Victoria expressed their disapproval at the app’s push to raise rental rates.

The app hosts online rental auctions, which allow prospective tenants to place bids and personalize renter profiles for landlords. This allows them to secure a property. Tenants can see what other tenants are bidding and landlords can select the best offers.

“This creates a healthy rental environment in which all prospective tenants can evaluate competition and make educated offers. Such open assessment results in a fair and true market price for the property that benefits both the landlord and the tenant,” said Rentberry.

Speaking to the Domain Group, Lubinsky said landlords will not always choose the highest bid, and many instead use the site’s built-in credit check and referencing system to determine the most appropriate tenant for them. If a tenant has good credit, a landlord will often give a discount.

Rentberry will be available in Australia within the next few weeks. Rentberry will launch first in Sydney, Melbourne, and then all over Australia.

Tenant advocates raise concerns

Rentberry was an American tech disruptor, similar to Uber and Airbnb. Critics warned that Rentberry could cause high rental prices in high-priced areas like San Francisco.

“There is always controversy when there is something new – some people act with fear [because] they still have not understood it,” Lubinsky said. “When Uber came out, people said it was stealing taxi jobs, they don’t have insurance, many things, but we all know now [that these] companies [brought about a] huge positive change.”

Lubinsky also said that major markets, such as Sydney, need more transparency. “By transparency I’m not necessarily saying higher prices – no, absolutely not. What we showed in the US is that we actually save money of about 5.12 per cent for tenants,” he said.

Tenants Union of NSW’s senior officer Ned Cutcher stated rent auctions are a problem due the fact that bidding happens behind closed doors. He also called rent auctions “dangerous” as they had the potential to push the cost of renting even higher than they already were.

“Rents are a function of the market and this is a tool that tries to push the market as high as it can go … It’s not actually asking tenants to set the price, it’s asking tenants to bid up the price,” he said.

Cutcher said the union’s preference was for rent auctions to be made illegal. “Bidding wars are really only designed for one thing – and that is to push prices up.”