Seattle bans apartment auction apps to avoid online bidding wars

There’s a new way to get rental housing – by bidding against other people on an app. The person who offers to pay the most gets the spot.

Seattle City Council wants none of this. In a setback for tech entrepreneurs trying to disrupt the rental housing market, the Council issued a one-year moratorium on these kinds of rent auction apps.

Online auction apps like Rentberry and Biddwell serve as a sort eBay for rental housing — how much the rent will ultimately cost isn’t known until the deal closes.

Nicole Vallestero Keenan-Lai with the nonprofit Puget Sound Sage said these auction apps were similar to the online, short-term rental provider Airbnb: "Something that could take lots and lots of housing off the market [and] make it something so only billionaires can afford to have vacation homes here."

"We believe housing is a human right," she said.

City Council members and housing advocates said the auctions could drive up the price of rental housing in an already-heated Seattle market. The council approved the moratorium 8-0 on Monday.

Few landlords in Seattle use the apps.

Councilmember Teresa Mosqueda said the city wanted to get ahead of the curve and avoid mistakes it made when trying to regulate Airbnb and ride-hailing apps like Uber and Lyft.

"It's clear that this has not yet penetrated the community yet,” Mosqueda said. “I think we'll have a better opportunity to look at long-term solutions."

Students at the University of Washington first brought the apps to the city's attention. The students were concerned the online auctions could boost the rising cost of off-campus housing.

"Obviously in an auction, you're setting people against each other to try to drive up the price. That's the point of an auction,” Nick Peda with the Associated Students of the University of Washington testified before a City Council committee in February.

Peda said he lives with five other people and pays $800 a month in rent.

"I wouldn't want to have to be bidding against other students to be driving up both of our home prices," he said.

San Francisco-based Rentberry had no apartments listed in Seattle Monday morning.

Canadian app Biddwell had about 60 apartments in Seattle listed on its website. But Clarence de Silva with Vancouver-based Biddwell said Monday its landlord-clients in Seattle were not accepting rent offers other than the advertised amounts.

“It’s just a ton of back and forth,” de Silva said of price negotiations. “It’s not really worth the time.”

de Silva said Biddwell pivoted in December to helping landlords show their properties more quickly and efficiently, making the process of finding tenants less costly.

Rentberry did not respond to KUOW requests for comment.

Seattle officials said they want to stay ahead of the curve on the budding bidding industry.

The city now has a year to study the impact of rent-bidding on affordability and whether the practice would violate a city law requiring rental housing to go to the first qualified applicant.