Tenant advocates and real estate agents have criticised NSW laws designed to help tenants amid warnings that bans on secret rent bidding will drive prices higher.
The proposed legislation would close loopholes that allow landlords and real agents to covertly solicit bids on rental properties and take offers without informing other prospective tenants.
It is one of a raft of rental reforms the Minns government wants to implement at a time when weekly rent for the average Sydney apartment has risen $100 in a year.
Although initially designed to help level the playing field for tenants and assist with the costs of renting, community organisations said the proposed legislation would spark legal rental auctions and further push up prices.
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".
The proposal was unlikely to lead to good outcomes for the one in three NSW residents who rent, tenants union chief executive Leo Patterson Ross told a parliamentary inquiry on Friday.
Instead, it would create more pressure on tenants to offer more than the asking price.
"We don't auction off other essential services," he said.
Mr Ross argued that implementing a fixed, advertised price for all rentals would be the most transparent solution in preventing rent bidding altogether.
The average Sydney rent has risen more than 13 per cent in the past year, to $711 per week. Units have surged by a record 19.1 per cent, forcing the average apartment tenant to find an extra $106 per week.
Real estate industry representatives raised concern about the administrative burden on property managers and argued the proposals were merely an attempt to deal with the symptoms of a housing supply problem.
Landlords always try to maximise the return on their investment and attempts to inhibit this would be "unattractive" to those wanting to enter the market, Real Estate Institute of NSW chief executive Tim McKibbin said.
"I support transparency (but) the mechanics of how it could be achieved concerns me," he told the NSW inquiry.
"The market does what the market will do ... if we interfere with that there will be adverse outcomes."
The Greens, which would prefer a two-year rent freeze, said there were serious concerns about the impact of rental auctions on vulnerable people, amid an "already brutally competitive rental market".
"We've heard clearly today that no one is asking for rental auctions to be entrenched in NSW - not the real estate industry, tenants advocates or peak bodies," housing spokeswoman Jenny Leong told AAP.
Labor is open to change but defended its proposal, saying many renters currently felt they had to offer above the advertised price from the outset, based on guessing what was happening in secret.
“Sunlight is the best disinfectant and it's not fair to leave renters in the dark," Better Regulation Minister Anoulack Chanthivong said.
"This is about finding a balance. Renters deserve transparency so they can make good decisions, but we also can't send signals that would discourage new supply coming into the market."
The inquiry report is due before parliament returns on June 20.
It comes a day after the government passed legislation to widen how many first-home buyers could access stamp duty exemptions.
The new law also shut the door on the coalition's novel approach to allow some buyers the chance to enter an annual land tax scheme, instead of paying upfront stamp duty.
That system's biggest flaw was homeowners had to use their wages to pay a tax levied against the value of their property, Premier Chris Minns said on Friday.
