The Housing Minister says rent bidding is "an unacceptable practice" and will look to ban it.
Rent bidding, a practice common in cities where housing is scarce, is when a landlord or property manager asks prospective tenants what the maximum amount of weekly rent they can afford is, and then whoever can pay the most is chosen as the tenant.
"I just think it's an unacceptable practice. It further exacerbates the market power of landlords at the expense of tenants," the Housing Minister, Phil Twyford, said.
"It's all bad news for renters and I don't think there should be any place for it in our housing market."
Mr Twyford spoke to Checkpoint after it brought to his attention Auckland property management company WalkerWeir, who was offering rent bidding to clients on its website.
Listed under the 'Why choose us?' section, it was the first service offered in WalkerWeir's promotional video.
WalkerWeir deleted the rent bidding section of its website after Checkpoint inquired about it.
Owner Ryan Weir declined to be interviewed but issued a statement through public relations firm Botia Butler Raudon saying there has been little demand for the service - three clients in three years - and it no longer offers it.
"A tender lengthens the time taken to reach a rental agreement. It makes the process more complicated. And landlords generally prioritise other criteria - like references, stability and ability to pay.
"Thanks for drawing the website copy to our attention. We have now removed it," the statement said.
However, Kate Day, spokesperson for Renters United, said rent bidding is common practice in Wellington. Ms Day said it "completely shuts out anyone who's on the vulnerable side of things."
"So if you're a student, or if you're on a benefit, or if your income is limited, obviously this makes it even harder to compete and even harder to find a home."
She said people contact Renters United saying they've filled out application forms for rental properties that ask "what's the highest rent you'd be willing to pay?"
Mr Twyford said a review of tenancy laws underway at the moment will consider what to do about rent bidding.
Today he tabled a bill that would ban landlords passing letting fees onto tenants, arguing there's no good reason for the fees.
"We're looking at modernising all of the tenancy laws to make life better for renters and as part of that review we're about to do a public consultation about what should go into the legislation and within that we're going to look at how we can regulate or possibly even ban rent bidding."