Rent-seeking operators are pushing people looking for a home to pay for background checks that provide no boost to their chance of securing a property in the latest revenue-raiser targeted for reform.
Background checks will not be paid for by prospective tenants under changes for Australia's most expensive rental market, while some question their legality.
The NSW government says renters are increasingly asked to fork out, paying up to $30 through some online application portals.
Rental Commissioner Trina Jones said companies were profiting off a disconnect between tenants and landlords.
"We speak to landlords, they don't even know about these background checks," she told reporters on Tuesday.
"We want to send a strong message that's not fair."
PropTech Association of Australia president Kylie Davis said Ms Jones' comments were disappointing.
"Rental application apps are still very new in the market, so new that it has been unclear how legislation - written before the technology existed - applied to the new environment," she told AAP.
"We've engaged with the Rental Commissioner in good faith and confirmed our willingness to work through issues where legislation and technology need to be aligned so to be vilified in this way is unhelpful to the mission that we all have."
Charging for background checks was squeezing money from renters through a legally dubious process, Tenants' Union of NSW chief executive Leo Patterson Ross told AAP.
"But people feel like because of the pressures of finding a new home, that they should do everything they can to try and get ahead in the application process," he said.
Databases agents subscribe to provide questionable value predicting a tenancy's success and were mainly a punitive tool for landlords to punish tenants they do not like, he said.
"There's a pretty strong argument that they're actually already illegal, and the issue is enforcement," Mr Patterson Ross said.
Premier Chris Minns said charging tenants for checks they did not need to pay for was a backdoor way of raising revenue.
"As a result of that, we are seeing it even harder for renters in NSW to keep money in their own pockets, to have that available for housing," he said.
Only specific charges for deposits, bonds, rent and fees for registering longer leases will be able to be passed on to renters in the state.
Landlords will still be able to check and make reports to tenancy databases.
Tenants who leave a property owing money or had their lease terminated by the state's Civil and Administrative Tribunal for misconduct can be listed.
The change is among reforms to renting in NSW, including plans to end no-grounds evictions.
A scheme allowing tenants to transfer bonds between properties is also planned to be introduced in 2025.
Sydney has been Australia's most expensive rental market, with houses costing $100 a week more than the combined-capital median, according to recent figures from property site Domain.
Queensland, South Australia and WA have recently limited rental increases to once every 12 months.
Victoria's renting task force targeting dodgy behaviour by landlords and agents launched inspections at the weekend to investigate whether offered rentals meet mandatory minimum standards.
