The Labour Party have vowed to introduce a law to minimise bidding wars in the private rental sector and let renters offer higher rents voluntarily.
The Goodlord team
Jun 24, 2024
Last week Sir Kier Starmer, leader of the Labour Party, promised to end rental “bidding wars” for tenants, and instead allow voluntary rent increases made by the prospective tenant.
If elected, the leader of the Labour Party plans to pass new laws to stop landlords from “ripping off tenants” when they encourage prospective tenants to pay more to secure a property. There will, however, be a possible loophole for renters to bid above the advertised rent of a property if desired.
The rise of bidding wars in the private rental sector
In April 2024, it was reported that almost one in five tenants had not secured a rental property due to a bidding war in the past two years.
Since the pandemic and lack of supply within the sector, renting a property has become a game of speed and money for tenants. At the height of the bidding war crisis, approximately 25 people were applying to rent one property.
According to Cornerstone Tax, Southampton is the worst area for bidding wars, with 28% of renters being forced to partake in one to attempt to secure a property. This is followed by Brighton with 27%, London with 26% and Manchester with 20%.
Throughout England, renters are forced to bid against other prospective applicants or pay months of rent upfront to secure a property.
Now, as rents hit a seven-month high, four in 10 private renters are paying above the advertised rate, according to the New Economics Foundation.
How does the Labour Party promise to end bidding wars?
Last week, Labour Party leader Sir Kier Starmer stated Labour can enact new legislation to stop landlords and letting agents from creating sky-high rents within the sector.
This would mean that while letting agents and landlords cannot encourage a bidding war for a rental property, a renter can choose to bid above the advertised price to secure it.
The legislation would stop an agency or landlord from facilitating a bidding war but instead create a “loophole” for any new possible legislation.
“We’ve got to stop the bidding wars because what happens is that the landlord effectively goes to two or three different sets of renters driving the rent up and up and up . . . we won’t allow them to do that,” says Starmer.
This possible legislation is similar to New Zealand's policy in 2021, which banned landlords from encouraging tenants to bid above the asking price. Instead, the country allows renters to only offer higher prices voluntarily.
However, the Financial Times reported the average rental prices in New Zealand have risen faster since this policy came into force.
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