Explore the government’s ban on rental bidding wars, its impact on landlords, agents, and tenants, and the unintended consequences facing the PRS.
Before their landslide victory in the last general election, the Labour Party made a promise to eliminate bidding wars for rental properties.
They argued that they created an unfair situation in the rental market for prospective tenants, where rents were being “...driven through the roof.”
Whether or not this is a fair assessment of the Private Rented Sector (PRS) is not the point. As the demand for housing has steadily risen, so have rent prices. Data from the June 2025 Goodlord Rental Index shows that rental prices across England have increased year-over-year by 3.2%.
These rises, in turn, compound the ongoing housing crisis, as some private renters have been priced out of the market. It seems like banning the practice would be beneficial for everyone, right?
Well-intentioned policies can often have unintended consequences, and the government’s push to outlaw these wars is no exception. If landlords and letting agents can no longer take bids on their properties, they may choose to raise their initial asking price. We’ll delve into this in more detail in a little while.
The Renters’ Rights Bill is just around the corner, bringing with it a massive wave of change that will include a complete ban on bidding wars. Letting agents and landlords need to understand the discussion around the practice, why it’s being banned, and how it will affect them.
- What are bidding wars, and why do they matter?
- Unintended consequences of the ban
- Practical compliance tips for agents and landlords
- Conclusion
What are bidding wars, and why do they matter?
Rental or tenant bidding wars are situations where prospective tenants make “bids” on rental properties that exceed the advertised asking rent. As tenants try to outdo each other to secure the property, a “war” breaks out, and the already inflated price continues to rise.
It feels like bidding processes tend to end the same way: one group of tenants outbids the other, and to the victor go the spoils (in this case, a charming two-bed in North London). These wars have increasingly become a feature of cities and towns across the UK, with data from the National Residential Landlords Association (NRLA) claiming that 10% of polled landlords had benefited from a bidding war.
Why have bidding wars become so common?
In April 2024, The Negotiator reported that almost one in five tenants had lost out on a property due to a bidding war. While this is personally disappointing for the tenant, it also indicates a few growing problems within the PRS.
Rental bidding wars in the UK are driven by several factors that we’ve listed below.
Supply and demand imbalance
In towns and cities across the country, tenants tend to hear the same old story: there simply isn’t enough affordable housing to go around. Whether or not this claim represents a true picture is besides the point, as tenants find themselves scrambling to secure housing.
This issue of supply and demand is felt most keenly in cities, where hopeful prospective tenants move in large numbers each year. According to a survey conducted by Cornerstone Tax, Southampton is the worst area for bidding wars, with 28% of renters being forced to participate in one to secure a property. This is followed by Brighton with 27%, London with 26% and Manchester with 20%.
Despite promises and vague gestures from those in power, successive governments have failed to address this issue.
Rising interest rates
Since the end of 2021, interest rates in the UK have been steadily rising. Inflation reached its highest point in 40 years, prompting the Bank of England to raise the country’s base rate in an effort to combat the issue.
While the Bank of England did eventually start making cuts in August 2024, the markets have never quite been the same. This has made buying a house in the UK increasingly difficult.
The rental market has felt this squeeze as tenants who would have naturally transitioned into homeowners have been forced to stay in their rental properties. This is supported by data from the Deposit Protection Service, which claims that renters are staying in their homes for an average of 1000 days.
Landlords leaving the market
With the Renters’ Rights Bill expected to become effective by early 2026, many landlords face an uncertain future. No matter how you slice it, the Bill will have an unimaginable effect on how agents and landlords do business.
In the face of this monumental change, some landlords have chosen to leave the market altogether. Landlord Today reported that in May 2025, a quarter of surveyed landlords planned to sell off some or all of their properties within the next 12 months. That could be a shocking blow to an already weary industry.
With fewer properties available to rent, competition amongst tenants will increase, and bidding wars will continue to squeeze the market.
Unintended consequences of the ban
The ban on bidding wars is all a part of the government’s goal of creating a fairer system for tenants within the PRS. It is, in the grand scheme of things, a commendable plan.
However, as with many well-intentioned policies, the plan does have its drawbacks. As William Reeve, CEO of Goodlord, said in an article for The Negotiator:
“Government interventions in price-setting rarely end well. Despite a desire to protect tenants at the heart of the bidding war ban, unwittingly encouraging pricing distortions in an already pressurised market will only make matters worse.”
Here are some of the consequences we believe could arise once the ban is in place.
Higher asking rents
It’s understandable that landlords want to ensure that they receive a return on their investment. A simple way for them to maximise their return is by listing their properties at a higher starting rent.
These would mean that tenants would end up paying just as much (and in some cases more) than they would have in a bidding war. This could lead to a supercharge effect on market rates and a situation in which even more renters are priced out of the sector.
A further shrinking rental supply
As we mentioned earlier, the UK is already facing a housing crisis due to growing demand and shrinking rental supply. With rising mortgage rates, tax changes, and incoming Renters’ Rights Bill regulations like the Decent Homes Standard, and minimum EPC ratings, more landlords may choose to leave the sector.
As we mentioned earlier, this will only intensify the competition between tenants and drive up rents nationwide.
A more difficult referencing process
While some landlords prioritise stability when deciding on a tenant, others may prefer those who can afford higher rents. The idea is that tenants who can afford a higher rent will have the strongest financial profiles and therefore stay in the property for longer.
Discrimination is illegal, but a ban on bidding wars could drive some landlords and agents to become increasingly selective in who they rent to, as they may feel they’re not getting their ideal tenants. To ensure that their investment is protected, they could institute a more stringent referencing policy.
This would disadvantage tenants on benefits, students, or those with non-traditional income streams.
Practical compliance tips for agents and landlords
With the ban firmly on its way, the best time for you to improve your practices is now. This will help you stay compliant with the incoming legislation.
- Set a realistic asking rent - Base your price on local market data from sources like Goodlord’s Rental Index. This helps set expectations around the property and speeds up the process.
- Focus on tenant quality - The highest offer doesn’t necessarily denote the quality of the tenant. Ensure your tenant referencing process identifies the best candidates without inadvertently discriminating against any protected groups.
- Think long-term - Everyone deserves to feel safe and secure in their home. A landlord who keeps things cordial with their tenants will usually enjoy a much more positive long-term partnership with them.
Conclusion
The ban on rental bidding wars aims to create a fairer process for tenants, but it’s unlikely to address the root issues of high demand, limited supply, and rising costs. Instead, we could see landlords raising their initial asking rents, increased competition for fewer properties, and more rigorous tenant vetting.
While the government’s intentions are well-meaning, the policy risks adding pressure to an already stretched Private Rented Sector. In his Negotiator article, William added:
“The best approach is to let the market determine fair rental prices through genuine supply and demand, rather than usher in artificial restrictions that could very well backfire in practice. Of course, in the long-term, we have to build more rental homes to stop costs spiralling out of control for ordinary renters. But, in the meantime, this loophole in the legislation could end up tightening the screw and leaving tenants in a bind.”
For landlords and letting agents, the key is adaptation. Setting realistic rents, focusing on long-term, reliable tenants, and ensuring transparent, compliant practices will be vital to navigating these changes. By staying informed and proactive, those in the PRS can continue to thrive despite the challenges brought by the Renters’ Rights Bill and other ongoing reforms.
This article is intended as a guide only and does not constitute legal advice. Visit gov.uk for more information.
