Labour Party calls for ban on tenant bidding wars

The Labour Party is proposing a new policy to ban tenant bidding wars in the UK because it says the practice of tenants bidding against each other for a property is ‘unfair’ and ‘exploitative’.

The party also says that bidding creates competition among tenants and will only benefit a landlord.

Now Labour wants to follow the example of New Zealand and some Australian states by banning the practice.

'Tenants who lose out on a property because of bidding wars'

Matthew Pennycook, Labour’s Shadow Housing Minister, told BBC's Newsbeat: "Those tenants who lose out on a property because of bidding wars are in a worse situation.

“And those who manage to get a property by that method are often stretched to the maximum of what they can pay."

Labour is looking to modify the Renters (Reform) Bill, which is currently going through Parliament, to include a clause that would prohibit tenant bidding wars.

The Bill which will abolish section 21 'no-fault' evictions does not, Labour says, go far enough to protect tenants from rising rents and poor conditions.

The policy of banning tenant bidding wars was implemented in New Zealand in 2021, as part of a series of reforms to improve the rights and wellbeing of renters.

The law states that landlords must advertise a fixed rent for a property and cannot invite or encourage tenants to pay more than the advertised rent.

Tenant bidding wars have led to renters paying up to £1,200 a year more

However, Labour's move this week also coincides with research from the New Economics Foundation (NEF) which found that tenant bidding wars have led to 39% of renters paying up to £1,200 a year more for their rented home.

The organisation says the reason for this is the levels of high demand for rented homes - and the low supply of properties available.

Other key findings include:

· 45% of tenants paid more than one month of rent upfront to secure a home

· 21% had a rent increase mid-way through a tenancy without agreeing to it

· 38% of tenants are in properties with damp or mould

· 17% were illegally charged a fee to view a home

· 19% were asked for a copy of their CV.

'Data shows just how difficult it can be'

A senior researcher at NEF, Alex Diner, said: "Everybody deserves to be able to afford a safe, secure and warm place to live, but this data shows just how difficult it can be for many people to find somewhere to call home.

“The lack of affordable housing across the country forces people to enter into bidding wars, which end up meaning the rent they pay goes through the roof.

“And all too often, the properties they end up living in are cold and damp, with landlords who are not always willing to help."

Mr Diner warns that the government must now ban tenant bidding wars and build more affordable social homes to help reduce the pressures on the housing market.

He adds: "Not only must the government stop backsliding on its commitment to reform the private rental sector, it also has an opportunity to make a real difference here."

Private rented sector's issues are down to a lack of supply

Speaking for landlords, Ben Beadle, the chief executive of the National Residential Landlords Association, told Newsbeat that the accepts that tenant bidding wars do take place but pointed out that many of the private rented sector's issues are down to a lack of supply.

He also said: "You can't go around banning everything.

"What I would say is we need to look at what's forcing people to make these decisions.

"At the end of the day, if we have a plentiful supply of homes then bidding wars are a thing of the past and, actually, high rents are as well."

A government spokesperson said: "It is ultimately for landlords and tenants to agree the amount of rent that should be charged when a tenancy begins.

"Our Renters (Reform) Bill will deliver a fairer, more secure, and higher quality private rental sector for landlords and tenants."

'Tenant bidding wars are taking place'

Simon Thompson, the managing director of Accommodation for Students, said: "Most landlords won't be surprised to hear that tenant bidding wars are taking place.

"This is what happens when the supply of homes to rent doesn't match the level of demand.

"And this situation will occur in the student housing market too as more student tenants look for somewhere to live."

He added: "I'm not too sure though that this practice can be outlawed - there will always be tenants wanting to offer more to secure a home when demand is high."