Major London council tells agents to ‘immediately’ stop tenant bidding wars
Southwark Council is to contact letting agents in its area of South London where it says rents are rising unchecked, and tenants are being encouraged to outbid each other.
A major London council has called for an immediate ban on tenant bidding wars, which it says are driving rents ever higher.
Southwark Council passed a motion calling for an end to “unethical practices” by some letting agents in the borough.
“Private rents in Southwark are amongst the highest in the country increasing by 8.2% over the past year with the average rent now being £2,274 per month,” the motion read.
Some lettings agents in the borough have been engaging in unethical sales practices.”
“Some lettings agents in the borough have been engaging in unethical sales practices known as bidding wars, where they pit prospective tenants against each other, pressuring them to bid above the asking price.”
The council will now contact letting agents in the area that have not agreed to end the “exploitative” practice.
The motion proposed by Labour councillor Sam Foster, received cross-party support from the Labour-run council and Liberal Democrat opposition, BBC News reported.
Exploitative
Foster said: “Exploitative bidding wars are worsening London’s housing crisis and it’s time for them to be banned.”
The Renters’ Rights Bill, which is passing through Parliament, will outlaw bidding wars, although it is not clear how this will be enforced.
New Zealand introduced a similar measure three years ago, but rents have still been rising there.
Ripping tenants off
Prime Minister Keir Starmer said during the General Election campaign that he wanted to stop landlords “ripping tenants off” by encouraging them to put in higher rent offers.
“We can pass legislation to say you can’t do it because it is driving rents through the roof and it’s not fair on people.
“We have to have a scheme in place to stop them driving the rent up and up,” he said.
Meera Chindooroy, Deputy Director for Campaigns, Public Affairs & Policy at the NRLA, told The Neg: “Letting agents and landlords should be setting and advertising rents based fairly on local market conditions.
None of this will address the intense competition for properties.”
“The forthcoming Renters’ Rights Bill includes a ban on bidding wars. In the meantime, Southwark Council is within its rights to encourage agents to stop them on a voluntary basis.
“That said, none of this will address the intense competition for properties as a result of 21 people currently chasing every available home to rent. Only through boosting supply will tenants be afforded the choices they need and deserve about where to live.”
Labour’s promise to end bidding wars ‘impractical’, lawyer claims
I am struggling to make sense of the current narrative, where the blame for rent increases is being squarely placed on letting agents and landlords. They are being accused of pushing a “best and final” offer process, which some deem unscrupulous.
Where do we draw the line in a capitalist society if we start implementing rent controls and measures to prevent rent increases? This seems absurd because the essence of capitalism is to allow market forces to dictate supply and demand. The housing shortage exists because successive governments have failed to provide sufficient social housing or incentivize a stronger private sector. Therefore, placing the blame solely on landlords and letting agents is unfair. This entire situation reeks of hypocrisy, as it contradicts the very principles of capitalism. It theoretically it opens the debate for the merits of communist principles.
In recent years, governments have penalised accidental landlords, whereas, in the past, they encouraged private individuals over a couple of decades to buy properties as part of their pension planning. Now though they are imposing taxes that is making it difficult for landlords to profit unless they can rely on continued rising rents.
An example of where landlords are being disincentivised is they now face an additional 5% stamp duty when acquiring any new properties, which discourages an increasing housing stock. Moreover, landlords for a few years now have not been able to offset mortgage interest against the rental income, and so with higher interest rates eroding their margin, many have been forced to sell. This has resulted in stock levels plummeting to current unprecedented lows.
This in fact is the only area in UK commerce where the government generates revenue from landlords who may be operating at a loss. This in turn pushes even more landlords into selling and new legislation is being introduced that will provide tenants with more security of tenure, stock levels are reducing even more.
But despite all of this, the letting agent and landlord seem to be the demon here and in many cases being punished and a victim of a chaotic system.
Worse things are going on in the world I know, but I wanted to put these points forward to highlight a broken system, where for 20 years sufficient houses have not been built and utter mismanagement has prevailed.
My agency is in Southwark.
Rent rises have nothing to do with agencies encouraging ‘bidding wars’ . Absolutely nothing.
Landlords have been demonised and left the market decreasing supply. UK population continues to grow largely driven by mass immigration (Currently running at net 700,000 a year) increasing demand for properties.
If Southwark want to slow rents rising then encourage landlords. Start by scrapping their largely pointless and expensive licensing scheme.
Of course that wont happen. Next solution to the problem they have created will be rent controls. Never worked anywhere. Create a problem then create a solution that doesn’t work to solve the problem you’ve created.
You couldn’t make it up.
Says the Councils & the Govt who’s policies are causing the bidding wars.
You couldn’t make this up.