After years of delays, the newly beefed-up and freshly rebranded Renters’ Rights Bill is blitzing its way through Parliament.

This legislation is on track to be law by late Spring and implemented by the Autumn.

But as we wade into the weeds of the legislative details, a litany of confusions and anxieties remain. And it’s the unintended consequences of this bill that are now keeping agents and landlords up at night.

A key quirk that seems to have been overlooked is a potential surge in landlord rental price ‘gazundering.’ This will stem from a well-intentioned provision in the bill that bans ‘bidding wars’.

However, as with most efforts to tinker with the market, this provision risks doing more harm than good.

Quite naturally, landlords will start to ‘overprice’ their lets – putting properties on the market at a slightly higher price, on the assumption that tenants will then negotiate them down. In effect, listed rents will become ONO; “Or Nearest Offer”.

This reaction would be quite logical – giving landlords a cushion to ensure they secure market-rate plus a bit of wiggle room in choosing between tenants.

And so, while renters may be spared the stress of a bidding war, they’ll be presenting with an entirely new problem: the distortion of rental market data.

Across the market, most rental trackers (unlike ours which reports confirmed rents) rely on advertised prices to gauge trends and averages. These trackers and figures influence the whole market; from agents and landlords through to tenants.

So, if rental properties start being advertised with say a 10% price bump to hedge for gazundering, suddenly we’re all at sea.

Tenants will be hit hard; unable to gauge what a ‘fair’ price for their region is. And agents will be under pressure to advise on exactly how high landlords should go.

Also, landlords who try to resist the practice will lay themselves open to below market rental bids. The desire for accurate data will grow, and we may see more organisations shift towards using confirmed prices instead of advertised prices in a bid to keep things accurate.

Woollier market

Having to ‘game’ prices and operate in a much woollier market when it comes to averages and indices will also further unsettle a landlord community already feeling rattled.

According to our latest State of the Lettings Industry report, by the fourt quarter of 2024 almost half of landlords said they had sold properties over the previous year or that they were planning to do so over the coming year.

In addition, 66% of letting agents believe the Renters’ Rights Bill will lead to fewer rental properties being available.

A whole cohort of landlords are already teetering on the edge, eyeing up the ejector button. Being pulled into a reverse bidding-war each time they let a property could be the push some need to jump. It’s the last thing the market needs at a time of unprecedented demand.

Pricing distortions

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 pressurized market will only make matters worse.

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.

The window for the Government to act to address this unintended consequence is rapidly closing. If it doesn’t, expect to see those ‘on paper’ prices start to spiral sooner rather than later.

William Reeve is CEO of Goodlord.

Read more: Tory housing minister savages ‘rushed’ Renters’ Rights Bill