Following the ban on conventional rental bidding wars under the Renters’ Rights Act, attention has shifted to a tactic known as ‘inverse bidding’.

Rather than listing a property at market value and encouraging prospective tenants to bid upwards, the strategy flips the dynamic: set an artificially high asking price to establish a ceiling, then invite tenants to compete downwards toward a target rent.

Recent reports show some landlords and agents in the capital have been hiking rents to trigger inverse bidding wars and get around the new rental rules.

How the dynamic works

Under traditional market conditions, an agent might list a flat at £2,500 and let prospective tenants drive the price higher. Under an inverse bidding dynamic, a property is listed significantly above market value - for instance, at £3,000, then prospective tenants are encouraged to view the property and submit offers below asking price. Multiple applicants then submit competing offers (e.g., £2,600, £2,700, and £2,800) and the landlord accepts the highest bid.

Because no applicant has exceeded the £3,000 asking rent, the transaction superficially appears compliant. However, tenants are still effectively forced into a blind auction against one another to secure the home.

What does the law actually say?

Official guidance outlined in GOV.UK’s civil penalties policy makes a clear distinction on two main points:

• Prohibited: Landlords and agents must advertise a fixed rent and cannot invite, encourage, or accept an offer above that figure. They are also prohibited from disclosing competing offers to drive bids above the advertised price

• Permitted: The law does not prohibit downward negotiation. A landlord is entirely within their rights to advertise at £3,000 and accept a legitimate lower offer of £2,700

The crucial legal boundary rests on conduct:

• Compliant: An agent receives several independent offers below asking price, and the landlord simply chooses one without pitting applicants against each other

• Non-compliant: An agent actively orchestrates a blind auction. For example, by informing an applicant that another bidder has offered £2,700 and prompting them to increase their offer to secure the property

Industry perspective: strategy vs. market reality

Industry leaders have pointed out that setting higher asking prices reflects how agents and landlords are navigating a new pricing environment where flexibility is required.

In coverage detailing industry reactions to allegations of inverse bidding, Tom Goodman, managing director at Goodlord, notes that listing above market value is becoming a default strategy for many agents to guarantee negotiating room. However, he warns that it risks creating an "underbidding free-for-all" for tenants, highlighting an increasing demand across the sector for accurate data on achieved rents rather than asking prices.

Meanwhile, Propertymark CEO Nathan Emerson emphasizes that while a cooling market naturally involves greater price negotiation, deliberately setting inflated rents to recreate a bidding environment raises serious questions around professional practice and transparency.

Enforcement and penalties

Local authorities responsible for enforcing rental bidding rules will look at the full paper trail when investigating potential breaches, including:

• Initial property listings and portal history

• Written correspondence (emails, text messages, and messaging apps)

• Final tenancy agreements

While a gap between the advertised rent and the final tenancy price is not evidence of a breach on its own, written proof that an agent actively encouraged applicants to outbid one another below the asking price carries significant legal risk. First-time civil penalties for non-compliance can reach up to £7,000, with serious or repeat offences subject to fines of up to £40,000.

Whether inverse bidding becomes a widespread compliance headache or remains a temporary market anomaly depends on how strictly local authorities monitor agent practices.

For landlords and managing agents, the boundary is straightforward: allowing room for standard negotiation is entirely lawful but actively managing a downward bidding war risks falling squarely foul of the law.