Renters in the capital have reported that some landlords are encouraging ‘inverse bidding wars’ to get round new rental rules.

Bidding wars - where landlords and letting agents advertise properties then encourage prospective tenants to competitively bid up the amount they’re willing to pay each month - were banned under the Renters’ Rights Act. However, The London Centric Substack reports that they have responded by enormously increasing the advertised prices for flats.

“The landlord’s initial hope is that a potential tenant is panicked enough to pay over the odds,” it explains. “If not, prospective tenants are encouraged to view a property out of their price range then told to put in a bid below the asking price - creating an inverse blind auction where the objective is to try to work out how low your rival bidders have gone, then bid slightly above that.”

Shocked

One renter. who told a letting agent she was shocked by the massive increases in advertised prices reports, told the Substack: “[The agent] said to me that landlords were putting the rent higher, either expecting a lower offer or just taking a stab in the dark and hoping that people would pay.”

How high the advertised rent went depended on the landlord, with the agent telling her some were “going crazy and putting the rent really high, and some were doing it just a little bit higher than what their current tenants were paying”.

Theory

London Centric tested the theory by ringing up more than a dozen letting agents to inquire about renting. It was repeatedly encouraged to view properties advertised as being well out of its stated price range, while letting agents repeatedly said the landlord would definitely consider offers under the asking price.

The report explains: “A mix of desperation to find a property, inexperience in London’s rental market, and a desire to escape the tedium of flat hunting is proving enough to push renters into paying far more than what a flat is worth.”

Mairi MacRae, director of policy and campaigns at housing charity Shelter, says seeing the back of “ludicrous upfront costs” is hugely welcome, but the government cannot leave room for loopholes. “Unscrupulous landlords must be prevented from flouting the law or finding cynical workarounds to continue cashing in on tenants’ basic need for a home.”

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