Labour wants to ban tenant bidding wars – landlord explains why that won’t work

The Labour Party says it wants the UK to outlaw tenant bidding wars for rented homes, adopting a New Zealand policy, the Party’s Shadow Housing Minister, Matthew Pennycook, says.

Several Australian states have also apparently followed suit and Labour says the practice ‘creates a competition among tenants’ which only benefits the landlord.

Mr Pennycook says: “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 now wants to amend the Renters (Reform) Bill that is working its way through Parliament.

‘Tenants outbidding each other’

And on 5 Live Breakfast, Nottingham landlord Mick Roberts was questioned by presenter Rachel Burden over the bidding practice, when she asked: “Do you get your tenants outbidding each other for your properties?”

Mr Roberts replied: “I do, and I’ve had that in the past, but I don’t get into it. But I can understand why other landlords are doing it.”

He was then asked why this situation is happening and Mr Roberts replied: “Well, you’ve got a shortage of landlords and since 2015 there’s been this anti-landlord rhetoric and the landlords are packing up like wildfire.

“And now you’ve got a supply and demand issue – and we never know what is coming next.”

‘Going to get to tenants bidding against each other’

He added: “For example, in Nottingham we’ve got a selective licensing charge of £900 and for some landlords, if they’re going to get to tenants bidding against each other, then they are going to take that bid.”

Along with the prospect of Labour banning tenants bidding for a rented property, Mr Roberts asked Ms Burden whether we should also ban bidding on the shopping site eBay and ban house sellers when bidding puts the price up.

Ms Burden asked: “Having somewhere to live is kind of a basic human right and need, isn’t it? And if people are being priced out of the market, this is really problematic.”

Mr Roberts replied: “I agree, but is it the landlord’s job to provide that basic human right?

“The landlord’s job is to provide a home – they are not a charity. It’s not the council providing that home, it’s not a housing association, it’s a human being. And he can take his money elsewhere.”

Landlord advertising a property at a certain price

Ms Burden said that a landlord advertising a property at a certain price will know that the amount covers all the landlord’s costs and gives a buffer zone.

She then asked: “Then maybe there should be a system whereby you don’t allow people to come in and offer over that price.

“So, in other words, the landlord isn’t losing out. But you’re equally being fair to the renters.”

Mr Roberts said: “Well, you just hit the nail on the head. The landlord knows he’s covering his costs, but he isn’t because he doesn’t know what is coming next.

“Labour is proposing rent caps and if you look at Scotland, where they’ve done the rent cap, tenants have ended up much worse off from that. Now the new tenants can’t get a house.

“And when the landlord comes to rent it out again, he charges the most. And that’s what is happening in these bidding wars.”

‘Wait and see all the parties different manifestos’

Ms Burden said: “Obviously, we’ll have to wait and see all the parties’ different manifestos as to how they’re going to deal with this.

“But I guess that’s always been the case for any landlord. There’s always going to be some uncertainty for landlords.”

Mr Roberts replied: “There’s not as much certainty now and most of us are aware that a lot of Labour are anti-landlord, but you get rid of the landlord, and you’ve got no houses.

“You know, they’ve been calling for landlords to pack up and more great landlords are packing up when given the choice.

“There will be lots of landlords fighting for tenants – my tenants can’t leave me anyway, you know, I’m probably one of the rare ones.

“I want to sell a lot of my houses, but I can’t because they can’t get anywhere because of things like this bidding war.”

‘I won’t leave them in that position’

He continued: “I won’t leave them in that position because I’ve got morals and a conscience.

“But a lot of landlords, it’s something like 60% of landlords, don’t give rent increases, but because we don’t know when the next tax is coming from, I’ve got to get in as much as I can because I just don’t know.

“There’s no certainty anymore. I can’t even look after a family anymore.”

Mr Roberts added: “Lots of landlords are packing up and the more you talk about banning bidding wars and landlords not refusing pets, you’ll have no landlords left.”

Accepts that bidding wars happen

The chief executive of the National Residential Landlords Association, Ben Beadle, told BBC’s Newsbeat that he accepts that bidding wars happen but says many problems in the private rental market are due to supply issues.

He 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.”

A government spokesperson told the programme: “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.”

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