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

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

9:51 AM, 6th December 2023, About 3 months ago 89

Text Size

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.”


Share This Article


Comments

Mark Alexander - Founder of Property118

10:01 AM, 6th December 2023, About 3 months ago

Well said Mick

TheBiggerPicture

10:05 AM, 6th December 2023, About 3 months ago

If banning is a good thing, then we should be banning politicians from doing destructive behaviours.

There is no such thing as a free lunch, they are treating the symptom, and not the cause. If they ban tenants from bidding, then many landlords will run a Dutch auction.
That means starting with a high price and working way down. They will make the price ceiling the price floor.

Thanks Mick for speaking out.

michael caffyn parsons

10:07 AM, 6th December 2023, About 3 months ago

All labour, generation rent, shelter do is make renting more expensive. The conservatives and labour are the biggest argument for small state if they get involved it fails as they haven’t got a clue. We don’t build enough houses that’s the problem nothing more nothing less the current unaffordable rents are due to section 24 and the amount of licences red tape it all costs and those costs are passed on and if they can’t be passed on the houses sold off. What’s historically funny is Goves answer is to let local nimbys decide on planning that will help the housing shortage. When labour get in rents will double over 5 years.

Freda Blogs

10:08 AM, 6th December 2023, About 3 months ago

Great responses Mick.
Meantime the Government just trots out the same old tired and disingenuous platitude that “Our Renters (Reform) Bill will deliver a fairer, more secure, and higher quality private rental sector for landlords and tenants.”
Which no LL believes, and it simply isn't true, not for LLs anyway.

Martin Roberts

10:10 AM, 6th December 2023, About 3 months ago

Very well put by Mick.

I'm guessing landlords could reduce the asking price for prospective tenants, so let’s say you have a property which would rent for about £800, you advertise at £2,000 and take the closest offer, ie a reduction on the asking price.

Easy rider

10:11 AM, 6th December 2023, About 3 months ago

If government controlled population growth, there would be less demand for rental properties. This would ease the pressure on rents.

Martin

10:16 AM, 6th December 2023, About 3 months ago

Great article, the Dutch auction comment made me smile, as surely that's what we all do already.
Put the property on at the top end, gauge the interest and drop or maintain accordingly.
Also, once again the key point that is conveniently ignored is raised. We choose where to put our money and we are not a charity, we can easily choose to put it elsewhere. So making life hard for good landlords is not a great plan. Unless something changes next year I'll be moving some off mine into my property development and redevelopment company. Sadly the way I will do that is sell the houses that don't make a profit and as much as I try and look after my tenants, charity begins at home. The harsh truth is that to me food on my table is more important than food on their table. The powers that be need to understand that simple fact.

Mick Roberts

10:24 AM, 6th December 2023, About 3 months ago

Reply to the comment left by Mark Alexander - Founder of Property118 at 06/12/2023 - 10:01
Well done on Steve at 118 for breaking the verbal radio listening into words.
We need an hour don't we, on BBC to tell the Nation what is really happening, as my tenants understand all these new things makes them worse off.

She actually gave me 4 mins for a change.
I got in a bit about Pet Deposits and Nottm Selective Licensing too.
She didn't attack me for a change.

Starts at 2hr 52 & 32 seconds https://www.bbc.co.uk/sounds/play/m001t266

Direct link here to my recording here
https://photos.app.goo.gl/8ndunxELHx69dhFx5
Give it 4 seconds to load.

Mick Roberts

10:25 AM, 6th December 2023, About 3 months ago

Reply to the comment left by TheBiggerPicture at 06/12/2023 - 10:05
Exactly, again tenants will be worse off, unlike with bidding, they may get the house at a lower price.

Mick Roberts

10:25 AM, 6th December 2023, About 3 months ago

Reply to the comment left by michael caffyn parsons at 06/12/2023 - 10:07
I'm getting ready for Labour taking my houses off me. Although I do think they will pay well for Benefit tenants.

1 2 3 4 5 6 7 8 9

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Tax Planning Book Now