Landlords in England and Wales will be banned from renting out their properties for more than the advertised price under reforms set out by the government on Wednesday, as ministers seek to stop expensive bidding wars.
The renters’ rights bill, a key plank of the government’s housing reforms, will ban property owners from accepting more rent than they have asked for, in the UK’s first ban on competitive bidding in the housing market.
The change, which sources said was introduced late in the process of drafting the bill, goes further than Labour promised while in opposition. It is designed to keep a lid on the rapid increase in rents that has contributed to the housing crisis, especially in the south of England. However, landlords predict it will lead to an increase in listed prices instead.
Polly Neate, the chief executive of the housing charity Shelter, said: “The renters’ rights bill is a watershed moment for renters, and the government is right to commit to tackling issues like bidding wars that have locked people out of renting for years.”
A Labour source said: “We will empower tenants to challenge rent increases designed to force them out by the backdoor and introduce new laws to end the practice of rental bidding wars by landlords and letting agents.”
The ban on bidding wars is one of a number of measures in the bill, which was published on Wednesday but revealed by the Guardian last week, the centrepiece of which is an immediate ban on no-fault evictions.
The bill will also stop landlords barring tenants from keeping pets unless they have good reason to do so, and will force them to give four months’ notice before evicting someone because they need to sell the property, house a family member or move back in.
Further measures published on Wednesday include banning landlords from evicting a tenant in the first year of a tenancy and compelling them to give at least two months’ notice before raising the rent.
Michael Gove, the former housing secretary, had promised to bring in a different version of the bill during the previous parliament, but it was dropped when the election was called.
Matthew Pennycook, the housing minister, told LBC radio on Wednesday: “We are going to decisively level the playing field between landlord and tenant through this bill. We’re going to provide tenants, finally, after many years of waiting and many promises, with the protections they need against arbitrary evictions, against unreasonable within-tenancy rent hikes.”
The bill was expected to include a ban on landlords encouraging or soliciting rental bids of more than the listed price. However, people briefed on how the bill had been written said ministers had decided to toughen it up during the drafting process. As a result, it will now prevent landlords from accepting more rent than asked for, even if it is offered unilaterally by a prospective tenant.
The move is designed to dampen the rampant rent rises in the private market and stop people being priced out. In the year to July, average private-sector rents in England increased 8.6%, while in London that figure was 9.7%. Recent figures from Rightmove suggest there are now 17 households bidding for each advertised rental property.
The measure is modelled on similar bans in parts of Australia. This year the Labor state government in Queensland enacted a similar ban after ministers described a “feeding frenzy” for certain properties as desperate renters attempted to outbid one another.
Some landlords groups, however, say the new bill will simply encourage property owners to increase the advertised rental price, even if they know they are not going to get that sum.
One industry executive said: “This will just mean that landlords advertise their properties for more than they think they will get and then see who is able to get closest to the listed rent.”
