Is there a loophole in Labours proposed end to bidding wars?

Labour’s proposal to make rental bidding wars illegal is facing criticism due to a significant loophole that could undermine the policy’s effectiveness. While Labour aims to stop letting agents and landlords from initiating bidding wars, the loophole allows tenants to voluntarily offer higher rents above the asking price.

A Labour Party official clarified that while agencies cannot facilitate bidding wars to increase prices for landlords, renters can still choose to bid higher to secure a property. This approach is inspired by similar policies implemented in New Zealand in 2021, which prohibit landlords from encouraging higher bids but allow tenants to make such offers voluntarily.

However, tenant union group Acorn has labeled this loophole as making the policy “useless.” They argue that allowing voluntary higher bids effectively negates the intention of the policy, as it does not eliminate the competitive bidding environment that drives up rental prices.

Critics also note that since the implementation of the policy in New Zealand, average rent prices have continued to rise. This suggests that such measures may not effectively address the root causes of high rental costs, which are primarily driven by supply and demand imbalances.

Lucian Cook, head of residential research at Savills, commented that the issue is the lack of available rental properties in the UK, which naturally creates a competitive market where bidding wars are likely to occur, regardless of whether they are officially encouraged or not.

In summary, while Labour’s proposal aims to curb rental bidding wars, the loophole allowing voluntary higher offers may undermine the policy, as highlighted by tenant advocacy groups and housing market analysts

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