July 23, 2024
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Labour will allow renters to offer higher prices ‘voluntarily’

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Labour is planning to allow renters to bid “voluntarily” above the asking price on properties, in a move experts warn would undermine the party’s efforts to prevent bidding wars that contribute to soaring prices.

Sir Keir Starmer on Thursday vowed to “introduce a law” to prevent landlords from getting prospective tenants to bid against each other for rental homes.

“We’ve got to stop the bidding wars, because what happens is that the landlord effectively goes to two or three different sets of renters driving the rent up and up and up . . . we won’t allow them to do that,” he said while visiting a housing site in York on Thursday morning.

Wes Streeting, shadow health secretary, said Labour would compel landlords to clearly advertise rental prices, and that this price would have to be the same as the price ultimately charged.

But a senior Labour party official said on Friday that if a renter chose to bid above the advertised rental price to secure a property “then that’s a voluntary thing and would be allowed”.

“The idea is that the agency can’t facilitate the bidding war to drive up the price on behalf of the landlord,” they said.

Labour’s plans for the rental market are loosely modelled on policies adopted in New Zealand in 2021, which ban landlords from encouraging tenants to bid above the asking price — but crucially allows renters to offer higher prices voluntarily, so long as they are not pressured or advised to do so.

Campaigners have criticised this “loophole”and point out that average rental prices in New Zealand have risen faster since the rules came into force.

Lucian Cook, head of residential research at Savills, said: “Such is the shortfall of stock in the (UK) private sector, you’re always going to have a competitive bidding environment. Whether or not it is encouraged or invited strikes me as being sort of not the point.”

Labour did not respond to a request for comment.

The party has made affordable renting one of its election promises, vowing to “overhaul” regulation on the private rental sector in its manifesto.

Labour retains a commanding 20-point lead ahead of the Conservatives that would enable it to form a government if reflected on polling day in less than two weeks’ time.

The UK’s red hot rental market, coupled with a dwindling supply of properties and rising mortgage costs, has led to soaring prices across the UK.

There are roughly 5.5mn private rental homes in the UK. More than a third of these households spend half their take-home pay on rent, which is considered “severely rent burdened”, according to a survey of 11,000 people by Spareroom, the flat-sharing platform.

Evictions because of rent arrears reached the highest on records going back to 2009 in the first three months of last year, according to Generation Rent analysis of government data.

Activists have long called for the government to impose rent controls, to limit the amount landlords are able to increase rental prices in any given year, though Labour has been resistant to the idea.

Labour has also proposed to limit the amount of rent that tenants can be asked to pay upfront in order to secure a property.

Scotland’s devolved government sought to protect tenants by imposing legislation that limited annual rent rises to 3 per cent, with the ability to increase to 6 per cent in some extenuating circumstances. The measures also put a moratorium on evictions.

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