From May, the Renters’ Rights Act will prohibit offers above the advertised rent. The change removes a feature that, while informal, has been far from marginal.Over the past five years, roughly one in ten new tenancies across the UK have been agreed above asking – a meaningful share of the market.
Landlords, unable to accept higher bids, are likely to adjust by setting higher initial asking rents, capturing in advance what the market previously revealed through bidding.
City level data gives an even better insight. Birmingham mirrors the data for the UK average but for London and Manchester the data shows that offers over asking was more widespread.
In London, around two in ten lets have exceeded the asking rent over the past five years. At the peak of the rental cycle, that figure rose to four in ten, a sign of a competitive market and lack of supply. Manchester shows a similar, if less extreme, pattern, with up to three in ten lets agreed above asking at the height of the rental cycle.
In short, the reform curbs a visible symptom of competition, not its underlying cause. Rental pricing will likely adjust a little accordingly. Source: Dataloft by PriceHubble