A prominent figure in the PropTech lettings sector has raised concerns about an unexpected consequence of the Renters Rights Bill: the potential rise of gazundering.
William Reeve, the chief executive of Goodlord, shared his thoughts on the industry website The Negotiator. He warned that the Bill’s ban on rental bidding wars could prompt landlords to adopt a different pricing strategy. To compensate for the inability to benefit from tenant competition, some landlords might initially list properties at higher-than-usual prices, anticipating that tenants will negotiate the rent down.
Reeve highlighted that while renters may be spared the stress of bidding wars, they could face new challenges. With landlords adjusting their pricing strategies, the available market data might become unreliable, making it harder for renters to gauge true rental values accurately.
This unintended outcome could create confusion for tenants navigating the rental market, even as the Bill aims to improve transparency and fairness.
A prominent figure in the PropTech lettings sector has raised concerns about an unexpected consequence of the Renters Rights Bill: the potential rise of gazundering.
William Reeve, the chief executive of Goodlord, shared his thoughts on the industry website The Negotiator. He warned that the Bill’s ban on rental bidding wars could prompt landlords to adopt a different pricing strategy. To compensate for the inability to benefit from tenant competition, some landlords might initially list properties at higher-than-usual prices, anticipating that tenants will negotiate the rent down.
Reeve highlighted that while renters may be spared the stress of bidding wars, they could face new challenges. With landlords adjusting their pricing strategies, the available market data might become unreliable, making it harder for renters to gauge true rental values accurately.
This unintended outcome could create confusion for tenants navigating the rental market, even as the Bill aims to improve transparency and fairness.
William Reeve, chief executive of Goodlord, has raised fresh concerns about the possible unintended consequences of the Renters Rights Bill, specifically its impact on rental pricing and market stability. His analysis focuses on how a ban on rental bidding wars may lead to a practice known as gazundering, where landlords initially list properties at higher rents with the expectation that tenants will negotiate the price down. According to Reeve, this could have a cascading effect on how rental prices are tracked and perceived, leaving tenants, landlords, and agents navigating a more opaque market.
Reeve draws attention to the fact that many rental market trackers, which provide data on average rental values, rely heavily on the advertised prices of properties. This data plays a key role in helping landlords, agents, and tenants determine what constitutes a fair rent in any given area. However, if landlords begin artificially inflating their advertised prices to counter the risk of gazundering, these market trackers could start reflecting skewed figures that don’t accurately represent true rental values.
This shift in pricing strategy, Reeve suggests, could cause confusion and instability across the rental market. He warns that, under these circumstances, tenants may struggle to understand what a fair rental price actually looks like. With advertised prices potentially inflated by 10% or more, renters could find themselves at a disadvantage, as they would no longer have access to reliable market data when making decisions about where to live and how much to pay.
Reeve elaborates further on the pressures that agents would face in this scenario. He explains that letting agents, who play a crucial advisory role for landlords, may find themselves under increased strain to recommend higher asking prices. With the market becoming more uncertain, agents would need to balance the competing priorities of helping landlords secure tenants while ensuring that properties are priced competitively enough to attract interest.
For landlords, the situation could also present new challenges. Reeve notes that those who choose not to adopt the practice of inflating advertised prices might leave themselves open to below-market rental offers. This, in turn, could create a two-tiered rental market, where some properties are priced artificially high while others struggle to attract tenants willing to pay the full asking price.
One of Reeve’s key concerns is that the deterioration in the quality of market data could erode confidence in the rental market as a whole. He explains that reliable data is essential for maintaining stability and predictability, both for landlords deciding how to price their properties and for tenants seeking affordable housing. Without accurate information, both sides of the market could become increasingly unsettled.
Reeve also highlights the potential impact on landlords who are already feeling the strain of increased regulations and market pressures. Many landlords, he says, are already “teetering on the edge, eyeing up the ejector button,” and may view this additional layer of uncertainty as the final straw that prompts them to sell their properties and exit the rental market altogether.
The departure of landlords from the market could exacerbate the existing housing shortage, particularly in areas where rental demand already outstrips supply. With fewer properties available to rent, competition among tenants could intensify, further driving up prices and making it even harder for renters to secure affordable housing. This could, ironically, lead to the very problem the Renters Rights Bill seeks to address – a lack of transparency and fairness in the rental process.
Reeve’s analysis underscores the complex and interconnected nature of the rental market. He emphasises that while the intention behind the Renters Rights Bill is to protect tenants, the potential side effects of banning bidding wars could end up creating new challenges for renters, landlords, and agents alike. Addressing these unintended consequences, he suggests, will require careful consideration and a balanced approach to regulation.
You can read Reeve’s full article and explore his detailed analysis on The Negotiator’s website. His insights offer a valuable perspective on the ongoing debate about how best to create a fairer, more transparent, and more stable rental market for everyone involved.
Download NOW
4 Simple Steps To Becoming Wealthy Through Property