Ban on bidding wars: How to set rental prices under the new rules

Bidding wars on rental properties are now banned in England, meaning landlords and letting agents must advertise a fixed asking rent and can’t accept offers above it. For landlords already getting used to the Renters’ Rights Act, that makes pricing accuracy more important than ever.

Get it right and you can stay compliant while protecting your rental yield. Get it wrong and you could either lock in a lower rent than the market average, or risk longer void periods by pricing too high. Here’s how to set the right asking rent, choose tenants fairly, and adapt your pricing strategy under the new rules.

What the bidding war ban means for landlords 

The legislation from the Renters’ Rights Act is clear – the days of best and final offers are over. You’re breaking the law if you accept an offer that’s even a penny over your advertised asking price. 

Landlords must now adapt to three major changes: 

1. Every property must now be advertised with a single, specific asking rent. Advertising a price range or using terms like ‘offers in the region of’ are strictly prohibited.
2. The price in your advert is the absolute maximum you can legally agree when  renting out your property. You can’t ask for, encourage, or accept any offer above that advertised figure, even if the tenant volunteers it unprompted.
3. The practice of asking a tenant to pay for months of rent upfront to secure the property over others is also now illegal. Advance rent is now capped at one month.

Why setting the right asking rent matters more than ever

Because your advertised rent must be final, your pricing strategy becomes even more crucial. 

In the past, landlords could use an initial asking rent to test demand and see what tenants were willing to pay, eventually landing on a monthly cost that worked on both sides. 

But now there’s less room for trial and error, which raises the risk of charging too much and putting potential tenants off – or undercharging and being locked into a below-market rate. 

It’s vital you do your research before listing your property. Look at the asking rents for comparable properties in your area and make sure you land on a realistic amount before your advert goes live. 

What happens if you underprice your rental property? 

If your rent is lower than the local market rate, you could generate a lot of interest in your property. But you’re legally locked into that rate for at least 12 months (under new Section 13 laws). 

Even being £100 below the local market rate will have a meaningful impact on your annual yield. And with margins tighter than ever, it’s important to take everything into consideration before setting your asking price. 

What happens if you overprice your rental property? 

With so many regulatory changes coming in at once, it could be tempting to inflate your asking price to give yourself a buffer for higher running costs in the future.

But overpricing risks pricing out potential tenants entirely, leading to extended void periods that could wipe out any profit you looked to make. 

Market research before listing has become non-negotiable. You should assess local properties, factor in your property’s condition and amenities, and arrive at a fair, fixed value before the advert goes live.

How to adapt your tenant selection process 

In many cases, the tenant willing to pay the most would secure the property. Now there’s a level playing field where all of your potential tenants are offering the same amount – so how do you choose between them?  

That makes tenant referencing even more important – so shift focus to affordability, credit history and previous landlord references instead. If you use a letting agent, it’s likely they offer this as part of their typical service. Or you can hire an independent tenant referencing company to carry out the checks for you. 

Because of the anti-discrimination laws brought in with the Renters’ Rights Act, checks must be based solely on affordability, credit history, and references from previous landlords.

Focusing on the stability of your tenant’s history could be an effective strategy. Choosing a tenant that has a good track record of paying rent on time and taking care of the property has become more important than what they’re willing to pay. 

How to stay compliant and avoid a £7,000 fine

Local councils can penalise any landlords who aren’t following the new rules. For the first offence, you can be fined up to £7,000, with an additional £7,000 for any repeat offences within five years. 

Get into the habit of keeping dated copies of your online listings and any communication with  letting agents or prospective tenants, just in case. If you’re reported to the council you’ll need proof that the property was advertised at a fixed price and that you didn’t accept any offers above it.