Landlords and letting agents are being advised to exercise greater care when setting asking rents following the implementation of a ban on rental bidding wars, according to regulation expert Zach Hayward-Jones.
Reduced pricing flexibility
The new regulations require advertised rental prices to be final, eliminating the previous practice of using initial asking rents to test market demand. Hayward-Jones noted that this change leaves landlords with less room for trial and error in their pricing strategies.
“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,” he explained. “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.”
Market research now essential
Speaking to insurer Simply Business, Hayward-Jones warned that landlords who set rents below local market levels could reduce their annual returns, whilst those who overprice properties risk extended void periods as prospective tenants seek alternatives elsewhere.
The regulatory changes come amid broader shifts in the rental sector, with recent data showing rent increases dropping 23% following the Renters’ Rights Act.
“With margins tighter than ever, it’s important to take everything into consideration before setting your asking price,” Hayward-Jones stated, arguing that comprehensive market research before listing has become “non-negotiable”.
He recommended that landlords compare similar local properties and assess factors including property condition, location, and available amenities before advertising. The advice follows a period of heightened regulatory scrutiny across the sector, with authorities taking enforcement action against non-compliant operators, as evidenced by recent penalties issued to landlords for safety breaches.
Pricing strategy recommendations
Hayward-Jones advised that landlords and agents should focus on realistic local asking rents rather than attempting to build in buffers against future costs. “Make sure you land on a realistic amount before your advert goes live,” he said.
The prohibition on rental bidding wars represents a significant shift in how the private rental sector operates, requiring landlords to adopt more rigorous pricing methodologies from the outset of the letting process.