The homelessness charity Step By Step is demanding that rival bidding on rental property be outlawed to give the poorest prospective tenants a chance to get a home.

The organisation claims that the concept of the rental bidding war is a growing factor in the lettings market, with landlords “taking advantage” of the excess of demand over supply by demanding six months’ rent in advance. 

This is pricing young people out of the market, particularly those already facing challenging personal circumstances, claims chair spokeswoman Susan Muckart. 

“As the need to bid for a property becomes more commonplace, the likelihood of a young person securing their own property declines. Young people who have faced challenging upbringings and experienced homelessness will be at an immediate disadvantage.”

A statement by the charity says traditionally landlords have let a property on a first-come-first-served basis, so long as a potential tenant can pay the deposit and passes reference and credit checks.

However, the charity claims that now some landlords ask potential tenants to write an application, explaining who they are, their background, and the amount they are willing to bid, either in terms of the monthly rent or the amount they are able to pay upfront. 

Landlords then make their decision based on who can pay more or who looks better on paper. “Applicants are often gazumped by those offering to pay up to 25 per cent more rent” it says.

As a result, increasingly the advertised rent is becoming a minimum bid amount.

Kelly Headen, another Step By Step spokesperson, adds: “It is deeply concerning that the decision-making process is now based on unregulated ‘assumptions’ from a landlord. It is unquestionably unethical and open to significant discrimination.”

She claims that younger people in particular are likely to lose out through the process.

The charity says that an additional disadvantage for younger prospective tenants has come as a result of the law change forbidding agents and landlords charging tenants for some services such as referencing. 

A statement from Step By Step says: “A change to the law in 2019 means that tenants no longer have to pay the fees associated with obtaining references. Instead, the landlord is expected to foot the bill. 

“While this is ostensibly good news for tenants, in reality it has led to landlords seeking references only once they have already made the decision about who to let to; with so many potential tenants vying for each property, it would prove very costly for a landlord to obtain references for each initial applicant. 

“This effectively means that references do not factor into a landlord’s decision making. Even if a young person has strong references, these would afford no advantage in being considered over rival applicants.”