Tenants: how fair are sealed bids?
- 9th November 2010
- Renting Property News
Although unpopular with tenants, a sealed bids process is fairer to all parties in a busy rental market.
Sealed bids were unheard of in the rental market until this summer. The practice has transferred from the sales market to the lettings market for the first time. The market is not used to the process and sealed bids are largely unpopular with tenants. Where a letting agent does not introduce the sealed bids process, it is highly likely that gazumping will occur. Gazumping is the process of accepting one offer and then dropping it for a higher offer at a later stage. It's a term more commonly associated with the boom times of the house sales market.
ludlowthompson, London's Letting Agent, report how many tenants resent the process of sealed bids and seem to see it as an agency tactic to extract more rental. In fact, the sealed bids process puts the kibosh on gazumping.
According to London Evening Standard Consumer Business Editor, Jonathan Prynn, in "normal times" professional landlords could expect to have 40% of their properties empty at any one time. Now, it is rare to have a property empty at all - with occupancy rates typically reaching 98%.
The rental market has become saturated, with demand far outweighing supply. Such fierce competition has meant that some people will do anything to get their property of choice.
There are various reasons behind this stampede for rentals but the main factor is the disappearance of high percentage mortgages. This means that potential first time buyers are priced out of the market.
With gazumping becoming more common, it is increasingly important to look to rent through a reputable agent who does not condone this practice. With gazumping tenants are more likely to pay way over the odds.
At ludlowthompson 25% of rentals are now going to sealed bids. This happens to ensure that every prospective tenant has an equal chance of winning the rental. Each tenant can outline the reasons behind why they would be a good candidate, and what price they would be willing to pay should their application be successful. It may sound a little bit like a job application but it is fairest means to securing a rental.
Stephen Ludlow comments: “The rental market has been explosively busy this year, but we never expected the spike in seasonal demand to carry on this late into the year. If anything, the rental market is even more red-hot now.
Sealed bids are the only way to go to ensure that both landlord and tenant are treated fairly. As a letting agent our role is to secure the best deal for the landlord, and we see this as the best way of doing this with integrity. It does not always follow that the highest rental will secure the property. A landlord will also look at other aspects such as employment, references and the number of tenants."
To find out more about available properties to rent, visit www.ludlowthompson.com or pop in to one of your local ludlowthompson letting agencies.
The rental market has been explosively busy this year
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