London's feverish rental market has potential tenants resorting to competitive bidding to one-up their home-seeking rivals.

The number of sealed bids being received on rental properties has risen by more than 50% over the last three months amid a continuous and substantial gulf between demand and supply, according to a report Friday from Knight Frank.

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Finding a tenant via sealed bids invites prospective renters to submit one best and final offer for a property’s monthly rent when there are a number of interested parties, the estate agency and property consultant said.

“Once extremely rare in the rental market, every office across our [prime central London] network is now reporting a pronounced increase in sealed bidding,” said David Mumby, regional partner at Knight Frank, in the report.

“Without doubt, the increase in demand from the tech sector and limited options for tenants are driving demand at a rate we haven’t seen for years,” he added.

Knight Frank has also seen a 23% increase in the number of tenancy, or lease, renewals between 2016 and 2019, “exacerbating the lack of supply with fewer new properties entering the market,” he said.

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While the number of new prospective tenants in prime central London increased 33% in the year to January 2020, the number of new rental listings in London declined by 15.5% in 2018, and then increased 4.6% last year, according to the report.

Landlords are turning their backs on the rental sector, having grappled with a number of regulatory changes that have made the market less lucrative, including the scrapping of tenant fees and the gradual elimination of a mortgage interest deduction on buy-to-let properties.

“The ultimate impact of such measures has been to push rents higher and add to affordability pressures for tenants,” Tom Bill, head of London residential research at Knight Frank, said in the report.