I spent the best part of a year studying how rents move in the UK’s private rental sector. Somewhere in the reading, before any analysis, I came across the code of practice that letting agents are held to [7]. It recommends that a rental asking price should ideally be based on what similar properties are asking in a comparable local area.

When prices move together, the instinct is to look for a cartel: someone in a room agreeing the number. What I kept finding, in market after market, is convergence with no conspirators, ordinary people making individually sensible decisions that add up to a market moving as one.

The name for it

In 1983 two sociologists asked why organisations in the same field end up so alike, even when being alike makes no one any money [1]. Their answer was institutional isomorphism: convergence by three routes. Coercive, when an outside force (a regulator, a tax change, a dominant buyer) pushes everyone the same way. Mimetic, when the future is uncertain and copying a peer who looks successful is the cheapest available bet. Normative, when people trained the same way carry the same instincts between firms [1].

Mimetic convergence is what happens under uncertainty: not stupidity, not collusion, just a rational actor reaching for the nearest credible signal of what to do. In the rental market, the nearest credible signal is the listing next door.

If the mechanism surfacing a price signal drives a behaviour, where does the responsibility for that behaviour sit?

Case one: the rental market

Despite net migration falling from a peak of 944,000 to 171,000 in under three years [2], rents still rose 3.3% in the year to May 2026, the slowest in four years, but growth all the same [3].

Landlords could see it too. In a quarterly survey of around 750 of them, the share describing tenant demand as strong fell from 79% in the third quarter of 2024 to 71% by the middle of 2025, and to 58% by the first quarter of 2026 [4]. Demand was cooling, landlords said so themselves, and rents went up anyway.

Two things are holding rents up. The first is supply. No official series counts landlords leaving, though the direction is clear: around 31% now intend to reduce their holdings, up from 22%, buy-to-let lending is in retreat, and surveyors report many more landlords pulling rental stock out of the market than adding to it, a net balance of minus 28% in May 2026 [5]. Much of that is coercive isomorphism doing its work. Section 24, the higher stamp duty on additional homes, the end of furnished-holiday-let relief and the Renters’ Rights Act all push in the same direction at once [6, 1]. The same external shocks produce the same response across very different landlords.

Supply explains why rents could rise while demand fell. It doesn’t explain why thousands of individual landlords, each pricing alone, arrive at similar numbers.

That is where the code of practice comes back in. An agent valuing a property opens the same listings a tenant does, reads the same comparables, and prices against them, because the profession’s own guidance, legitimised by national trading standards, says that is what good practice looks like [7]. The code encourages a normative rationality for valuing rents without ever being coercive about it. Nobody is compelled, but everybody is pointed the same way.

The agent pricing off comparables is doing what the code says a fair valuation is. If that behaviour, repeated by everyone at once, helps hold prices up in a falling market, the responsibility does not sit with the agent. It sits with the decision, made years ago by institutions and accepted by the rest of us, that comparables are the definition of fair value. Convergence was never a side effect of that definition. It is the definition, operating as designed.

The United States has just tested what happens when a company turns that definition into a product. RealPage sold landlords a pricing engine built on the same instinct the code describes, pricing against the comparables, with one added ingredient: it drew on the private lease data of competing clients. The Department of Justice sued in 2024, alleging the algorithm moved rents in step across landlords who were supposed to be competing. The case settled in November 2025, with RealPage admitting no liability: the company agreed to stop using nonpublic competitor data and to retrain its models without it [8]. Converging on visible prices is written into a code of practice as fair value, and converging through pooled private data is a federal competition case. The same instinct with different ingredients, and which side of the line it falls decides whether anyone is held responsible at all.

Case two: hotels

A hotel adjusts pricing by referencing comparable rooms on the same booking platform, often within the hour. Researchers studying the hotel trade found that conforming to the field’s dominant competitive pattern was rewarded: hotels that moved with the pack tended to outperform those that struck out on their own [9].

That is the mimetic mechanism again, with the incentive made explicit. Convergence here is what the market pays you to do. Put yourself in the revenue manager’s chair. Matching pricing to market expectations is the correct individual call, driven by data that is available every hour of the day.

Case three: investors, where the stakes climb

Push the same mechanism into financial markets and the consequences stop being about one flat or one room.

Why would a fund manager follow the herd? Because being wrong alone ends a career, and being wrong in company does not. Managers rationally copy each other and discount their own private information, precisely to avoid standing out [10]. This is not a theory without evidence. Herding is measurable, strongest in smaller and growth stocks, and it moves prices [11]. Putting imitation aside, when large institutions simply share the same preferences, their combined demand reprices whole categories of asset on its own [12]. Three different routes, reputation, imitation, and shared taste, resulting in convergence.

The same sociologists’ framework was turned on the subprime crisis. The subprime mortgage approach spread until almost everyone had converged on the identical model, and the convergence itself hollowed out the checks that had held risk in place. The authors called the endpoint terminal isomorphism: convergence so complete that the field loses the variety it needs to survive a shock [13]. Copying worked until it was the only thing anyone was doing.

The messy middle

Across all three, the shape is identical, and so is the position of the person making the call. The agent pricing off comparables is not being lazy; they are following the profession’s own definition of a fair valuation. The revenue manager matching the field is not being greedy; the field rewards it. The fund manager who cannot afford to be wrong alone is not being cowardly; the career logic is sound. Every one of those decisions is individually defensible. The aggregate is a market that moves as one and loses the variety it needs when conditions turn.

Every framework we use to run organisations assumes rational, independent, controllable actors. Reality supplies convergent, loss-averse, reputationally constrained ones, and the work lives in that gap.

That gap is what I call the messy middle: tough decisions, a mixture of rational and irrational actors, and unpredictable interventions caused by the markets and societies we operate in. It is where transformation actually happens, and it is the part every operating model is written as though it doesn’t exist. The people in it are not failing to be rational, they are being rational about a system that does not reward standing alone.

There is a live test of this coming. From late 2026 the Renters’ Rights Act will establish a national database of every private landlord and let property in England, each home tied to its unique property reference, and in time opened to public view [14]. It records identity, property and compliance, not price.

So what? A national record of what a compliant let looks like is a standard, and standards travel the normative route rather than the mimetic one: landlords converging not on each other’s prices, but on a shared model of what a properly run tenancy is. Convergence on practice tends to arrive before convergence on price. We have seen what one paragraph of guidance about comparables did to valuation. The question for the new database is the same one: who is deciding what the standard says, and who carries the consequences of these decisions?

None of this makes convergence good or bad. Wermers shows it can make markets quicker; Pozner shows it can make them fragile [11, 13]. The point is that the signals a field publishes (the listing, the booking platform, the index, the code of practice) are not neutral. They shape behaviour, and they shift where responsibility sits, whether the consequences were intended or not.

So: what did you check before you set your last price, or forecast, and what would you have chosen if you hadn’t been able to see it? If that call turns out to be wrong, would you rather be wrong alone or wrong in company? Which of the signals your organisation publishes are other people pricing off?

Sources

  1. DiMaggio & Powell (1983). The Iron Cage Revisited. American Sociological Review, 48(2), 147-160. https://doi.org/10.2307/2095101
  2. ONS, Long-term international migration, year ending December 2025. https://www.ons.gov.uk/peoplepopulationandcommunity/populationandmigration/internationalmigration/bulletins/longterminternationalmigrationprovisional/yearendingdecember2025
  3. ONS, Private rent and house prices, UK: June 2026. https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/privaterentandhousepricesuk/june2026
  4. Pegasus Insight, Landlord Trends (quarterly tracking survey run with the NRLA, ~750 landlords per quarter): 79% reporting strong tenant demand in Q3 2024; 71% in fieldwork of 22 June to 7 July 2025 (n=794); 58% in fieldwork of 9 March to 3 April 2026 (n=631). https://pegasus-insight.co.uk/what-we-do/landlord-trends/ ; https://www.nrla.org.uk/news/rent-pressures-ease-but-market-remains-fragile-warns-landlordsnra ; https://www.nrla.org.uk/strong-tenant-demand-shows-need
  5. English Private Landlord Survey 2024 (MHCLG/NatCen): 31% of landlords intend to reduce their portfolio over the next two years, up from 22% in 2021 and 16% in 2018 (fieldwork April to May 2024, 9,216 landlords). UK Finance buy-to-let lending data. RICS UK Residential Market Survey, May 2026: landlord instructions at a net balance of minus 28%, tenant demand at plus 14%. https://www.gov.uk/government/statistics/english-private-landlord-survey-2024 ; https://www.rics.org/news-insights/uk-residential-survey-may-2026
  6. GOV.UK / HoC Library: Section 24 (SN06361); SDLT 5%; FHL abolition; Renters’ Rights Act 2025. https://commonslibrary.parliament.uk/research-briefings/sn06361/
  7. The Property Ombudsman, Code of Practice for Residential Letting Agents, England (TPOE22-9, effective 1 May 2026), approved by National Trading Standards; the edition read during the research was the 2019 Code. https://www.tpos.co.uk/wp-content/uploads/2026/05/TPOE22-9-Code-of-Practice-for-Residential-Letting-Agents-A4-England-Updated-1-May-2026.pdf
  8. U.S. Department of Justice v. RealPage: complaint (23 Aug 2024); proposed settlement (24 Nov 2025) requiring RealPage to cease use of nonpublic competitor data and retrain its models, no admission of liability. https://www.justice.gov/opa/pr/justice-department-sues-realpage-algorithmic-pricing-scheme-harms-millions-american ; settlement analysis: https://www.paulweiss.com/insights/client-memos/practical-takeaways-from-the-doj-s-algorithmic-pricing-settlement
  9. Yeung & Lau (2005). Competitive actions and firm performance of hotels in Hong Kong. Int. J. Hospitality Management, 24(4), 611-633. https://doi.org/10.1016/j.ijhm.2004.11.006
  10. Scharfstein & Stein (1990). Herd Behavior and Investment. American Economic Review, 80(3), 465-479. https://www.jstor.org/stable/2006678
  11. Wermers (1999). Mutual Fund Herding and the Impact on Stock Prices. Journal of Finance, 54(2), 581-622. https://doi.org/10.1111/0022-1082.00118
  12. Gompers & Metrick (2001). Institutional Investors and Equity Prices. QJE, 116(1), 229-259. https://doi.org/10.1162/003355301556392
  13. Pozner, Stimmler & Hirsch (2010). Terminal Isomorphism. In Markets on Trial (RSO Vol. 30A, pp. 183-216). Emerald. https://doi.org/10.1108/S0733-558X(2010)000030A010
  14. GOV.UK, Renters’ Rights Act 2025 implementation roadmap (Nov 2025). https://www.gov.uk/government/publications/renters-rights-act-2025-implementation-roadmap/implementing-the-renters-rights-act-2025-our-roadmap-for-reforming-the-private-rented-sector