Backfired! Rent controls hurt lettings as government flounders

Research from Propertymark highlights a growing concern for the private rental sector in Scotland.

As the Scottish National Party lurches from crisis to crisis, its policy of rent controls and an eviction ban – devised in a loose alliance with the Scottish Green Party – problems in the private rental sector grow.

While landlords are unable to evict tenants in many circumstances as the Cost of Living (Tenant Protection) (Scotland) Act is extended, those with tenancies that are naturally coming to an end are now more likely to take the chance to sell.

In new research, 94 per cent of letting agents have reported an increase in investors choosing to get rid of their properties, rather than provide a home for a new tenant.

In December 2022, Propertymark released its first report on the issue, where 69 per cent of agents saw an increase in the number of landlords serving notice to sell because of the temporary measures. However, in its most recent report released this spring, the figure has risen dramatically to 83 per cent.

Those that aren’t selling are ensuring their future financial position is secure by raising rents in between tenancies, and when asked, 94 per cent of agents said that their landlords are now more inclined to do so as a result of the measures. This is compared to 91 per cent in December 2022.

The body says that rather than solve supply issues in the private rented sector, the emergency legislation appears to be alienating landlords, this is discouraging investment in the sector which, in turn, is inhibiting supply and causing rents to rise faster than they otherwise might have.

Of all the notices served to tenants, an average, 67 per cent do not meet the exemption criteria and are awaiting processing from October 2023. This is up from 44 per cent in the last report.

Timothy Douglas, head of policy and campaigns at Propertymark, comments: “Rent control is causing problems for the sector in Scotland and we know from our member agents that as a direct result of the Cost of Living legislation rents and costs are now being more heavily scrutinised by landlords with many putting up rents between tenancies to protect against any future cost implications.

“The crux of the housing problem is that demand is far outstripping supply, but this legislation is counterproductive for tenants, pushing landlords out of the sector and leaving little choice for those looking for a rented home.”

This article is taken from Letting Agent Today