ScotGov rent rise curbs blamed for 'forcing' landlords out

It has been revealed that a December survey of 697 members by the Scottish Association of Landlords (SAL) has warned that the size of the private rented sector is reducing and will continue to drop over the next five years with rent controls and politicians' attitude to the sector identified as key factors.

Some 56% of respondents say they are now planning to cut their property portfolio size and only 9% were planning an increase.

Those responding had already withdrawn an average of 6.4% of their properties from the sector in 2023, which suggested that around 21,760 homes could have been lost - around 6.4% of the 340,000 properties in the private rented sector - over a year. They say that they would not yet be reflected in landlord registration figures.

The Hamptons study shows that Scotland is the only part of Great Britain where property sales by landlords were higher in the year to October, 2023 compared to the previous year.

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It found that in Scotland landlords were the sellers in 12% of property transactions in the year, three percentage points higher than in 2022. In other regions of Great Britain the rate was either down or flat.

A separate study has shown that the loophole in the Scottish Government rent rise curbs has meant average new private sector rents have soared by up to 16% in a year in Scotland.

According to analysis by Citylets, Renfrewshire has become the hotspot for rent rises on new tenancies in 2023 as the average bill has risen by 12.9% across Scotland.

It comes in the wake of rent curbs first announced by the then First Minister Nicola Sturgeon in September, 2022, to beat the cost of living crisis.

It was replaced by a 3% rent cap for private tenancies only last April which was to remain in place until September 30, 2023.

A further six-month extension was agreed by ministers meaning landlords with properties within Scotland will continue to face restrictions to rent rises until March, this year.

But the controls only apply to sitting tenants and do not apply to new rental properties being advertised. They include those properties which have come onto the market after tenants have moved on.

The rent cap, while of benefit to many tenants, has been widely blamed for encouraging sales by landlords reducing the supply of private rentals and causing new rents to soar.

In the SAL survey, when asked about their reasons for withdrawing properties, 83% said it was down to "perceived hostility towards landlords from government and politicians".

Some 75% said it was over concerns to introduce rent controls.

When landlords were asked how they will go about withdrawing their properties from the market, for 58% of properties the landlord would serve notice to evict their tenants.

For 29% of properties the landlord will wait until the tenants choose to move out.

And some 22% would be sold to another landlord with tenants in place.

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SAL says the survey painted "a very concerning picture for the future of the private rented sector and it is certain that the Cost of Living (Tenant Protection) (Scotland) Act 2022 has contributed significantly to landlords’ plans to exit the sector and their more assertive approach to rent increases".

They warned that it was "the most vulnerable in society who will suffer from a reduction in the size of the private rented sector and increasing rents".

And Scotland's housing regulator has warned that registered social landlords (RSLs), are facing "uncertainty" in the national and global economy which has contributed to the cost-of-living crisis, alongside what it called "significant and sustained cost increases, higher energy costs, higher borrowing costs, continuing supply chain disruption and labour scarcity".

The Scottish Housing Regulator said have a "reduced financial flexibility" to respond to further challenges which is leading to a reduction in housebuilding, restrictions on maintenance expenditure and less spending on some of the wider role activities that support tenants and communities.

It says that the total number of new units forecast for development in the five years to 2028 at just over 26,000, 17% down on the 30,600 previously suggested.

Glasgow became the second Scottish city to declare a "housing emergency" in November amid mounting pressures on homelessness services.

A city council committee agreed the move due to "unprecedented pressures" facing the local authority.

The council had more than 5,200 open homelessness case and has has already called on the UK government to provide financial assistance as it expects to see more than 1,400 homelessness applications from people granted asylum before the end of 2023.

Edinburgh City Council became the first Scottish city to declare a housing emergency earlier this month. Argyll and Bute Council did the same in June.

According Citylets analysis, in Renfrewshire the rent rise has hit 16% for a typical three bedroomed property - the highest leap registered - with monthly rent at £1014.

The analysis examining the last three months of 2023 shows that a typical one-bedroomed property in South Lanarkshire is costing £576 a month - an annual rise of 15.2%.

Annual rises for a one bedroomed property in Edinburgh and Renfrewshire have gone up by 14%, although the monthly bill in the capital comes to £1052, £451 more than the west of Scotland region.

The typical three-bedroomed property in West Lothian has seen a 13.1% annual rent rise costing £828-a-month while a four-bed in Aberdeen has seen a 12.4% hike with average monthly bills at £1783.

The Scottish Tenants Organisation (STO) said that changes were needed to ensure everyone is protecting from rising rents.

"We have returned to the era of Rachmanism where unscrupulous private landlords are hiking rents to ridiculous levels in Scotland exploiting private tenants especially financially vulnerable young people using the large loopholes in the failed Scottish Government rent cap policy," the group said.

Sean Clerkin, campaign co-ordinator of the STO added: "There has to be an immediate introduction of watertight rent controls in Scotland covering the private rented sector ensuring that rent controls are not tied to tenancy agreements but to the property itself eliminating exorbitant rent hikes by Rachman landlords. Only by the state intervening can we protect financially vulnerable tenants."

Tenants’ Rights Minister Patrick Harvie told the Herald: “Our temporary, emergency legislation has led the way at a time when rents have been rising across the UK, striking an important balance between protection for tenants and the rights of landlords. The latest Scottish Landlord Register data show the number of registered properties for rent in Scotland between August 2022 and November 2023 has increased by 1.5%.

“Since 1 April 2023, private landlords with a tenancy subject to the rent cap have been able to increase in-tenancy rents by up to 3% or can apply to Rent Service Scotland for approval of an increase of up to 6% in specific circumstances. Anywhere else in the UK, private tenants have faced the double impact of uncapped rent rises both during and between tenancies.

“Rental market challenges are being felt across the UK, with the cost of living increasing pressure on tenants and landlords. We will introduce a Housing Bill to deliver a New Deal for Tenants, including the introduction of long-term rent controls for the private rented sector, creating new tenants’ rights.”