By Riccardo Giovanacci
SOME of the more onerous restrictions which were imposed on landlords in Scotland in the first dark days of the pandemic are being rescinded and it might be assumed that this would be a good thing for the private rental sector.
But will it?
The restrictions – such as extending notice periods for evictions, limiting the grounds for evictions and so on – were put in place in a hurry with the best of intentions.
Massive financial aid through UK furlough schemes, however, meant that worst-case non-payment of rent scenarios were not realised, but the Scottish Government still decided in September last year to further extend the Emergency Acts until now.
It has to be said that that the great majority of tenants are responsible and meet their commitments under their agreements. It has been notable that those who have fallen into substantial rent arrears are known repeat offenders.
But a landlord who might want to recover built-up arrears or cut his or her losses by eviction, is now faced with a situation in which grounds which previously meant that an eviction would be mandatory have been made discretionary.
This means that more cases will inevitably head to the First Tier Tribunal where more notices to leave will be decided under the “reasonableness test”. The likely effect will be that landlords will decide the game is not worth the hassle and exit the sector.
The reason rental prices are rising is that there is a lack of private rental stock in the market. To increase the availability of suitable stock, the regulatory framework has to make the market more appealing to property owners.
This is far from being the case at present. The private letting sector is one of the most heavily regulated areas of commercial enterprise in the country, to the point that many landlords now feel that they are being actively discriminated against.
Take the new legislation which is about to come in which means landlords can no longer issue a blanket ban on tenants keeping pets and will have to object in writing on receipt of a pet request.
It is just another disincentive for people who might want to enter the market, coming on top of the difficulties of becoming registered, lodging of deposits, safety checks and certification and detrimental changes in tax laws.
Proposed new legislation in the Scottish Government’s New Deal for Tenants, now out for consultation, will further affect restrictions on evictions, establish a regulator for the sector, implement rent controls and impose further zero emissions burdens.
The private rented sector plays a crucial role in the housing system, providing homes to people who cannot, or simply do not want to, own their own home and for whom the social rented sector is not an option.
Such people want reasonable accommodation at a fair rental price. Responsible landlords aspire to provide it and still make a reasonable return on their investment.
There is no gain to be had from regulating a functional market into extinction.
Riccardo Giovanacci is Managing Director of Newton Letting
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