Following on from last week’s report to the Scottish Parliament regarding The Cost of Living (Tenant Protection) (Scotland) Act 2022, Rettie & Co. wants to assure our clients that our experienced team is prepared for all eventualities and that we are here to help with any enquiries you may have.
A Freeze of Investment
The introduction of rent control and the uncertainty around how this will operate in future is harmful to our sector. Not only could this force small scale housing providers out of the sector, but it could also see institutional providers take their business to other parts of the UK, stopping valuable investment into Scotland. This is something that we’ve already seen following the introduction of the Scottish Private Residential Tenancy (SPRT) in 2017 and the recent RICS national survey has reported a decrease in new housing provider instructions in the UK, particularly in Scotland.
The Demand for Rental Properties
With the cost-of-living crisis and increased interest rates pushing would-be first-time buyers out of the sales market, we’ve seen an increased demand for rental properties in the PRS.
As expected, with this increasing demand and constrained supply, price increases have occurred. Due to this demand, more focus should be placed on encouraging private landlords to invest into the sector to aid the shortage of homes, something that would be beneficial for all parties.
At Rettie & Co. we’ve seen a particular strong demand for affordable rental properties, receiving 1,200 completed unique applications from 670 households from just one advert, removed after a few days.
The Need for New Homes
To meet the current demand, Homes for Scotland has estimated the need for 25,000 new homes each year. Without investment, it’s impossible to meet this number.
We would ask the question - without any investment, particularly in the BTR sector, where are the new homes going to come from to support the rented sector in this time of need and to ensure that home occupiers aren’t impoverished with choice, trapped in poor housing or without a roof over their heads.
On the latest update, our Director of Build to Rent & UKAA Scottish Hub Chair, Gillian McLees said:
“With exact details of the extension with respect to private housing providers not yet released, this uncertainty is not conducive to the future success and delivery of the desperately needed homes across Scotland. I am disappointed that what started as emergency legislation to help the most in need across Scotland during unprecedented global circumstances, has become a way of exacerbating the current housing crisis caused by chronic undersupply. It is important that the build to rent industry, as a quality, professionally managed homes provider in Scotland, is part of the conversation around this issue and we intend to continue to collaborate with the Scottish Government and investors into Scotland to find a solution.”
Our Director of Lettings, Karen Turner said:
“The initial rent freeze came as a surprise when it was announced last year. With the Scottish Government now proposing to extend this from 31 March 2023 this will further impact investment into the PRS from private housing providers. Private housing providers play a key part in providing homes. If they are further impacted, then we will see many of them drop out of the market all together or perhaps move their investments to England. We need to be working together with government across all sectors to provide solutions for the shortage of homes in Scotland not putting blockers in the way.”
Rettie & Co. are working closely with our colleagues in SPF, HfS, UKAA and Investors on the issue and we will keep clients updated throughout.