A prominent agent says the shortage of rental property is now so acute, and like to get still worse, that those letting short-lets Airbnb-style homes should consider switching them to the mainstream market.
David Alexander - managing director of DJ Alexander, part of the Lomond Group - says: “There is a clear need to encourage more property owners, landlords and investors to enter the private rented sector to meet this unprecedented demand.
“This is perhaps the time when those who shifted to short-term letting should consider reversing that decision particularly as the short term and holiday letting sector is about to experience additional costs associated with increased regulation.”
Alexander says the position is particularly acute in his home country of Scotland, where the Index of Private Housing Rental Prices reveals that rents rose by 2.3 per cent in the 12 months to December 2021.
This compares to a 1.8 per cent increase in England and a 1.5 per cent rise in Wales over the same period. The Scottish figure is the highest annual growth rate since records began in 2012.
Alexander says rents are rising rapidly due to an unprecedented shortage of stock coupled with an influx of workers as the economy starts to recover from the pandemic and the situation is likely to get worse before it gets better.
A recent report by property consultancy Avison Young predicts that Scotland will experience substantial growth this year with about 8,500 additional jobs forecast for Edinburgh, which would see a record of 382,000 workers in the labour market. Glasgow is expected to add 9,600 jobs lifting its job total to 449,000, which would also be a record.
“Given the pace of the recovery and the forecast increase in the number of jobs to record levels the issue of supply in Scotland is likely to continue with both Edinburgh and Glasgow facing severe shortages this year” states Alexander.
“This data on rising [rents] and limited supply comes at a time when the Labour party has said that they would place an additional tax burden on buy to let landlords to help pay for the forthcoming National Insurance increase.
“Yet again, we see politicians continuing to see the PRS as an easy target for additional taxes without considering the service the sector provides or, more crucially, how they would replace the homes tenants currently live in if the sector were to shrink in size.”
Alexander concludes: “The concern is that the PRS is often seen by politicians as a soft target to win voter approval without consideration for the hundreds of thousands of people who live in homes provided by the sector.
“The current levels of demand should prompt governments to encourage more landlords, and more investors to enter the market to meet this growing market. If action isn’t done to do this then there is real potential for shortages in the future and people will be unable to find places to live.”