Actual rent rises may be below figures in surveys

PropTech firm PayProp UK claims actual rent rises may be well below those suggested in some surveys.

In response to the Scottish Government’s consultation on its recent rent control legislation, PayProp cites data based on hundreds of thousands of real rental transactions made through the platform.

Managing Director Neil Cobbold says: “According to our figures, the average rent increase for renewed Scottish tenancies in the 12 months to November was 7.2 per cent compared to a UK-wide average increase of 7.5 per cent.

“Other recent surveys reported much higher numbers, but they either looked only at new tenancies or only at new rental listings, which we believe skews the numbers.

“Historically, new tenancies have been the greatest single contributor to increases. Excluding new tenancies from the numbers therefore removes a major skewing effect on rental growth figures. And of course asking prices do not reflect true rental prices as invoiced and paid in real rental transactions.”

Cobbold says that at the other end of the scale, the rate measured by PayProp far exceeded the Office of National Statistics figure of 3.8 per cent.

However, ONS data includes all tenancies, including those that are still within a fixed term (that is, without rent increases), while PayProp looked only at existing tenancies with a rent increase during that period.

The Scottish Government is currently considering submissions, including PayProp’s, to a consultation on the bill.

Cobbold hopes that more accurate data on rents will help the Scottish government to make an informed decision on whether or not to extend the rent freeze in March.

He says: “As property industry professionals, we all recognise the need to protect and support tenants through this cost of living crisis. But if we want to solve the problem, we need to understand it first, and the perception that rent growth in Scotland has been out of control isn’t supported by the data.”

Cobbold warns that freezing the rents that landlords can charge could actually make life more difficult for tenants in the medium term.

“While some tenants have been temporarily protected from rent increases, the moratorium has damaged landlord confidence, which could have had the unintended opposite effect of putting upward pressure on rent growth if more of them quit the market.”