No fewer than 85 per cent of letting agents say that landlord clients have expressed a wish to sell up in Scotland.
The Scottish Government recently introduced a rent freeze to last until at least April and a new Propertymark survey shows the impact this is having on the sector.
Under the Cost of Living (Tenant Protection) (Scotland) Act, Scottish ministers must report and review every three months on the need for the provisions in the Act to either be continued or to end, based on the evidence available at the time.
Using research carried out by the membership body, Propertymark has expressed immense concerns about how the measures are affecting those working in the private rented sector in Scotland, detailed in its response the Scottish Government’s call for evidence.
Feedback from Propertymark members in Scotland found 85 per cent of agents had landlords who had expressed a wish to withdraw from the private rented sector and sell their properties and 68 per cent of agents have already seen an increase in notices to sell due to the temporary measures.
Propertymark believes that the legislation is disproportionate to the scale of the problem in Scotland, with many of its member agents saying that landlords did not raise rents in the last year.
One of its agents - not named by Propertymark - says: “Many landlords who have not increased rent and had properties below market value for years are now considering this position and feeling they must raise to market rent from now on and keep up with annual increases, whereby before they had not considered it.”
Over 80 per cent of those that Propertymark surveyed stated that they would be inclined to increase rents as a result of the Act as landlords want to have reassurance that they can cover any rental loss as well as rising cost of maintenance and repairs, utilities and mortgage interest hikes.
The first report, covering the period October 28 to December 30 will be laid before the Scottish Parliament in the first half of January.
Timothy Douglas, Head of Policy and Campaigns at Propertymark, says: “The measures introduced under the cost of living legislation are disproportionate to the scale of the problem and have only driven more landlords out of the sector.
“Feedback from Propertymark members shows that because of the measures introduced by the Scottish Government the desire for landlords to remain in the sector and increase the number of homes for people to rent is stalling.
“Alarmingly, the temporary nature of the legislation means that the impact is not fully realised yet but if the changes are extended then there will be greater consequences.
“The private rented sector is a key solution to resolve the housing crisis but if the Scottish Government continue with policies that disincentive landlords this will only make the situation worse.”
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Although this is happening in Scotland at the moment, and perhaps also Wales, I'm sure this sort of ill-consider and highly counter productive interference, i.e. attempts at various forms of Rent Control, is on its way to England too.
Ironically even just the threat of it is producing the opposite effect to what its pundits intended - or at least claimed was their rationale for it (which are probably two very different things)..... for example, my wife and I have been renting out properties for about 23 years now and - for a number of good reasons - generally only increased rent for any particular tenant once every three or four years or so and even then aimed to keep it below then current market rents so they wouldn't want to move out.
Now however (but only very recently), in response to the threat of being one day told we can't increase rent for a few months, or a year or whatever - even if we wanted or needed to - we have decided to always increase rent for every tenant at least once a year "to keep up" just in case.
Also, of course, the threat of rent controls coming in is yet another factor setting landlords (including us) thinking about Selling Up and Getting Out.
So even just the *threat* of Rent Controls is another beginning-of-the-end kiss-of-death for the PRS......
I like to draw comparisons between rent control and official price fixing, e.g. the infamous policy of "material balancing" in the Soviet Union from the 1920s until the whole regime finally collapsed in 1991. They had what ended up becoming a monolithic, and of course utterly incapable and incompetent, "central planning committee" called "Gosplan" (google it if you've never heard of it) that attempted to predict supply and demand, then set prices, a year in advance for absolutely everything including about 20,000 basic commodities for a start, plus anything else they could think of and add to the list of things they then rigidly controlled in their ideologically fixated authoritarian way.
Of course it was doomed from the start, but they weren't willing to admit that and kept up the pretence (lie) of it all for decades while millions of people suffered every day from a total loss of choice in almost every type of product (food, electrical goods, clothing... you name it).
Famously, this sort of State Interference inevitably led to chronic and spectacular shortages of even basic food and goods, with empty shelves in most shops for months on end and then huge queues of customers suddenly forming outside any shop that had briefly managed to somehow obtain a few boxes of stock of anything (people urgently bought anything they could lay their hands on because even if they didn't want or need it they might be able to use it to barter with for something more useful)....
Well, guess what? The steady introduction of rent controls in the UK during the 1960s and 1970s gradually led to a similar situation for tenants, i.e. less and less choice due to increasing shortages of available accommodation, with worse and worse value for money. Even though rents were kept artificially low by official "Rent Officers", landlords had no motivation or interest in cosmetically maintaining (let alone improving) their properties so tenants were forced to live in increasingly dull and grotty properties. There was generally nowhere better for them to move to and anyhow, because they'd been turned into "sitting tenants" (another huge problem, and the abolition of the s.21 notice is leading us back to it), no landlord would be willing to take them as they were all waiting for their existing tenants to move out so they could Sell Up and Escape.
in summary: Rent Controls, and even just the threat of them is another Kiss of Death for the Private Rental Sector.
Not just rent controls. At PMQs today no less than three Labour MPs tugged at the heartstrings with tales of tenants being “thrown out” because of S21. One allegedly had them crowded in her office keeping warm. Do they not realise the long and tortuous, not to mention expensive, process it takes to actually get these tenants out? Of course Sushi Sunak insisted that this CONservative government was protecting tenants with legislation preventing rip off fees, deposits etc.
Anyone expecting THIS CONservative government to defend landlords is simply deluded.
It's ironic that - just as with the mere threat (let alone implementation) of rent controls encouraging landlords like me to start increasing rents whenever we can while we're still allowed to (but without the controls we hardly ever did) - even just the *threat* of abolishing s.21 is leading to quite a few landlords I personally know then serving s.21 notices they otherwise would never have thought of, just because this latest change in law (currently still only threatened, but almost certainly on its way) was the last straw for them and has led to them deciding to Sell Up and Get Out.
As with so many of these misguided, ideologically driven legislative gimmicks that seem designed purely to impress tenants (especially the more easily taken in and militantly anti-landlord ones) and woo their votes, there are serious unintended consequences... with the new law(s) often resulting in the exact opposite of what they were allegedly going to achieve and/or causing other very detrimental results.
None of the rental sector will get better under gov control until they are directly affected by it. Remember the great stink ?
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