The Scottish Parliament’s so called Cost of Living Act – imposing rent controls on the private sector – is backfiring.

That’s the view of Propertymark which has given evidence to a Scottish Parliament committee on the working of the act.

The trade body says the majority of letting agents are continuing to see landlords exit the market and the legislation is causing landlords to increase rents between tenancies to cover future costs.

Rents we’re frozen completely for the first three months of the legislation and are now allowed to rise by only three per cent a year from next month.

Ahead of the committee Propertymark gathered evidence from members. 

An agent in Lanarkshire highlighted the rise in mortgage costs for landlords, outlining that one has had an increase in premiums from £151 to £560. 

And an agent from Inverness said that one landlord – now between tenancies and with a fixed mortgage due to end next year – has increased the rent now in expectation of future costs and changes to legislation. 

Other evidence indicates that the prospect of rent control is promoting rent increases at tenancy changeover – which is allowed under the law – and that landlords are fearful of the policy direction and signalling an intention to sell.

Propertymark’s head of policy and campaigns Timothy Douglas says: “The Cost of Living Act is continuing to have an effect on landlord confidence with the majority of agents still seeing them exiting the market. 

“The crux of the housing problem is that demand is far outstripping supply, yet this legislation is having the opposite effect of pushing landlords out of the sector.

“Rent increases have never been a significant factor in the private rented sector, yet this legislation and the threat of further rent controls is forcing landlords to put up rents between tenancies to cover any future cost implications.

“Costs have increased for tenants, but also for landlords. Those on variable mortgages have seen their payments increase much higher than three per cent, not to mention the other costs involved in property management.”