Propertymark provides evidence on impact of Scottish letting legislation

Timothy Douglas, Propertymark's Head of Policy and Campaigns, has  given evidence to the Local Government, Housing and Planning Committee of the Scottish Parliament warning of the impact of proposed legislation to limit rent increases and evictions on the supply of private rented property in Scotland.

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While recognising the difficult economic climate, he told the Holyrood committee that Propertymark’s member agents have already seen a decline in the number of homes available for rent because of rising costs levied on their landlords and warned any form of rent control in the short and longer-term will mean more landlords selling up, resulting in even fewer and rental homes available.

He explained that landlords are also experiencing rising costs and warned that such severe measures would have a detrimental impact on the quality of private rented sector accommodation available.

Restrictions on rent increases and evictions

The Scottish government is bringing emergency legislation in to restrict rent increases and impose a moratorium on evictions until March 2023. Parliament agreed that all three stages of the Bill would happen within days and therefore while the committee has no formal role, it’s hearings help inform scrutiny of the Bill in the chamber in the coming days.

While there are exceptional circumstances when evictions will be permitted, and landlords can apply to a rent officer to increase rents to cover 50 per cwnt of increases in prescribed charges they incur, the restrictions are likely to have a significant negative impact on landlords.

Supply of property must be protected

Giving evidence, Douglas explained the rent freeze was not a balanced or proportionate response to the current situation and could lead to a reduction in both supply and quality of rented property. He detailed examples from members in Scotland, of the support that landlords have given to tenants throughout the last three years and set out the important role played by agents and professional bodies in maintaining tenancies and helping tenants.

The data from one of our largest member agencies who manage just over 3,000 tenancies across Scotland shows in 2021 they issued 16 notices for arrears but 66 for landlords selling and in 2022, up until September, there were 18 for arrears and 69 for selling. Landlord selling notices are up from 33 in 2020. All roads lead back to supply and selling is one of the exemptions proposed in the legislation.

It needs to be acknowledged that throughout the pandemic and beyond letting agents and landlords have worked extremely hard to maintain tenancies and keep tenants in their homes. For example a letting agent in Glasgow paused all rent increases, some landlords withdrew all rent charges or reduced amounts that were owed, and they have capped increases at five per cent for two to three years which they think is a reasonable response.

Agents as a whole are not bartering on rent prices or offering to the highest bidder, they are checking at length a tenants’ affordability and trying to be accommodating and find solutions as best as possible. We must remember the environment in which private landlords are operating in: higher costs to buy-to-let through the additional surcharges that have increased; higher interest rates; higher tax on rental income; they can no longer offset interest mortgage costs; changes to the wear and tear allowance; the removal of mandatory grounds for possession; the impending energy efficiency costs. All these things are playing into the cost factor for private landlords going forward.

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Timothy Douglas Head of Policy and Campaigns | Propertymark

Propertymark highlighted the role of landlords as housing providers with responsibilities and overheads, many having to meet the costs of buy-to-let mortgages and other charges which are increasing at a prohibitive rate, such as insurance and energy efficiency requirements.

He pointed out to the Committee that landlords selling their properties is a major reason for evictions, and that this is an exemption under the new legislation, highlighting an existing lack of confidence in the rental sector that would not be addressed by these measures.

Evidence was also given by Scottish government officials responsible for tenants’ rights and housing services, charities representing tenants’ rights, and the Scottish Association of Landlords (SAL). Propertymark and SAL are working together on a possible legal challenge to this legislation, and we will keep members updated on progress with this.

Watch the evidence session
Local Government, Housing and Planning Committee

4 October 2022, 9:00am