Glasgow: A warning to all landlords in the UK?

Glasgow: A warning to all landlords in the UK?

11:46 AM, 19th August 2022, About 2 months ago 19

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Landlords around the UK have been warning for years that with growing numbers leaving the private rental sector, tenants will increasingly struggle to find somewhere to live and, it seems, that this has now come to pass.

Two stories from Glasgow this week highlight what can happen when rented accommodation becomes scarce – but landlords still get the blame for not providing enough rental homes.

The first involves more than 1,000 people wanting to view a one-bed flat for rent.

David Gibb, the operations director at Tay Letting in Glasgow, told us: “Demand in the Glasgow market this year has been incredible – we have had more than 1,000 people wanting to view a one-bed flat in the city.

“We manage thousands of properties in Glasgow, Edinburgh and Dundee and the situation is just as bad in those cities too. For example, we have a property in Edinburgh that has attracted more than 200 enquiries, particularly from students.”

‘There’s a perfect storm building up’

He added: “There’s a perfect storm building up. The tax changes with section 24 four years ago had an impact, plus every landlord in Scotland must be registered and their properties must be maintained properly.

“Demand is outstripping supply and there’s also the anti-landlord rhetoric from the Scottish government who are very much looking to bring in rent controls and this is having a knock-on effect for landlord confidence.

“Also, landlords don’t have the tax benefits they once had, and many are now feeling the squeeze.”

He says that landlords are being accused of profiteering by several political parties but ‘that is not the case’ and this leads people believing that landlords there are being greedy.

Mr Gibb also warns: “What’s happening in Glasgow, and Scotland generally, as well as in Wales, will come home to roost for landlords in England, unless the UK Government looks at the issues affecting the nations in the devolved countries and realise that landlords are a key element to stop the housing shortage in the UK.”

University could not guarantee accommodation

The second story that landlords need to appreciate is the University of Glasgow announcing that it could not guarantee accommodation for its new students this year.

That means students who are within commuting distance from campus being automatically denied accommodation. And those who live further afield, are not being guaranteed a bed.

However, the university blames a growing demand for students on a ‘significant contraction’ in the city’s private rental sector for the lack of accommodation.

They add that this shortage is down to changes in Scotland’s private rental tenancy laws and landlords being impacted by Covid restrictions who then left the sector.

And this is despite the university boosting its own accommodation bed numbers by 25%.

University has been accepting too many new students

Part of the university’s problem has been highlighted by the Students Representative Council (SRC) which says the university has been accepting too many new students for the next semester.

In a statement, the SRC said it was ‘disappointed’ by the university’s approach, particularly after Glasgow’s accommodation crisis last year and they have lobbied the university to have a moratorium on student recruitment – because it appears that over-recruitment is now creating a similar situation.

A spokesperson for the University of Glasgow said that ‘regrettably’ there has been a significant contraction in the city’s private rental market and demand for rooms is substantially ahead of expectations.

They confirmed that the university can no longer guarantee university accommodation and must prioritise accommodation for students who can’t travel from home.

It is also worth noting that there are student accommodation issues in St Andrews and Edinburgh. International students heading to the University of Strathclyde are reported to be struggling to find somewhere to live.

NUS Scotland President, Ellie Gomersall, said: “There are students across Scotland right now struggling to get accommodation for the year ahead, facing a choice between sofa-surfing or paying sky-high rents.

“We urgently need a student housing strategy, with rent controls and a student housing guarantee that ensures government, universities, and local authorities work together so every student has a safe and affordable place to live.”

‘Chronic shortage of supply caused by landlords leaving the sector’

John Blackwood, the chief executive of the Scottish Association of Landlords (SAL), told Property118.com: “As SAL has warned for over a year, a chronic shortage of supply of rented properties caused by landlords leaving the sector is driving up rents.

“Damaging rhetoric and policies from the Scottish Government are a significant factor in landlords choosing to exit the sector.

“A survey of our members earlier this year showed that there could be a cut of more than 36,000 homes available to rent in Scotland as over a third of private landlords look to reduce the number of properties they let out, leading to more housing shortages.”

He added: “For students, in particular, this is also partially attributable to an unintended consequence of the Private Residential Tenancy (PRT) introduced in 2017 that reduced the number of homes available to students as landlords were no longer able to offer fixed-term leases which matched term times.

“The Scottish Government must put in place a real strategy for increasing supply and investment across the housing sector, including in the private rented sector.”

Put the skids under the student accommodation market

Worryingly, it is the Private Residential Tenancy rules that look set to be replicated in England with the Renter’s Reform Bill – and which could put the skids under the student accommodation market.

In Scotland, the new law replaced assured and short assured tenancy agreements, so they are now open-ended – with landlords in England facing the prospect of periodic tenancies replacing assured and shorthold tenancies.

The other interesting issue is that Glasgow council announced last year that it would prevent any more student flats from being built in some areas in the city due to an over-concentration of student accommodation.

But the shortage of student accommodation isn’t just happening in Scotland – the University of the West of England in Bristol has also revealed that its halls of residence were oversubscribed shortly after applications were opened.

This means we will be seeing the same stories in September and October of students being housed in towns and cities many miles from their university campus as they struggle to find somewhere to live.

Except, that for students in 2022 they will find that search even harder.



Comments

Peter

12:22 PM, 19th August 2022, About 2 months ago

It’s unbearable. This train crash has already happened in Scotland and now it’s going to happen in England. I’ve never seen anything so stupid in my life.

I’m a student landlord after 37 years I’m selling up the whole lot.

Chris @ Possession Friend

12:29 PM, 19th August 2022, About 2 months ago

The Govt call it ' Unintended consequences ' but tenant groups don't talk about it.

Yvonne Francis

12:52 PM, 19th August 2022, About 2 months ago

Reply to the comment left by Peter at 19/08/2022 - 12:22
I have been a student landlord for over forty years but if I sell at least a third will go on Capital Gains, and if I die soon afterwards more than another third would go on Inheritance Tax. It would pay me to just keep them empty for a number of years, What's more stupid than that?

JB

14:39 PM, 19th August 2022, About 2 months ago

I think this article should be titled:

Glasgow: A warning to all tenants in the UK?

Tenants need to take action to put a stop to landlord bashing and stupid government policies

Ian Narbeth View Profile

15:20 PM, 19th August 2022, About 2 months ago

Reply to the comment left by Chris @ Possession Friend at 19/08/2022 - 12:29
In the traditional legal sense, these are intended consequences as they are the natural consequences of the Scottish Government's actions.

Even with a more subjective test, only wilful blindness on the part of the politicians lets them think that their policies will not make things worse for tenants.

However, I expect the Scots to double down on their foolishness and probably introduce rent controls.

Chris @ Possession Friend

16:03 PM, 19th August 2022, About 2 months ago

Reply to the comment left by Ian Narbeth at 19/08/2022 - 15:20
Quite Ian,
I was just quoting the govt. but I agree that they have an underlying 'plan'
To eradicate smaller landlords and replace them with [ party-donor ] Build to rent.

Of course these companies will not be building lower end of market housing for tenants on benefit, but high-end serviced, on-site Gym etc.

Housing in this country is being driven to catastrophe by politicians and so-called tenant support groups.

Grumpy Doug

19:01 PM, 19th August 2022, About 2 months ago

Quite a Twitter and media storm in Ireland about a queue of over 150 all wanting to view a rental property in Dublin. UK government - take note. The Irish Government have been a bellwether for what is going to happen over here, or already is in many parts. They enacted their version of S24 prior to the UK, albeit less severe as it wasn't retrospective in the manner of S24. Combined with other anti landlord policies, the rental market in Ireland has tanked. Daft.ie reporting just 729 properties to rent at the moment in the whole of Ireland! Yes, the whole country!! Ireland is now backpedalling on many of their anti landlord policies, but it's too little too late. Landlords will need significant incentives, and assurances, to start investing further.
As Chris says, corporate build to rent is obviously the government's preferred option, but that'll take decades to make an impact, may well be the wrong strategy anyway (60's tower blocks anyone?) and in the meantime leaves a generation of renters in the lurch.
https://www.dailymail.co.uk/news/article-11119259/Hundreds-queue-one-rental-property-Dublin-Irish-capitals-housing-shortage-crisis.html

Chris @ Possession Friend

22:42 PM, 19th August 2022, About 2 months ago

Reply to the comment left by Grumpy Doug at 19/08/2022 - 19:01
The day after Krackers Khan imposed Rent restrictions in London, the Irish experience would travel to London quicker that the crime wave the mayor has presided over ( for which he blames the weather ! )

Bit like him blaming Landlords for the politicians and his mis-handling of the housing situation for decades.

northern landlord View Profile

12:28 PM, 20th August 2022, About 2 months ago

This is Governments shooting themselves in the foot. Apparently there are only about 800 homes to rent in the whole of Ireland due to years of landlord bashing and it looks to be going the same way in Scotland (the link in the article shows people queuing around the block to look at a fairly nondescript terraced house). Now England is setting itself up for the same situation. Suddenly the cost of renting is being highlighted in the media with no attempt to look at it from a landlord’s perspective at all. This all ties in with and reinforces the popular promoted image of “Buy to Leech” landlords. Well, evil doers and leeches have sympathy from nobody and it would be right and proper to see them punished.

I think landlords’ can guess where this is all going to lead. We will have rent controls introduced as a measure to counteract the cost of living rises. This will start with a ban on rent increases for existing tenants and not allowing rent increases for incoming new tenants as old ones move out. Next will be a ban on evictions for rent arrears (with no landlord compensation) just like we had in the pandemic. The Government will love both these moves as the cost will be borne by landlords’ not by the public purse and non-landlords will get a warm glow that somehow justice has been done.

This will of course lead to mass evictions at some point, landlords selling up and the number of rental properties shrinking. The tenants who will suffer will be at the lower income/rent end of the scale. They are not the intended customers for the build to let developers who are seen as the saviours in the housing crisis with their on-site gyms, restaurants and electric car charging points.

I see that now the Irish Government are going to offer incentives to encourage landlords to enter or stay in the PRS. Well maybe the wheel will come full circle in England as well when we have a full blown homeless crisis. But why not learn from the mistakes of others and work to avoid it, rather than carry out populist knee jerk reactions that will ultimately fail?

Grumpy Doug

13:48 PM, 20th August 2022, About 2 months ago

Reply to the comment left by northern landlord at 20/08/2022 - 12:28
I agree, however government fails to recognise that housing isn't an asset that can be switched on and off at a whim. It took me many years to build my rental business, and if we get to a point (like the Irish) where the government has a lightbulb moment and recognises the damage of its policies, it's going to take a long time to reverse that damage. Never mind that many landlords will have cashed out and will be supping a cold beer by the pool in the Canary Islands, so they won't be helping out. Those that do will want strong incentives, and cast iron guarantees that government won't screech into reverse again. Interesting times ahead

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