Rent cap law drives up Scottish rents to record highs

Average rents in Scotland for new tenancies in the private rented sector (PRS) have soared by 11.4% – the third consecutive quarter for a double-digit increase, one lettings portal reveals.

Citylets says that since the Cost of Living (Tenant Protection) (Scotland) Act 2022 came into effect to protect tenants from excessive rent increases, it has had the opposite effect.

Renters have also seen a worsening in the supply of homes to rent as landlords leave the PRS.

The report shows that nearly all major regions in Scotland experienced double-digit increases in rents in the second quarter of 2023.

‘Unique times for the Scottish private rented sector’

The managing director of Citylets, Thomas Ashdown, said: “We are living through unique times for the Scottish private rented sector.

“Never before have we recorded such steep and sustained annual price appreciation across a single region, never mind across the country as a whole.”

He added: “A vicious circle of low supply leading to higher rents for new tenancies and less movement within the sector seems to have been set in motion as the rent gap between open and closed markets grows.

“Add in anecdotal evidence of landlords leaving and pressures on would-be property buyers and it is clear we have a difficult path ahead in achieving balance.”

Rent cap’s impact on Scotland’s PRS

The firm’s report highlights that the rent cap’s impact on Scotland’s PRS has been ‘substantial’ and that the foreseeable future ‘does not offer much promise’ of significant improvement.

It is predicting that there will be high demand from tenants but low supply, with a ‘modest’ increase in stock levels in the second predicted which were still 10% lower than last year.

Also, the average cost of renting a property in Scotland broke the £1,000 barrier for the first time in the first quarter of this year.

Citylets say the average will continue climbing and is now £1,081 on average.

Landlords are also seeing void periods of just 19 days.

‘Demand for good quality accommodation’

Adrian Sangster, of letting agents Aberdein Considine, said: “Demand for good quality accommodation remains at record high levels.

“This demand is not only restricted to the major cities, we are also witnessing unprecedented enquiries for properties in our towns and rural areas.

“With the lack of housing availability, people are being forced to widen their parameters, which is fuelling higher rentals in areas traditionally impervious to wider market trends.”

He added: “The media have recently been referring to a ‘ticking timebomb’’ in the mortgage market.

“Scotland’s PRS timebomb started ticking several years ago and despite many warnings, the Scottish government appear happy to let it explode with those they claim to be protecting, suffering the most.”