Scotland’s rent cap disaster – a warning to landlords and tenant groups everywhere

Scotland’s rent cap disaster – a warning to landlords and tenant groups everywhere

10:20 AM, 1st December 2023, About 3 months ago 30

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News this week that the rent cap in Scotland has led to higher rents will be a story ignored by the likes of Shelter, Generation Rent and Acorn.

But my first thought was, who’d have thunk it?

Capping rents at a time when landlords are seeing their overheads increase and profits fall was always going to end this way.

Rent caps have never worked, anywhere. But we still have loons who don’t understand how the private rented sector works.

And the story on Property118 has the man responsible, Patrick Harvie, STILL insisting that this is the best route – and he is looking at long term rent controls.

He wants a new law to control rents in Scotland to help with ‘rent affordability’. This is baffling – there’s no connection with rising rents and the current rent cap. Madness.

Rent rise being capped at 3%

While tenants will see a rent rise being capped at 3% – or 6% in special circumstances – in an existing tenancy, the real issue is that tenants in Scotland face a huge leap in rent when moving.

That was always expected by landlords who will react to the reality of having a tenant who won’t have to face a rent increase that matches an increase in their costs.

But once the landlord has an empty property, they will have to calculate the market rate (which is going up because every other landlord is in the same boat) and pay for their rising costs.

The other downside is that landlords are selling up which brings its own issues for tenants.

Fewer homes to rent means higher rents because of intense tenant competition.

I keep saying the same thing: It’s all about supply and demand.

The ONLY way to reduce rents in Scotland is to boost the number of homes available.

Double council tax for second homes

I see too that Scotland will allow for the council tax on second homes to be doubled from next April, affecting 24,000 properties.

This was always going to happen, and the councils will want to push homes back into the PRS – if the owners sell to landlords.

It is still a case of people in government deciding what they can do with someone else’s property.

Though I am staggered at the official figures from the statistics chief in Scotland for the higher rents – these are official figures so there’s no accusation of making them up.

Two-bedroom homes saw a rent increase of 14.3% in the year to the end of September.

That is simply astonishing for the most common type of rented property in Scotland – especially since wages haven’t increased by that much.

And then there’s an incredible 15.1% rise for one-bedroom homes. Astonishing when a rent cap is in play.

Generation Rent, Shelter, Acorn and the Labour Party

We need the likes of Generation Rent, Shelter, Acorn and the Labour Party to take a step back and look at this situation in Scotland.

There’s a lesson to be learned and it is this: Punishing landlords is not the way to resolve the shortage of homes to rent in Scotland, or in England and Wales.

Ignoring the facts of the situation doesn’t make rent caps right.

So, here’s a message to the tenant activist group: Stop making random statements that landlords are raking it in, that tenants are being exploited and a rent cap will solve everything.

It really won’t.

We also need politicians to be honest about the impact of rent caps on the private rented sector.

And we need politicians to have some intelligence to appreciate what happens when tenants aren’t protected when fed-up landlords sell up and leave.

Because protecting tenants is the last thing you do – unless you buy out the landlords who want to sell.

But I’m guessing that wanting intelligent politicians is a request too far.

Landlords in Scotland

To all those landlords in Scotland being lambasted for putting up rents, you have my sympathy.

To landlords in England and Wales, be prepared for more calls this winter to help tenants in a so-called ‘cost of living’ crisis.

Not for landlords, you understand. Just tenants.

Even the headline-grabbing loon Sadiq Khan has got in early this year.

He wants the Renters (Reform) Bill to be passed ‘immediately’ – ignoring the Parliamentary process, obvs.

And he calls again for a two-year rent freeze – just who does he think he is?

In recent weeks he has moaned about the homelessness problem in London and here he is putting the skids under landlords.

In a democracy, we really do get the leaders we deserve.

But what did we as landlords do to get this current shower?

Until next time,

The Landlord Crusader


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Comments

Trisha

10:45 AM, 1st December 2023, About 3 months ago

Those who don’t understand how things work on the ground and make up rules which are popular with others who don’t understand how things work. That’s what’s wrong with every system in the UK too. Additionally, we have councils charging full council tax on voids and the disgraceful scam of licensing, pushing more landlords to sell. Tenants then present as homeless to said council, and then they gatekeep, and we all know what happens to tenants then. The lunatics are really running the asylum 🤷🏻‍♀️

Judith Wordsworth

10:53 AM, 1st December 2023, About 3 months ago

"who’d have thunk it?" ??????

NewYorkie

11:02 AM, 1st December 2023, About 3 months ago

The Renters activist groups and supporting politicians [which seems to be all of them for fear of being a common sense outlier] have got themselves into a death spiral. They started the ball rolling and cannot now stop until they achieve their aims. But their aims will see the end of the PRS as we know it, resulting in massive homelessness.
Do they not understand Landlords have choice with how they invest their money?
Right now, many landlords really are struggling to balance their books. Many are failing, and many more will fail in the coming months, especially as they come off fixed rate mortgages. It is argued their properties will be bought by other landlords, so no net loss to the PRS, but that's just nonsense. Landlords don't want to inherit tenants if they cannot increase rents to the market rate, and will need vacant possession in any case to effect refurbishment [all those 'green' improvements tenants are demanding!]. But, why would landlords want to buy more, when the climate is so hostile against them?
And then there will be first time buyers; another of the numerous big political hot potatoes, who will see lower priced properties at the lower end of the market, especially when the brakes come off flat sales following leasehold reform [many thousands of landlords are desperate to escape that trap!]. Therefore, yet more loss to the PRS.
And we haven't yet mentioned the devastating effect uncontrolled immigration is having on housing, particularly in the Social housing sector... Any thoughts on this one, Ms Neate, Ms Rayner, Mr Harvie?

Martin Roberts

11:27 AM, 1st December 2023, About 3 months ago

Shhh…

Don’t mention the ‘I' word.

Fed Up Landlord

11:52 AM, 1st December 2023, About 3 months ago

Bang on.
Ideology over competent governance. Landlords are easy targets for the loony marxist socialist worker type lefty Shelter Gen Rent Acorn idiots- and a vote winner for Generation Z who need somewhere to live when they are
" working from home". Rent caps. Great idea. Works well. Let's keep making the same mistake and hoping for a different result.

TheBiggerPicture

11:52 AM, 1st December 2023, About 3 months ago

Not just rent controls, but price controls don't work. We're on our way to becoming Venezuela.

Unfortunately renters are becoming a larger part of the voting constituency due to mismanagement of the housing in this country.

A democracy is like 3 wolf's and a sheep decking who to eat for dinner. This is why we also have human rights, as a counterbalance to democracy.
However there is a gap here in relation to property rights, where government capture the economic benefit of assets.

Basically legalised theft.

Trapped Landlord

11:58 AM, 1st December 2023, About 3 months ago

Reply to the comment left by NewYorkie at 01/12/2023 - 11:02
Couldn't agree more with every point you make here, I'm my area , landlords are exiting left right and centre, but as you say they are not selling to other landlords at knocked down prices ( which is what they would need to be in order for the model to work on borrowed money ) they are going to first time buyers and down sizers at pretty normal prices. Meanwhile , large newly built factories are opening up which resulting in an influx of Eastern European workers coming to the area, fighting over any kind of rental property they can get. Where we go from here I'm sure I do not know, personally I am enjoining the new higher rents of which we have never seen here before and taking the opportunity of paying down debt at an acceleration rate. Labour look to be coming in soon , but from what I have seen from the likes of Angela Raynor , I can't see anything other that catastrophe since she doesn't seem to understand the sector whatsoever but seems hell bent on continuing war with private landlords. God help us all !!

NewYorkie

12:03 PM, 1st December 2023, About 3 months ago

Reply to the comment left by TheBiggerPicture at 01/12/2023 - 11:52Renters may well become the largest voting block, but I say again, landlords have choice, and many are choosing to take their ball away! So, renters can crack on and vote for all the anti-landlord policies they want, while they sit in a hostel!

john thompson

12:12 PM, 1st December 2023, About 3 months ago

Its the same story with just about every issue the morons in charge deal with these days.
I don't believe they care or are interested in the outcomes, they just want to appease the loudest voices, they want to look like they are with the latest trends and wokery for votes.
They'll bring in the dumest laws and policys just to look good, that or they will agree with what the majority wants to hear and do the opposite if it suits themselves.
Its all show and no substance.

Me, I'm so happy all the moronic policys are backfiring.
Keep biting the hand that feeds you and kicking us while we are down and you see the consequences.
Higher rents for all new tennants then the market as a whole, way less choice for tennants and many priced out of private rentals completely, leading to even bigger waiting lists and very angry people for councils to deal with.

What will be left will be huge corporate landlords that prioritise profit for share holders and don't give a stuff about tenants or their issues, that and bad landlords who dodge the law and provide lousy damp housing for desperate tennants.
All good...what goes around comes around.
Most good landlords (and that's the majority) have kept good tenants in with low rents for years, and keep property's well maintained....and this is the thanks they get.

So as an insurance policy with my existing tennants, unfortunately i will have to put rents up each year just below market level till they leave.

When my tennants leave, like most landlords I will have two major consirations...

1 Do I crack on, put up with the hate, lies, tax grabs, low profits and even more damaging reforms, and then put new tenants in with a big increase in rent to cope..or preferably...

2. Hope by then house prices have increased to make it worthwhile to sell up, cash in, and find a much less devicisive, hateful and problematic investment strategy/sector.

Buy to let is on the casutly floor being booted and stamped on and struggling for its last gasps of life.

With the disaster of a woke Labour government on the horizon, the future for the prs looks incrediblely bleek.

NewYorkie

12:28 PM, 1st December 2023, About 3 months ago

Reply to the comment left by john thompson at 01/12/2023 - 12:12
After years of [stupidly] holding rents below the market rate, and being rewarded with a devastating £20k eviction, I've increased my remaining BTL rent by 15% since 2021, with another 10% to come in January. Yet, it's still below the market rate, and my costs exceed the income. I will sell ASAP, and another 2 tenants and a young child will have to find somewhere else to live, at a much higher rent.

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