Scotland’s rent freeze will see landlords ‘remove their properties’

Scotland’s rent freeze will see landlords ‘remove their properties’

15:39 PM, 6th September 2022, About 4 weeks ago 73

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In a bid to help tenants struggling with rising bills, Scotland’s First Minister Nicola Sturgeon has announced a rent freeze for private and public rented properties.

The rent freeze starts immediately and will be in place until the end of March next year – and the government will also introduce a moratorium on evictions during winter.

However, Scottish landlords say the move will see landlords removing their rental homes from the market.

And one leading industry expert says Scotland’s move could see rent controls mark ‘the end of the private rental sector as we know it’.

Rent freeze in Scotland is necessary

Ms Sturgeon told MSPs at Holyrood that the rent freeze in Scotland is necessary because the cost-of-living crisis is a ‘humanitarian emergency’ that could cost lives.

The Scottish government will now table emergency legislation that will ban evictions during winter – and freeze rent until next spring.

Ms Sturgeon also says that the devolved governments need to meet with the UK government about the steps that should be taken to help people – raising the prospect of a UK-wide rent freeze.

The Scottish government is also looking to increase Scottish child payments which will pay extra money to families who are receiving some benefits.

Also, rail fares will be frozen by ScotRail until March 2023.

‘Landlords will be removing their vacant properties from the rental market’

John Blackwood, the chief executive of the Scottish Association of Landlords (SAL), said: “Since rumours of this announcement broke, I have been inundated by landlords saying they will be removing their vacant properties from the rental market, and I don’t blame them.

“Who on earth is going to let a property in the knowledge that they will be unable to meet their own financial and maintenance obligations if their tenants don’t pay the rent or their outgoings increase?”

He added: “Instead of helping tenants pay their bills, the Scottish Government has chosen to penalise people who have provided the homes politicians have failed to provide for decades.

“Once again the Scottish Government fails to grasp the reality of Scotland’s housing crisis and has chosen the easy option of attacking landlords for political reasons which will only further reduce the supply of housing, putting more people at risk.

“This is not a solution; it will only cause more hardship.”

‘Students and others who can’t find suitable accommodation’

He went on: “In just a few weeks, we will see more stories of students and others who can’t find suitable accommodation.

“We warned of this last year, and nothing was done but no one should be in any doubt where the blame for that new crisis will lie. It will be at the door of Bute House.

“Despite reassurances from Scottish Ministers that they value the role private landlords play in provided much needed housing, we are astounded that once again they have chosen to attack landlords at a time when they should be encouraging landlords and tenants to work together to overcome financial hardship.”

‘Rent freeze represents a potentially seismic new frontier’

Tom Mundy, the chief operating officer at Goodlord, the lettings platform, said: “This rent freeze represents a potentially seismic new frontier in UK lettings policy.

“While we understand the need to support tenants, introducing rent control could mark the end of the private rental sector as we know it by stripping away the central incentive which encourages people to invest in buy-to-let properties.”

He added: “There’s a major risk that this freeze will push landlords out of the PRS market at a time when pressure on rental stocks is particularly acute.

“This will squeeze the whole lettings market and create bigger headaches for the Scottish Government later down the line.

“Long-term, it could serve to stymie all future investment in the space and fatally undermine the system.”

‘A fundamental re-write of the UK lettings market’

Scotland's rent freeze will see landlords ‘remove their properties’ property118.com 2The chief executive of tenant referencing firm Vouch, Simon Tillyer, said: “This is a huge step from the Scottish Government. It could be the first towards a fundamental re-write of what the UK lettings market looks like.

“At a time when too many landlords are already leaving the market and there are more tenants than there are homes available to rent, we should not be taking steps that will drive even more landlords away from the PRS.”

He added: “I wouldn’t be at all surprised if this is the final straw for landlords and sparks an exodus. This policy risks creating more problems than it solves.”

Mark Alexander, the founder of Property118, said: “The Scottish government need to consider how many rental properties currently being marketed to let will revert to being marketed for sale as a result of this announcement.

“There is already an acute under-supply of available rental property in many areas of Scotland, and this will only serve to exacerbate that position.”



Comments

Porky

12:54 PM, 7th September 2022, About 4 weeks ago

Reply to the comment left by DSR at 07/09/2022 - 12:28
Well they can try I suppose but eventually they will price themselves out of the market. A gulf will emerge between those with mortgages and those without if interest rates sore. With low borrowing interest rates there was only a marginal difference but now we will start to see a void appearing. You can only charge the going rate for a particular area of the country.

Mr.A View Profile

13:02 PM, 7th September 2022, About 4 weeks ago

Where Scotland goes regarding the PRS ,the rest of the UK usually follow,hmo licencing etc.
I can see the Welsh government then the English government bringing in rent freeze and no evictions and eventually rent control.
The Governments don't learn not all private landlords are millionaires most only have one or a few properties,rent control never works ,if its not worth being a landlord any more we will just sell up.
Maybe its time to sell up and get rid of all the pain ,hassle and headache of being a small private landlord.
Definitely time to leave SNP Land .

DSR

13:53 PM, 7th September 2022, About 4 weeks ago

Reply to the comment left by Porky at 07/09/2022 - 12:54agreed but as is always the case, if this happens supply will lessen, demand go up and so rents will rise....so tenants will shoulder the burden of this.
The reality is it makes no matter WHY a LL raises the rent if the tenant wont pay it then he either lowers it or ultimately sells if not profitable. This means there is still a property available to let, or there wont be. If it remains then its market forces that dictate the rent (current shortage of supply = rent will increase) or lack of available lets - rent will increase.

If there is no appetite for a BTL investor to purchase at all then there will automatically be less coming to market in the first place.

Colin McLauchlin

14:07 PM, 7th September 2022, About 4 weeks ago

I have lost confidence in the SNPs ability over the past couple of years. This decision does not help recover any of that. I gave my tenants 90 day notice of a rental increase in June. I assume that I will still be able to implement this? I also have a property I intend selling and have given the tenant notice, in July so I am hoping that it shall also have no effect on that plan.

Dylan Morris

14:31 PM, 7th September 2022, About 4 weeks ago

I can see more and more landlords leaving the Scottish PRS when a property becomes vacant. That’s an opportunity to sell without going to Court to beg for the Judge’s permission, which may or may not be granted, as this is a discretionary ground in Scotland. And the white paper paper on the rent reform bill in England likewise provides that a request for possession due to a landlord wanting to sell up is going to be discretionary. Forget rent freezes they’re not important at all compared to the ability to sell your rental property, permission which may or not be granted by the Court when your case is eventually heard after 2 years. So whether to place a rental property back on the market when a tenant vacates will need very very careful consideration.

Mr.A View Profile

15:31 PM, 7th September 2022, About 4 weeks ago

What other business does the government stop you selling up if the owners want too .
What other buissnes does the government control to say this is your price limit ,surly market forces control that.
What other business gets charged tax on income and not on profits.
Seems like the property Renting buissnes is unique in being throttled to death by Government,as most landlords are decent individuals and are a easy target . Until they are not there anymore ....

Porky

16:35 PM, 7th September 2022, About 4 weeks ago

Reply to the comment left by Mr.A at 07/09/2022 - 15:31
I mostly agree but last time I looked tax is only charged on profit except interest payments on mortgages which only now attracts a 20% tax reduction.
Everything else you say is true and unlike other businesses.
I'm not sure we are unique in this respect in comparison for instance other European countries like Germany.

Mr.A View Profile

17:01 PM, 7th September 2022, About 4 weeks ago

Reply to the comment left by Porky at 07/09/2022 - 16:35
If your a 40%tax payer you only get a 20% credit so you pay tax on the other 20% ....
Tax on income not on profits....

Porky

17:10 PM, 7th September 2022, About 4 weeks ago

Reply to the comment left by Mr.A at 07/09/2022 - 17:01
No not entirely on income you can deduct maintenance, management, upgrades, insurance and gas/elec expenses just like any other businesses.
I run an engineering business as well and letting properties is a doddle in comparison.

Mr.A View Profile

11:09 AM, 9th September 2022, About 4 weeks ago

Reply to the comment left by Mr.A at 07/09/2022 - 17:01
To clarify ,that only applies to interest paid on a mortgage.

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