Scottish landlords exit as housing crisis deepens

Scottish landlords exit as housing crisis deepens

16:57 PM, 3rd May 2024, About 3 months ago 14

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Scottish landlords are throwing in the towel and leaving the sector due to the impact of rent controls – and the prospect of permanent rent rise restrictions, warns one industry body.

In a video interview with Property118 which can be viewed below, the Scottish Association of Landlords (SAL) says Scotland is facing a housing crisis that will only get worse if landlords continue to leave.

The industry body is urging the Scottish government to create legislation that supports landlords and encourages more investment in the private rented sector.

Largest and sole representative body exclusively for landlords and letting agents in Scotland

The Scottish Association of Landlords has grown to become the largest organisation for landlords and letting agents in Scotland.

John Blackwood, the organisation’s chief executive, tells Property118 how the organisation has evolved.

He explains: “I was one of the founding members and directors of the Scottish Association of Landlords.

“It all started in 2001 just after devolution and the Scottish Parliament was introduced.

“Back then we didn’t have a national organisation for landlords and letting agents in Scotland, it was mainly just small local groups.

“We were meeting with representatives from the government at the time and they said we need to speak to a national body of landlords.

“We went away and then created the Scottish Association of Landlords. Today, we stand as the largest and sole representative body exclusively for landlords and letting agents in Scotland.”

Rent controls are not good for landlords or tenants

Introduced in 2022, the Cost of Living (Tenant Protection) (Scotland) Act, aimed to protect tenants from rent increases and ban evictions.

Despite the rent cap, average rents have surged by 14.3% in Scotland.

The emergency rent cap came to an end on 1 April, but the Scottish government has published its new Housing Bill which includes proposals for long-term rent controls.

The new bill could allow Scottish Ministers to create rent control areas and cap rent rises during and in between tenancies.

Mr Blackwood explains more landlords are leaving the sector as a direct result of rent controls.

He said: “There is a political agenda for rent controls because the SNP are in a coalition government with the Scottish Greens and that’s set out in the Bute House Agreement.

“It’s very clear within that agreement between the two parties that in order to share power in Scotland rent controls will be a permanent fixture.”

Since the interview with Mr Blackwood, Humza Yousaf has resigned as First Minister and the coalition with the Greens has been dissolved.

Mr Blackwood says the Bute House Agreement has damaged Scotland’s housing market.

He said: “Hopefully with these changes (in the Scottish government), we will see a more pragmatic and collaborative approach to housing policy that will allow for discussion and implementation of long-term measures that will end Scotland’s housing crisis.

“The Bute House Agreement has systematically damaged investor confidence in building new homes and has forced many landlords to sell up, with institutional investors openly saying they no longer see Scotland as an attractive place to invest.

“The Scottish government must now act urgently to reverse their anti-landlord policies.”

He continued that no matter which First Minister is elected rent controls are not the answer to solve the housing crisis.

He said: “Rent controls are a very blunt tool to deal with a raft of issues regarding Scotland’s housing crisis. In the long run when you have rent controls it means one thing: rents go up.

“You then have a lack of supply because landlords opt to leave the sector and there’s fewer properties available to let.

“Those two things are not a good thing for landlords and letting agents and certainly not for tenants either.”

22,000 homes have been lost from the PRS

Former tenants’ rights minister Patrick Harvie claims landlords have nothing to fear over rent controls and the new Housing Bill will create a “healthy private rented sector in Scotland”.

However, Mr Blackwood explains rent controls will do more harm than good.

He said: “Obviously we have political differences and Mr Harvie has always been clear on the political direction of rent controls and reforming the private rented sector in Scotland.

“However, this causes a lot of damage to the private rented sector in the long run as landlords leave.

“Landlords with good experience and who provide much-needed homes, opting to sell, means that the available pool of accommodation to renters which Mr Harvie wants to make better is diminishing as we speak, and I don’t think that’s a good thing.”

Mr Blackwood adds that despite the Scottish government denying landlords are leaving the sector, the evidence suggests otherwise.

He explains: “The Greens believe landlords are not leaving the sector, but all our evidence suggests they are.”

According to SAL, nearly 22,000 homes could have been lost from the private rented sector in the last year.

Mr Blackwood says: “We are seeing from our members that they are selling up and our letting agent members who manage a huge amount of properties in Scotland are saying they are losing an average of 10% of their stock.

“Everyone is saying landlords are leaving – the only people disagreeing are the Scottish government. The Scottish government wants to see those figures reflected in landlord registration statistics.

“In Scotland, it’s a legal requirement to register with your local authority if you rent out a property.

“The government do have national figures they can reflect on and at the moment they are saying there is not much change and are not seeing landlords exiting the sector.

“The issue is landlords only update their registration every three years, and if they sell a property, they often forget to update the register.

“It could be the best part of three years before we see the effect of the current legislation and exactly how many landlords have left.”

Costs going up for landlords

Mr Blackwood explains other than rent controls, one of the biggest factors affecting landlords in Scotland is costs going up.

He said: “The biggest problem we have is landlords are not seen as people who are running businesses.

“We are not able to offset costs against our rental income, unlike other businesses.

“We are this unique business where we have not been able to pass on our increased cost to our customers who happen to be renters.

“Landlords are not treated as businesses by any government department, and we should be because we provide homes for people to live in.”

He adds: “Many landlords have expressed concerns regarding the financial viability of their businesses.

“In a survey we did just before Christmas, respondents shared that one in ten let properties are no longer financially viable and 56% said they would consider exiting the sector within the next few years.”

Government must act on empty words

Across Scotland, four councils have declared housing emergencies.

Mr Blackwood explains the Scottish government need to ensure landlords stay in the sector to help solve the housing crisis.

He said: “Every local authority will tell you that there is great pressure, especially on their homelessness services. Largely because landlords are selling up and giving notices to their tenants who then can’t find anywhere to live.

“We need to see legislation that is going to support landlords to encourage them not just to stay in the sector but to continue to invest in the sector.

“We have a housing emergency in Scotland, and we need more homes, not less homes for people to live in.

“How can we create those homes? Well that’s where landlords can come in as part of that solution.”

Mr Blackwood says the government must act on “empty words” and ensure landlords receive significant support.

He said: “The more landlords that sell up, the bigger the problem that’s going to create further down the line.

“Landlords need to be respected and recognised by the government as a vital part of the housing sector in Scotland and more investment needs to be encouraged.

“We had a recent meeting with Paul McLennan, the housing minister, and he reiterated that all private landlords are vital to the housing sector, but we don’t see the legislation that backs that up.

“At the moment it’s very much empty words and we are keen for the government to put the weight behind those words and demonstrate to us that landlords are valued and are wanted in Scotland.”

Watch the video below to find out more about how holiday lets are affecting Scotland and what the future holds for Scottish landlords.


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Stephen Hill

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10:42 AM, 3rd May 2024, About 3 months ago

The Scottish Government will plough on with more of the same old rubbish despite their apparent reset.
We just last week completed a sale of a lovely flat in Glasgow Southside to our tenant. Pleased to sell it to her as she was an exemplary tenant. We were just sick of the constant interference and implied threat from SG and GCC over the past few years, with little likelihood of a reversal. Once again though, another property lost to the PRS that will likely never return.

NewYorkie

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11:36 AM, 3rd May 2024, About 3 months ago

Institutional investors will not invest in BTR.

Mr.A

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12:46 PM, 3rd May 2024, About 3 months ago

This is the part of this puzzle the Scottish government is ignoring ,once this is taken into account, the facts speak for them selves , I've sold 9 Hmo in the last 2 years ,too much unneeded regulations.
“The government do have national figures they can reflect on and at the moment they are saying there is not much change and are not seeing landlords exiting the sector.

“The issue is landlords only update their registration every three years, and if they sell a property, they often forget to update the register.

“It could be the best part of three years before we see the effect of the current legislation and exactly how many landlords have left.”

Michael Booth

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14:03 PM, 3rd May 2024, About 3 months ago

Do you blame them ,you have a government snp who play the prs has a vote winning opertunity making it their sole purpose to blame all the policy woes onto the fault of greedy landlords, wake up snp before its too late .

Jack Craven

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14:29 PM, 3rd May 2024, About 3 months ago

If all the landlords sell up those houses dont just disappear they are still there, if private individualls don't buy them, who will, Landlords ?

NewYorkie

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15:06 PM, 3rd May 2024, About 3 months ago

Reply to the comment left by Jack Craven at 03/05/2024 - 14:29
If landlords sell up because it's not worth the hassle, why would another landlord buy?

Jack Craven

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16:53 PM, 3rd May 2024, About 3 months ago

Reply to the comment left by NewYorkie at 03/05/2024 - 15:06
I wonder if this will fix the housing problem ?

Reluctant Landlord

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17:13 PM, 3rd May 2024, About 3 months ago

Reply to the comment left by NewYorkie at 03/05/2024 - 15:06I have thought about this and the only answer I can come up with is landlords that wont be planning on taking any notice of legislation/licencing etc.
Those that have bought the property 'cheap' from an outgoing LL who can't sell it on to a FTB and so are hoovering up properties to rent out themselves? Only profitable by taking a risk and cutting standards/not abiding by legislation and dealing with non payment etc in their own 'special way' perhaps?
Otherwise it is wealthy second home owners willing to swoop and just pay the increased council tax when its empty because they can afford to?
Or perhaps second home owners who will also 'lend' it to friends to use for 'free' when they don't use it themselves. How is the Scottish government going to know exactly especially if its the owners name paying the council tax and the utilities are in their name?
Secret Air BnB.

Duncan Forbes

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19:40 PM, 3rd May 2024, About 3 months ago

England to follow if not already, Labour will get in and go down the same path BY BY PRS.

Cider Drinker

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20:18 PM, 3rd May 2024, About 3 months ago

Reply to the comment left by Jack Craven at 03/05/2024 - 16:53
The housing crisis is not caused by the PRS.

It is caused by over population. Nothing else.

Some of the houses being sold by landlords may be bought by other landlords however, it’s more likely that the properties will be bought by owner-occupiers or switched to holiday letting. It would be a brave landlord (or a fool) to enter the market at this time.

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