Small-scale landlords are key to solving Scotland’s housing crisis

Scotland’s housing emergency could worsen without proper backing for small-scale, part-time landlords who now dominate the rental market, property expert David Alexander says.

His warning comes as the Housing (Scotland) Bill prepares to become law, with fresh research highlighting how crucial small landlords have become over three decades.

A comprehensive study by the UK Collaborative Centre for Housing Evidence, examined the transformation of Scotland’s rental landscape between 1991 and 2024.

The findings show that small-scale, part-time investor landlords have become the backbone of the private rented sector during this period.

Crucial landlord communication

Mr Alexander said: “It is clear that this important report contains key ideas on how to grow the PRS in the future.

“Greater collaboration, consultation and communication with landlords is essential if we are to ensure the PRS continues to play an integral role in the supply of homes in Scotland.”

He added: “The report found that policies focused on the PRS would appear to discourage private investment and are likely to further exacerbate imbalances between supply and demand.

“It calls for greater support and understanding of small-scale private landlords through regular surveys and the establishment of a new landlord panel to advise and consult with government over the future direction of the sector.”

Dedicated landlord panel needed

The research advocates establishing a dedicated landlord panel to work with government alongside conducting regular surveys, arguing current policy relies too heavily on limited consultation feedback.

According to the study, this gap in reliable data means ‘an overreliance by policy makers on feedback from consultations, which are often completed by a limited number of interested parties and make it difficult to claim that policy interventions are evidence-based. They therefore risk being ineffective and prone to unintended consequences.’

The report also highlights that Scotland’s housing system is seeing unprecedented pressures around supply, affordability and energy efficiency standards.

The pandemic, followed by the cost-of-living squeeze and ongoing housing emergency have created urgent demands for solutions.

Landlords are leaving the sector

The report also notes these crises have ‘resulted in policymakers scrambling to generate solutions within a system that is not amenable to quick fixes, and which has been subject to years of cumulative legislative change.

‘Many unintended, but not entirely unforeseen consequences have arisen in the PRS from recent interventions. For example, a rise in rental arrears following the introduction of the ‘eviction ban’ and an increase in market rents following the introduction of the ‘rent cap’.’

The study also examined the Bill’s proposed rent controls alongside the recent Additional Dwelling Supplement rise from 6% to 8%.

Researchers warn that ‘this increasing legislative burden, high costs, low yields and the availability of lower risk and higher yielding investments elsewhere, have already made the sector less attractive to investment, and there is evidence that landlords are leaving the sector.’

The report says: “Therefore, it is more important than ever to reflect on what we know about landlords and to use this knowledge to re-evaluate the current direction of travel with the aim of stabilising investment patterns.”