Despite research and urgent calls to the Scottish Government to end the Cost of Living (Tenant Protection) (Scotland) Act 2022, it has announced yet another extension to the legislation beyond 30th September 2023 for an additional six months.
If voted in, not only will the temporary legislation continue to damage landlords struggling with spiralling costs and inflation pressures, but also tenants stuck in a highly competitive and shrinking market.
To reflect more recently on the impact that the controversial Cost of Living (Tenant Protection) (Scotland) Act 2022 is having on the ground, Propertymark surveyed its members in Scotland for the third time and discovered the devastating impact that the legislation is having on the private rented sector in Scotland.
Landlords exiting the market
It’s been argued time and again that the legislation is not helping relieve homelessness and financial hardship, but is actually more harmful by pushing landlords and investors out of the market. 100% of responding agents in Scotland are now reporting evidence of landlords looking to sell their buy-to-let properties directly because of the legislation.
In Propertymark’s latest housing insight monthly data collected from members, it was reported that each available privately rented property across the UK receives an average of 10 applications.
Lack of supply and rising demand is only worsening, the recent research in Scotland shows that more and more landlords are looking to exit the market.
A higher rental cap of 3% was introduced by the Scottish Government in April 2023, however, Scottish agents argued that this is not nearly enough to cover outgoings, with one landlord seeing an increase in their mortgage payments from £151 to £560, a rise of 270%, due to interest rate rises.
As well as this, all other services and trades such as administration, maintenance costs and energy bills have increased and have not been penalised by a cap, placing further pressure on landlords.
Throughout the COVID-19 pandemic, it was evident that agents and landlords worked hard to keep rents as low as possible and tenants in their homes.
However, since the legislation was introduced in October 2022, this has forced landlords to increase rents just to break even with a record increase of 4.5% reported in the 12 months to January 2023, which is the highest annual percentage change since the Office of National Statistics records began in January 2012.
The Scottish Government is urged to discuss working options with industry professionals as the ongoing temporary nature of the legislation causes more instability in an already fractured market.
Propertymark sits on the Scottish Government Stakeholder Group on Rent Control Measures to look at future legislation in Scotland, which will discuss how we can transition away from the current restrictions. The industry body has also met with Scottish Government officials in relation to future proposals that may be included in the Housing Bill.
The Scottish Government is failing to prevent any further impact on the private rented sector by putting an end to this legislation. The property industry now needs an end to the legislation so that the sector can start to recover.