Tenants and landlords are stuck in a tug-of-war in a tight housing market, says ADRIAN SANGSTER
The rental market continues to be a hot topic, with both landlords and tenants continuing to face a range of challenges throughout the UK. From the perspective of landlords, increasing regulation and, it seems, government policies designed to place heavier burdens on them, life probably feels pretty difficult.
There is significant anecdotal evidence to suggest that many landlords are finding the current landscape too complex and economically unattractive and, as such, are taking the decision to leave the market, along with their properties.
For tenants, open market rents continue to rise, much of which is attributed to a decrease in the
number of properties available for rent. Indeed, according to the latest figures from Citylets, rents in
Scotland had seen an annual 13.7% rise as at Q3.
Open market rents are those not covered by the rent cap, for example, rental properties that are new to the market. Broadly, the rent cap applies to current tenancies.
In Scotland, we’ll have had emergency legislation in place for a year as at September this year and landlords and the market will be looking to March next year which will see the expiry of the second period of extension after the introduction of the Cost of Living (Tenant protection) (Scotland) Act last October.
As for the future, the industry could be forgiven for wondering, with a degree of concern, what they will face next, and unsurprisingly there continues to be a steady move by landlords away from the market.
A shortage of properties inevitably leads to higher prices, and it’s probably little surprise that open market rents have risen as a whole for four consecutive quarters.
With talk of further legislation and rent caps there are likely to be more landlords exiting the market and the country will simply continue to face ongoing housing problems. Is there a solution to the problem?
Well, the biggest issue is clearly the lack of housing, an issue which the Scottish Government has promised to solve over the years but has yet to fulfil.
The build-to-rent sector has the potential to help with this shortage, however the prospect of longer term rent controls on top of recent government interventions is inevitably damaging investor confidence.
There is also a major requirement for proper and substantive dialogue between law makers and the industry. Something which has been severely lacking to date.
In view of this it remains vital that we have a thriving lettings market to ensure the country can meet the needs of those who require a safe and comfortable place to live. Demand is substantial and will continue to grow.
For those landlords who decide to stay in the market and anyone considering letting out a property, there is help available, not least with events such as the Scottish Lettings Day, the flagship annual conference of the Scottish Association of Landlords, taking place on 8 November in Edinburgh.
It’s the largest event of its kind in Scotland and, in a market which is increasingly complex to navigate, it will bring together experts and speakers who can provide much needed insight into what is happening now and what can be expected in the months and years to come.
Despite the challenges, there are still many good reasons to be a landlord and the more that is understood by them, the better equipped they will be to play what is a critical role in the housing market.
Adrian Sangster is leasing director at Aberdein Considine