What is the Cost of Living Tenant Protection Bill?
In September 2022, Scotland’s First Minister announced emergency legislation to help renters known as the Emergency Cost of Living (Tenant Protection) Scotland Bill. Since Q3 of 2022, the execution of this government intervention has been contested, with a lot of debate surrounding the potential damage to the private rental sector (PRS) in Scotland.
What will the Cost of Living Tenant Protection bill do?
With housing groups and some politicians celebrating the act and many others debating its effectiveness, this legislation has been contentious.
Many investors in Scotland’s housing economy have since announced they would be suspending any plans to build further residential units while this legislation remains in place. It’s thought that such investment could help ease the demand for rental properties in Scotland’s biggest cities, Edinburgh and Glasgow.
New changes announced for private landlords in Scotland
In January, the Scottish Government announced a partial thaw in the legislation, allowing landlords to raise rents from April by 3%, or up to 6% if they can show their underlying costs have increased significantly.
However, many are concerned that the increase in the additional dwellings supplement (ADS) announced in the Scottish budget, could make new landlords wary about investing in the PRS.
What’s the impact of rent freezes in Scotland?
Average rents in Scotland increased by 13.1% over Q4 2022, and with fewer properties on the market available to rent, we expect these increases to continue into the summer.
How does a rent freeze lead to the average rent increasing for Scottish renters? Many landlords report selling their portfolios due to rising costs, meaning that there are fewer units available which causes rents to rise.
Will more landlords sell up in response to Scotland’s rental legislation?
ARLA Propertymark recently confirmed they had responses from 69% of their member agents stating they’ve seen the number of landlords giving notice so they can sell their property.
Another worrying statistic released last week shows the number of people waiting on social housing is at a record high.
Across the market, numerous commentators have been vocal about the policy reducing supply and pushing up rent prices and here at Tay Letting, we see this as an excellent opportunity for long-term investors, who will benefit from the increasing demand for good quality rental properties.
In January, we took on 30 new properties, which shows that investors are still keen to enter the PRS.
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