The Scottish Government’s dramatic immediate introduction of a rent freeze and eviction ban could mark the beginning of the end of the country’s private rental sector.
That’s the reaction from one of many industry figures stunned by the measures announced by Nicola Sturgeon yesterday.
Tom Mundy, chief operating officer at PropTech suoplier Goodlord, says: "This rent freeze represents a potentially seismic new frontier in UK lettings policy. While we understand the need to support tenants, introducing rent control could mark the end of the private rental sector as we know it by stripping away the central incentive which encourages people to invest in buy-to-let properties.
“There's a major risk that this freeze will push landlords out of the PRS market at a time when pressure on rental stocks is particularly acute. This will squeeze the whole lettings market and create bigger headaches for the Scottish Government later down the line. Long-term, it could serve to stymie all future investment in the space and fatally undermine the system."
And Simon Tillyer, chief executive at another PropTech firm - Vouch - adds: "This is a huge step from the Scottish Government. It could be the first towards a fundamental re-write of what the UK lettings market looks like. At a time when too many landlords are already leaving the market and there are more tenants than there are homes available to rent, we should not be taking steps that will drive even more landlords away from the PRS.
“I wouldn't be at all surprised if this is the final straw for landlords and sparks an exodus. This policy risks creating more problems than it solves."
John Blackwood - chief executive of the Scottish Association of Landlords - says: “Since rumours of this announcement broke, I have been inundated by landlords saying they will be removing their vacant properties from the rental market, and I don’t blame them. Who on earth is going to let a property in the knowledge that they will be unable to meet their own financial and maintenance obligations if their tenants don’t pay the rent or their outgoings increase? Instead of helping tenants pay their bills, the Scottish Government has chosen to penalise people who have provided the homes politicians have failed to provide for decades.”
And David Alexander - chief executive officer of DJ Alexander Scotland Ltd, which is the largest lettings agency in Scotland and part of the Lomond Group - is outraged at the news.
“The proposed announcement by the First Minister of a rent freeze for tenants in the private rented sector tells you all you need to know about the Scottish Governments’ commitment to consultation and fairness. With the burden of the cost of the freeze being placed upon landlords the First Minister seeks to gain cheap political points whilst not addressing the fundamental failings of her own governments’ housing policy.
“No government would tell supermarkets, pubs, or clothing manufacturers to freeze the cost of their goods, but it seems that Nicola Sturgeon and her colleagues believe the private rented sector is fair game. One parliamentary source is quoted in the media as saying if the cost of a freeze was met by landlords the policy would cost the government nothing.”
He continues: “The result of this policy will be a shrinking of the private rented sector at a time when demand is at its highest. This has come at a time when local councils are seeking help from the private rented sector in housing the homeless as they have no capacity within social housing.”
“This policy underlines how inadequate the response of the Scottish government has been to delivering homes for the people of Scotland. There are currently 132,000 people on the social housing waiting list. There are only 1,000 more social housing homes available now compared with when the SNP came to power. Between 1979-1990 there were 63,795 new social housing dwellings completed.
“In the 12-year period from 2009-2020 there were 56,823 new social housing dwellings completed. This means that 12.3 per cent more houses (6,972) were built for the social sector in Scotland by the Thatcher government compared to the current SNP administration.”
Sturgeon says the emergency rent freeze and eviction ban will last until "at least" March 31 next year.
Although the rent freeze measure will require additional legislation, it will operate retrospectively so effectively means an immediate ban on rent rises.
Sturgeon comments: "By definition, these are temporary measures, but they will provide much-needed security for many during what will be a difficult winter. We envisage that both measures will remain in place until at least the end of March 2023."
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