Scottish PRS faces tax and rent control challenges

Scottish PRS faces tax and rent control challenges

0:07 AM, 29th January 2025, About A day ago

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Scottish residential lettings site, Citylets, says the nation’s private landlords are facing a range of challenges this year.

It points to political developments and a market returning to pre-COVID seasonal trends.

However, the Housing (Scotland) Bill, which successfully cleared its initial Parliamentary hurdle, could see a move to cap rent rises between tenancies.

That would see landlords being restricted to a rent rise at the Consumer Price Index plus 1% within designated Rent Controlled Areas.

Landlords must also deal with the Additional Dwelling Supplement (ADS) tax which was increased from 6% to 8%.

The move is seen as a disincentive for investment in the Scottish PRS, particularly amidst an ongoing housing crisis.

The need for private rented housing

The firm’s managing director, Thomas Ashdown, said: “Q4 2024 was eventful. In effect, we had an official government survey published, the Scottish Household Survey, which highlighted the clear demarcation between the demographics of those living in private and social rented housing, hence underlining the need for both.

“The survey also confirms the PRS has fallen from peak size, yet ADS was further increased deterring investment without a syllable offered as to where would-be private renters would go if the sector lacks the capacity to meet demand.”

Citylets says that hopes for a reversal of rent control proposals for the open market were dashed by the Housing Minister’s firm reaffirmation of this commitment during the Bill’s passage.

The need for rent controls

Like previous Rent Pressure Zone legislation, Citylets says that local authorities will be responsible for determining the need for rent controls.

However, the platform warns that the framework for implementing these controls remains unclear and potentially challenging.

In recent times, open market rents have shown signs of slowing down and even declining in major cities such as Edinburgh and Glasgow.

Nationally, annual rent growth has also continued to slow down.

Citylets is also warning there’s a possibility that another legislative push may occur without any real-world implementation of Rent Pressure Zones.

This means that the move would come without the enactment and enforcement issues being resolved first.


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