Scotland’s Cost of Living Act has led to rent rises

Propertymark has told Scottish Parliament’s Local Government, Housing and Planning Committee that the Cost-of-Living Act 2022 has led to rent rises and landlords leaving the private rented sector (PRS).

The organisation’s head of policy and campaigns, Timothy Douglas, gave evidence showing that most letting agents in Scotland are seeing landlords continuing to exit the market.

He added that the legislation is also causing landlords to increase rents between tenancies to cover future costs.

The law was introduced last year by Scottish Ministers to temporarily cap rents for private and social tenant and also paused the enforcement of eviction orders in certain cases.

‘Act is continuing to have an effect on landlord confidence’

Mr Douglas said: “The Cost-of-Living Act is continuing to have an effect on landlord confidence with the majority of agents still seeing them exiting the market.

“The crux of the housing problem is that demand is far outstripping supply, yet this legislation is having the opposite effect of pushing landlords out of the sector.”

He added: “Rent increases have never been a significant factor in the private rented sector, yet this legislation and the threat of further rent controls is forcing landlords to put up rents between tenancies to cover any future cost implications.

“Costs have increased for tenants, but also for landlords.

“Those on variable mortgages have seen their payments increase much higher than 3%, not to mention the other costs involved in property management.”

Continue with the temporary pause on the enforcement of eviction orders

The hearing comes after Patrick Harvie, the Minister for Zero Carbon Buildings, Active Travel and Tenants’ Rights, expressed his intention in a statement to the Scottish Parliament in January to continue with the temporary pause on the enforcement of eviction orders in certain cases.

He also said he wanted the rent cap for tenants in the private rented sector to be extended beyond the initial expiry date of 31 March 2023.

Increased the rent now in expectation of future costs

Ahead of the Committee session, Propertymark gathered evidence from its members with one letting agent from Inverness saying that one landlord who is between tenancies and has a fixed mortgage that ends in 15 months’ time, has increased the rent now in expectation of future costs and changes to legislation.

Propertymark says that the experiences of its members in Scotland indicates that the prospect of rent control is pushing up rents when tenancies change.

Landlords are also fearful of the policy direction of the Scottish government and are signalling an intention to sell.

Landlords would be inclined to increase rents between tenancies

When asked in November 2022, 83% of agents said that landlords would be inclined to increase rents between tenancies because of the Cost-of-Living Act to cover their impending and rising costs.

When asked again in February 2023, this had risen to 94%.

The first survey also found that 68% of agents said that they had already seen an increase in notices to sell due to the temporary measures, and in February’s survey this figure has risen to 78%.

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