0:03 AM, 21st March 2024, About 9 months ago 17
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Tenants in Scotland are seeing big rent rises and the rent cap brought in by the SNP is being blamed – as rent rises elsewhere in the UK begin to fall.
According to the Daily Telegraph which used Zoopla data, the rent cap and eviction ban implemented by Nicola Sturgeon is behind the rent increases.
It says that Scottish renters are facing the steepest annual rent growth across the UK, with an increase of 11.6%.
This growth is particularly pronounced in Edinburgh and Glasgow, where rental costs are rising faster than in London.
The Office for National Statistics (ONS) also reports this week that Scotland has seen the largest rent increase in the UK at 10.9% and an average rent of £944.
Meanwhile, Zoopla reveals that landlords nationwide are offering tenants smaller rent increases, which have reached a two-year low of 7.8% – down from 11% last year.
In response to the cost-of-living crisis, which Sturgeon referred to as a ‘humanitarian emergency’, Holyrood decided in September 2022 to freeze rents for tenants and ban most evictions.
However, this decision has had unintended consequences and Zoopla says that rents grew by 12.7% in the nine months to September last year. Nationally, the average increase was 10.5%.
Richard Donnell, Zoopla’s executive director, said the rent cap and evictions ban had incentivised landlords and agents in Scotland to ‘push rents up as much as they can’.
He told the Telegraph: “Landlords operating in Scotland have got this challenge that when a property becomes vacant the landlord thinks, ‘Obviously, I must get as much rent as I can because the amount I can increase is limited during the tenancy’.”
Despite these efforts, he added: “Rents in Scotland are more affordable than many parts of the UK so there’s headroom for rents to rise before you use up the buying power of renters.
“Rents can only really rise if renters are able to pay the higher rents.”
The regulations, introduced by Ms Sturgeon during her tenure as First Minister, initially froze rents and later capped increases at 3% in January last year.
Landlords are prohibited from increasing rent during a tenancy and can only do so when a new tenant moves in.
They have also been barred from evicting tenants, although this eviction ban is expected to end this month.
The escalating rent costs in Scotland contrast with London, where rent growth has slowed significantly over the past year, with an increase of just 5.1%, down from 15.3% a year ago, according to Zoopla’s research.
Despite this, London’s rents remain the highest in the UK, averaging £2,121 per month, followed by Bristol at £1,389. The average UK household now pays £1,223 per month.
In Glasgow, the average rent is now £951 per month, while in Edinburgh, tenants pay an average of £1,263.
Both cities are among the few in the UK where rents continue to rise by double digits, at 10.9% and 11.5% respectively.
Scotland’s tenants’ rights minister, Patrick Harvie, recently said: “Our emergency legislation has led the way in the UK in capping most in-tenancy rent increases, protecting tenants across Scotland from the worst impacts of the cost-of-living crisis.
“The emergency nature of the legislation, which was approved by parliament, means the rent cap cannot be extended beyond 31 March.”
He added: “But tenants still have significant rights from before the emergency act, and we have made use of powers to make sure any rent rises are more manageable.”
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Cider Drinker
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Sign Up9:29 AM, 21st March 2024, About 9 months ago
All we ever hear about is how much rents have risen. Homeowners are seeing their mortgage costs rise rapidly as fixed rates, secured when interest rates were ridiculously low, come to an end. My BTL mortgage has increased 6-fold.
Disillusioned Landlord
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Sign Up11:13 AM, 21st March 2024, About 9 months ago
Reply to the comment left by Cider Drinker at 21/03/2024 - 09:29
Me too, in most cases my rents had not risen for almost a decade in some cases, then my mortgages went from 2% to 7.2% and most of my houses fell into a negative profit.
Just how are we supposed to react?
Beaver
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Sign Up13:03 PM, 21st March 2024, About 9 months ago
Reply to the comment left by James Sim at 21/03/2024 - 11:13
It isn't just the mortgage costs driving up rents. Other costs such as EICR changes and EPC changes (which are of debatable value to tenants) are also putting up costs.
But the truth is the single most important factor in rent rises or falls is competition and when the SNP attacked the PRS it attacked competition and attacked choice. The PRS provides the rental market with choice - when governments attack that choice they are attacking tenants' freedoms to live where they want to live.
Beaver
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Sign Up13:27 PM, 21st March 2024, About 9 months ago
Reply to the comment left by Cider Drinker at 21/03/2024 - 09:29
That's correct. But it isn't just a consequence of SNP policy (although they are the worst offender)...it's a consequence of national policy as well. Because that six-fold increase in mortgage costs would have had less of an impact on landlord's costs if you'd been able to deduct that finance cost from rents...you can't unless you are incorporated. And most landlords are small portfolio landlords.
NewYorkie
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Sign Up13:44 PM, 21st March 2024, About 9 months ago
Reply to the comment left by James Sim at 21/03/2024 - 11:13
My mortgage in April 21 was £204 and rent was £600, for a nice, secure, 2-bed flat, with demised parking. This had allowed me to keep rents static. My mortgage is now £690 and rent is £759. After the management fee alone, I've been subsidising my tenant for months. She didn't appreciate the 9% increase, but I didn't hear a word when she was paying way below the market rate for 5 years.
I have put her on notice that I cannot afford to continue, and will be selling up. If she's interested, she can buy it.
Reluctant Landlord
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Sign Up15:31 PM, 21st March 2024, About 9 months ago
Reply to the comment left by NewYorkie at 21/03/2024 - 13:44
there will be many more like you who have been doing this and subsidising tenants, but once the RRB passes and the clock starts ticking towards current tenancies coming under the new regs (and loss of S21) I see more giving their tenants notice...
Michael Booth
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Sign Up15:32 PM, 21st March 2024, About 9 months ago
Well well well snp ya won't listen and here is your proof RENT CAPS DONT WORK.
Beaver
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Sign Up15:44 PM, 21st March 2024, About 9 months ago
Reply to the comment left by Reluctant Landlord at 21/03/2024 - 15:31
This is correct...if landlords are faced with the risk of not being able to get their properties back (and in some cases they are now loss-making after the changes preventing small landlords from deducting their finance costs) then they are going to exit or incorporate.
Small landlords are typically reluctant to raise rents because it's supplementary income for them and they are busy doing something else; the risk for them of having a void period is higher than for a large incorporated landlord. But void periods also have more of an impact on them because they are busy with other things and so problem tenants that they can no longer evict have more of an impact on them (1) because they don't have time to deal with them and (2) because they cannot offset the costs of these problem tenants against the rest of a large portfolio.
Some of those properties from small-portfolio landlords are going to be mopped up by larger landlords who are already incorporated and these bodies are going to put rents up even further. They have better access to legal advice, they know the processes of eviction and they also know how high they can raise rents. So they will.
That will be made worse because mortgage lenders won't lend if there's a risk that they can't get their investors' money back because the tenant has been given 'rights' over the property in some way. All of these things will drive out competition and drive rents up even further, especially in places like London, Edinburgh and Cardiff.
NewYorkie
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Sign Up15:55 PM, 21st March 2024, About 9 months ago
Reply to the comment left by Beaver at 21/03/2024 - 15:44
Yep! BTL was never my primary focus; my time was spent on my work. Then along came s24, and I sold the properties with the biggest rental income, and 6 beds went! Otherwise, I would have been financially crucified! I then caught covid in March 2020, and a single feckless tenant ended up costing me over £20K. After 20+ years as a landlord, that did it for me, and I sold up. Just one BTL remaining, and the sooner I get rid, the better... but not for my tenant, who will not find anything close to what they have now, and certainly not at the rent.
Beaver
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Sign Up16:10 PM, 21st March 2024, About 9 months ago
Reply to the comment left by NewYorkie at 21/03/2024 - 15:55
Exactly. BTL isn't my primary focus either; I'm a small portfolio landlord and I also run a separate small business.
I also use an agent to manage my property. When I started out the advice of the agent was actually to hold rents down slightly to minimise the risk of void periods. But now, because of these government policy changes that increase both my risk and my agent's risk, my *agent* has changed advice and is advising me to put rent up.
These things are things I can't change. In fact I can't make any positive change as a landlord now other than to raise rents. So the bottom line is, if you are a tenant in Scotland, be careful who you vote for. And if you are a tenant in London take a look at the failed SNP experiment in Scotland and make sure that your elected representative learns from it and doesn't make the same stupid mistakes.