19 Apr 2022

A leading lettings industry figure is warning politicians that they risk shrinking the size of the private rental sector if they implement drastic restrictions such as rent controls. 

The consultation period for the Scottish Government’s ‘A New Deal for Tenants’ ended over the Easter weekend and the DJ Alexander agency – part of the Lomond Group – is warning that by 2027 (two years after the legislation is proposed to be implemented) the sector will have shrunk.

It adds that overcrowding in homes will have increased; waiting times for homes in the sector will be longer; rents will be much higher for newer tenants than for incumbents; and the economy will suffer because of a lack of homes for EU workers returning after the pandemic.

David Alexander, the chief executive officer of DJ Alexander Scotland, comments: “Unfortunately this [New Deal] paper has been created for ideological reasons rather than as a practical approach to effective legislation. It seeks to address a problem that the paper itself denies exists.

“While the Scottish Government states that rents are soaring and becoming unaffordable the consultation paper states that ‘Two-bedroom PRS rents over the last eleven years have risen at a rate comparable to inflation (25.1 per cent compared to inflation of 24.3 per cent over the same period).’”

The document also admits that median gross earnings have also increased broadly ahead of rents (26 per cent since 2010 compared to 25 per cent rise in rents) and there has been an estimated increase of 36 per cent in the median monthly household income in the private rented sector from 2010 to 2020.

Alexander continues: “Clearly there are higher rent increases in the most popular areas but that is simply market forces. Individuals can choose to live in less expensive areas which would represent a lower percentage of their income.

“The PRS in Scotland is already, rightly, the most heavily regulated and controlled rental market in the UK with no administrative fees; no section 21 evictions; a rent tribunal to mediate in conflicted cases; the strongest security of tenure in the UK; and one month notice for tenants to withdraw from rental agreements. Therefore, the PRS in Scotland is already a fairer deal for tenants than any other part of the UK.

“There is undoubtedly an issue with demand exceeding supply in the Scottish housing market. There are too few homes to sell and rent and prices are rising in response. However, the answer is to build more homes, to expand the social housing sector, to boost the home building sector, and to encourage greater investment in the private rental market. 

“This may not generate headlines, and is certainly more expensive and complex to implement, but it will ultimately produce a more effective, fairer housing market in the future.”

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