Back to news

Scotland’s rent freezes to tackle cost of living 

News | 8 September 2022

Nicola Sturgeon has announced a rent freeze for public and private rented properties as part of efforts to help people struggling with rising bills. 

What a time to be alive!

Describing pressures on household budgets as a “humanitarian emergency”, Scotland’s first minister set out the annual programme for government as the Holyrood parliament met for the first time after the summer recess.

What does this mean for you? Well, if you’re a tenant in Scotland, this is good news. Or is it?

Conversations with our landlords since news broke have shown us that they weren’t planning on raising rents in the next six months anyway. Tenants coming towards the end of an AST with the intention of moving may end up worse off, paying more for a new tenancy than they otherwise would have if landlords choose to increase rents while they are able. 

An unfair picture is often painted of Landlords. One of fat cats who gobble up the housing stock, leaving millennials to pay 95% of their income on renting a studio flat. It’s in this light that they’ve become the target of punishing reforms that while well-intentioned, are likely to do little to increase the prospect of homeownership for renters.

In reality, almost half of landlords are what’s considered an “accidental” landlord who have just one property that they let out. They are equally affected by rising rates and rising energy costs as well as potentially spiralling rent arrears. 

The danger of these freezes is an exodus of landlords from the market. Rent freezes may make owning a rental property simply unaffordable, forcing good landlords to sell up, which could only drive rents higher.

On the flip side of this, landlords could sell to other landlords which would have no impact on Private Rental Stock, or better yet a sale could lead to an opportunity for first time buyers to leave the rental market and get their foot on the property ladder.

Peter Williams, CEO of Propp said “The measures introduced in Scotland appear to be another example of landlords being penalised for problems they aren’t creating. Targeting the PRS won’t bring down rents. Conversations today with our landlords are telling us that they weren’t planning on increasing rents in the next six months anyway. 

Our experience dealing with our landlords during the pandemic is that they are sympathetic to their tenants’ difficulties – with many of our biggest portfolio clients discounting rents across the board to ease the burden. It’s unlikely that attitudes are astoundingly different during the current cost of living crisis.“

How do Scottish landlords feel about the policy?

Neil Thomson, Landlord and Founder of Thomson Residential in Glasgow says “The is a huge body blow for landlords in Scotland. This will squeeze the whole rental market and create bigger issues for the Scottish Government later down the line. An absurd policy to score short term political points”

“Landlords will now withdraw empty properties to the market as they do not wish to rent, with the knowledge they cannot evict tenants, this creates a larger demand for less properties on market. The long-term consequences of such a rash policy is yet to be fully understood by politicians but the fall out could be severe.”

Are England & Wales likely to follow suit?

Liz Truss is unlikely to want to follow in the footsteps of Nicola Sturgeon in the early days of her premiership. However, the government is currently consulting on rent caps for the Social Rental Sector in England.

Meanwhile in Wales, there seems to be a political consensus that rent controls do little to combat affordability issues, but do actually have a detrimental effect on the rental market. The devolved Labour government abstained from voting on the issue which indicates little support for the notion. 

Is this just delaying inevitable rent rises?

Possibly. Landlords that are burdened with negative or miniscule margins due to these freezes could choose to implement raises further down the line.  

What help is there going to be for landlords?

To be honest… given we’re living in the early days of a new government, who knows. But recent history dictates that help directed at landlords is unlikely.

One thing is for certain – landlords are astoundingly resilient and fantastic at adapting to change. We hope they remain committed to the market despite the increasingly hostile environment as their contribution to the UK’s housing stock is vitally important. 

If you do have any concerns about any of the changes, feel free to call our specialist buy-to-let team on 01489 359320 who have a wealth of experience in the sector.

Don’t forget you can compare buy-to-let rates here: https://propp.io/buy-to-let/