Galbraith, one of the leading lettings agencies in Scotland, reports significant uncertainty in the private residential sector, with some landlords choosing to sell their rental properties just before the moratorium on evictions was introduced by the Scottish government in October.
However the overall number of landlords has now returned to pre-pandemic levels, with new entrants to the market equal in number to those who have chosen to exit.
There are many good reasons for landlords to stay positive and take a long-term view, according to Sarah Hazzard, who heads the Galbraith lettings team in Moray and the Highlands:
“There is continued exceptionally high demand from tenants and this shows absolutely no sign of falling. In most areas there are a significant number of applicants for every rental property that comes to the market, enabling us to evaluate each tenant for their reliability and suitability for the property. When properties are made available to let, we will typically secure a good quality tenant very quickly. Rents have also risen considerably in recent years, to compensate for the lack of supply in the market.”
About 38 percent of households in Scotland live in rented accommodation, according to the Scottish government’s consultation paper, A New Deal for Tenants. Of this, only 14 percent is in the private sector, estimated at around 140,000 properties.
Rents have risen considerably in the past five years, with increases of up to 30 per cent for rural cottages, but landlords’ associations report that fees have risen in response to the huge volume of legislation aimed at the sector, coupled with higher taxation. Demand for property to let in rural areas has risen in the past two years as many people continue to work from home and therefore do not need to live in a city centre.
Landlords in Scotland must be compliant with legislation including: energy performance certificates; repairing standards for rental property; smoke and fire alarm legislation; electrical installation condition reports; gas safety certificates; carbon monoxide alarms; legionella risk assessments; and the safe deposit scheme.
Sarah Hazzard continued:
“Eviction orders are now on hold until at least the end of March 2023, and there is also a freeze on rents, which puts extreme pressure on landlords. The vast majority of landlords are not wealthy – typically they let one property and they are covering the mortgage payments. These rates are rising for landlords as well as everyone else. Our landlords worked incredibly hard during the pandemic to support tenants who were struggling and now they are helping to ensure that properties are energy-efficient, well-insulated and warm for the winter. Where landlords and tenants can work together it’s a win-win situation.
“Landlords are prepared to invest in their property and create an excellent relationship with their tenants based on a long-term understanding. Most people would agree that the Scottish government has got the balance wrong, and the end result will be higher rents (once the period of rent control ends) and a smaller private rental sector in Scotland, which is surely not what was intended. If we want to enable people to move between jobs there must be sufficient good quality housing stock for people to move to a new region and find somewhere to live. Future policy for the rental sector should balance protection for tenants without encouraging disinvestment by existing landlords. Otherwise why would they take the risk? ”
Galbraith lets over a thousand properties on behalf of landlords in Scotland, from Moray in the north to Dumfries & Galloway in the south.