The Scottish Government has ended its public consultation on A New Deal for Tenants and intends to develop a final rented sector strategy by the end of the year, with legislation to follow in 2023. This strategy aims to ensure all tenants, whether living in private or social rented homes, ‘can access secure and stable tenancies with affordable choices - whilst also benefiting from good quality homes and professional levels of service and rights’.
Among other considerations, the consultation looked at bolstering tenant rights as well as changes to rent controls and purpose-built student accommodation (PBSA). The proposals have been put forward at a time when the market continues to adjust to the landmark Scottish Private Rented Tenancy (PRT), introduced in 2017, and as private landlords adapt to changed taxation policies.
The 2017 reforms were a watershed, giving residential tenants in Scotland lifelong security of tenure with landlords restricted to 18 grounds upon which to seek repossession of their property. It is not expected that current proposals for tenure reform in England will go as far and will instead retain a fixed term of tenure.
So how has the Scottish market responded to the PRT? The data suggests a strong rental market with negligible vacancy periods in many sectors. The lack of available supply of good rented accommodation is also putting upward pressure on advertised rental values. These market pressures are deepened by the loss of many homes from the rented sector. The Scottish Association of Landlords reported in February that some 36,000 homes (nearly 10 per cent) have disappeared, a huge number in a short period of time.
Purpose-built rented residential developments, the build to rent (BTR) model, is now making ground north of the border with some 9,000 units in the planning system under construction or in operation. The opportunity for this new market sector to supply new communities, quality homes and flexible residential choice is vitally needed in Scotland. It is important that its potential is not cut off by planning burdens or undue regulatory restrictions. True, this is a new market for the wider UK, let alone Scotland, but as the quarterly research undertaken by the British Property Federation with Savills demonstrates, Scotland is certainly trailing behind the establishment of BTR in England, including in regional cities outside London.
The market is seeing pronounced upward rental pressure in certain locations in Scotland, and this is leading to affordability concerns. But the measures proposed by A New Deal for Tenants may not be the answer. Indeed, the proposals contained within the consultation would transfer further risk to landlords and this will exacerbate the pressure on smaller landlords in particular. Aside from industry nervousness about rent controls, there are suggestions of tenant unions, further restrictions on repossession during an undefined winter period and new landlord support for vulnerable persons.
Scottish Government has also asked if Scottish PBSA students should be moved on to the broader market PRT, which would entail lifelong security of tenure. This does not recognise the very specific demands on PBSAs by universities, whereby they need to be able to confirm they have accommodation for students, particularly those in the first year who might be leaving home for the first time. The Government is also in the midst of a separate review of the PBSA sector and this is not due to report to ministers until the end of 2022.
Further, there has been no recognition of the risks for landlords in the wider private rented sector. Those landlords are the bedrock of private lettings and if the risk presented is too great they will simply leave the market, as so many have done already. The Scottish Property Federation and other representative bodies have addressed this blind spot head on, meeting the Minister for Tenants’ Rights twice in recent months.
The response to A New Deal for Tenants will without any doubt be a crucial moment for the industry and the market. We, along with everyone who is doing their best to deliver quality rental homes in Scotland, await its outcome later with interest.
.jpg)
.jpg)
(1).jpg)