The burning question; Q: Will the Scottish Government's proposals to introduce rent controls damage the property market?
YES Malcolm Warrack managing director, Cullen Property While many of the Scottish Government proposals for a new private rented sector tenancy will enhance security and flexibility for both tenants and landlords, evidence points to the fact rent controls will hinder investment in the sector, dis-incentivising small and large landlords from participating and/or maintaining their properties to a high standard.
The consequence will be a drying up of supply and limiting choice for tenants, as well as depleting the quality of the stock.
MAYBE Audrey Lafferty director of property management, Grant Property The devil will definitely be in the detail when it comes to determining what constitutes a rent control area and the extent of measures put in place. It is over-simplistic to believe putting caps on rents will allow more people access to quality housing when the real issue is the shortage in supply.
The threat of disproportionate legislation and control in any market is always a deterrent for investors and property is no exception.
YES Neil Livingstone managing director, Douglas Dickson Property Management Rent controls do not work. They will lead to increased rents in the long term. Coupled with the Scottish Government's proposal to remove a landlord's automatic right to end a tenancy, any proposed rent controls will deter new landlords and encourage existing landlords to leave the sector. This will result in a reduction of the supply of rental properties and lead to higher rents as tenants chase fewer properties.
The real solution is for the government to increase the provision of social housing and allow housebuilders to build more homes.
MAYBE Dan Cookson head of research, Lettingweb for PRS 4 Scotland Where forms of rent control exist, such as in Berlin, they have been balanced by strong tax incentives and land releases designed to promote supply and encourage investment in the sector. Cherry-picking the sticks and ignoring the carrots is bound to fail.
The damage will come about if the government misses the opportunity to create a distinct supply and tenancy model for Scotland that addresses the necessity for investment and the needs of tenants.
YES Ivor Dickinson regional chief executive, Lomond Capital The private rental sector in the UK was virtually non-existent prior to the introduction of assured tenancies in 1989 and assured short holds in 1997. As an agent we've seen the rental market grow to 55 per cent of our business, overtaking sales for the first time.
The Scottish Government wants to hand more control to tenants with fixed rates and security of tenure rather than letting market forces control the environment. Landlords will leave the sector, stock will evaporate and rents will reach an all-time high.
MAYBE Darina Kerr partner, CMS While we don't have the fine details of the proposed legislation to accurately assess its impact, it is hoped the government will opt for a regime which safeguards tenants without unduly restricting landlords.
The private rented sector is emerging as an important asset class, enabling high levels of investment into much-needed housing stock. It's a tricky balancing act as the government will want the new controls to be robust enough to protect tenants but not so stringent to dissuade investors from embracing new projects.
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|Date:||Oct 9, 2015|
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