Rental revolution brings good news for Scotland

Many actively choose to rent, recognising that the flexibility offered through being a tenant is better for their circumstances.
Many actively choose to rent, recognising that the flexibility offered through being a tenant is better for their circumstances.
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Comment: Peter McDermid on the new regulations for landlords and tenants

A couple of months ago, NatWest’s senior economist Sebastian Burnside predicted that by 2025 there will be more private renters in the UK than homeowners with a mortgage.

This created substantial concern among some in the market; but I share the alternative view that a lot of that worry has been misplaced.

There is no doubt that we aren’t building enough homes in the UK, something that the Chancellor sought to address by announcing a number of proposals for England and Wales in relation to housing and stamp duty in last month’s Budget.

But I think we also need to move away from the concept of home ownership being the be-all and end-all.

It is a very British thing, this obsession with owning your own home. On the continent, choosing to rent rather than buy is seen as a more acceptable choice to make.

Yes, some people are renting because they cannot afford to buy, but it would be wrong to assume that is the case for all tenants.

There are many tenants who cannot see the appeal of signing up to an enormous loan which will take decades in order to pay off, with all the rigmarole that comes attached to life as a homeowner.

Many actively choose to rent, recognising that the flexibility offered through being a tenant is better for their circumstances.

Figures show that the Scottish rental market has remained strong over the last year.

Returns for landlords are competitive, with the latest Your Move Scotland Buy-to-let Index reporting average rent across the country to be at £574 per calendar month with the typical landlord seeing returns of 4.8 per cent.

If we are to build a healthy market, then the needs and rights of tenants must be taken into account, rather than all of the focus going on routes into home ownership.

It’s reassuring to see Scotland taking the lead on this issue. This month renters in Scotland are receiving a boost as a number of sweeping reforms come into force.

These changes are some of the biggest the private rented sector has seen and will offer tenants in Scotland substantial protection – both from eviction as well as rent increases.

Tenancy contracts will no longer have an expiry date, with landlords now required to provide 84 days’ notice to their tenants to vacate a property.

Rent increases will also be limited to no more than once every 12 months, with the ability for dissatisfied tenants to appeal to a “rent officer” (part of the Scottish Government’s Rent Service Scotland) to consider their case.

Changes will also protect areas as well as individuals: if rent is seen to be rising too quickly in certain locations, local authorities will be able to apply to ministers to cap increases in these “rent pressure zones” to protect tenants from being priced out of their local area.

The changes will also modernise the tenancy agreement itself, standardising the paperwork required through the provision of set clauses that landlords can edit to suit their requirements.

Scotland has long led the way when it comes to rental reform, imposing a ban on letting agent fees for tenants years before the rest of the UK considered it.

We should welcome this new legislation in bringing substantial protection to the rights of both tenants and landlords in the sector for Scotland – it remains to be seen whether such sweeping improvement will be rolled out to the rest of the country in the future.

Peter McDermid is business development manager for Scotland at LendInvest
This article appears in the WINTER 2017 edition of Vision Scotland. Further information about Vision Scotland here.