Record rental prices appear to be easing but “draconian” Scottish Government rent control plans risk stifling the availability of new properties, a letting agent has warned.
Rental prices have fallen for the first time since January, down 0.5% to an average of £546 per month in Scotland, according to Your Move’s monthly buy to let index.
Your Move says the Private Tenancies Bill, which aims to safeguard against “unjustified and excessive increases” in rents and provide greater predictability for tenants, could deter landlords from investing in buy-to-let properties, leading to fewer available private lets.
Rents in Glasgow and the Clyde experienced the biggest monthly drop in August, down 1.3% since July, and growth also slowed on an annual basis, down from 2.8% in July to a 1.7% yearly rent rise in August.
However, tenant arrears are at a record high, with 12.2% of all rent paid late last month.
Brian Moran, lettings director at Your Move Scotland, said the fall in rental prices “should provide a welcome let-up for tenants, after only last month rents hit a new record level”.
He added: “This adjustment has also broken up the forward march of annual rent growth that’s been gathering speed recently.
“But peak lettings season is only around the corner and this breather may not last for long.
“The vast discrepancy between demand and supply of available homes to let has not disappeared, and this gap will only widen if landlords are scared out of the market by the Government’s proposed regulatory changes and draconian rent controls.”
The proportion of rent paid in arrears reached a record high in August, rising to 12.2% of all rent due in the month. This has increased steeply from 9.6% the previous month, and has also risen from rental arrears of 6.5% in August 2014.
Mr Moran added: “Paying the rent on time is clearly a deeper-rooted problem that goes beyond rental prices, which have actually gone down this month.
“Not every household is tasting the fruits of Scotland’s economic recovery, or all Scots seeing their incomes rise substantially to lift themselves out of the red.
“Supply of available homes to let is also struggling to keep up with demand, and there is an urgent need for further buy-to-let investment in Scotland to ease some of the financial pressure.”
House prices have been growing at more measured levels with cheap mortgage finance readily available, making it “a great time to invest in buy-to-let”, according to Mr Moran.
“The only blot on the horizon is Holyrood’s planned intervention and future regulatory changes,” he said.
“Rent controls and the red tape outlined in the Private Tenancies Bill will end up being more of a hindrance than a help to tenants, if landlords are dissuaded from investing in the private rented sector as a result and if competition for available properties mounts.”