Landlords flee Scotland in face of radical SNP-Green crackdown

Traditional old gothic tenemant houses at street of glasgow Scotland

Landlords are fleeing Scotland in the face of a “devastating” assault on property investors.

The share of properties bought by landlords in Scotland fell to 6.7pc in the first two months of 2024, the lowest share for this time of year since records began in 2010, according to data from estate agency Hamptons.

Meanwhile, the number of homes bought by Scottish landlords in England and Wales in January and February doubled from 3pc in 2021 to 6pc this year, as Scotland’s rent controls push investors to buy elsewhere.

It comes after Humza Yousaf’s SNP-Green government published radical plans to implement further market controls which could give local authorities powers to create rent caps as low as 0pc for up to five years.

Other proposals in the Housing (Scotland) Bill include allowing courts to delay evictions during the winter months, and preventing landlords from “unreasonably refusing” pets or requests to paint the walls.

The legislation doubles down on the 3pc cap on rent increases introduced by former first minister Nicola Sturgeon in September 2022. The move has backfired on tenants, with Scotland suffering the largest rent rises of anywhere in the UK.

The 3pc cap is due to expire on Sunday. Industry experts believe this will lead to a spike in rental prices as landlords scramble to cover their costs.

Experts have also warned the new plans will further reduce investment in the country’s private rental sector and force more landlords to sell up – cutting the number of rental homes on the market.

David Fell, of Hamptons, said Scottish landlords have been “squeezed” by the introduction of rent caps.

He added: “Their relative inability to increase rents in the face of rising costs has pushed growing numbers into the red. While most rental increases have been capped at 3pc, many landlords have seen their mortgage costs double which is unsustainable beyond the very short term. This environment has deterred new landlords, both individual investors alongside those building large numbers of new homes specifically for the rental market.

“Long term, any sort of cap on rental growth will only serve to reduce the number of rental homes on the market. While a cap will probably control costs for existing tenants, it will make it very difficult for someone trying to find a place to rent for the first time.”

Anna Gardiner, a policy adviser on rural property for landowners’ trade body Scottish Land & Estates, said: “The Scottish Government had an opportunity to work with both landlords and tenants to attempt to return confidence to the private rented sector – and thereby improve how things work for both groups.

“Instead, the new legislation appears to compound the mistakes that have led to a crash in the number of properties available to rent in rural areas, and tenants being unable to find accommodation to suit their needs.

“The lack of available housing, particularly in the rented sector, is a key driver of rural depopulation.”

The share of properties bought by landlords in Scotland in January and February fell from 9.1pc in 2022 – six months before the rent caps came into force – to 6.7pc in 2024. The share in England and Wales stayed roughly steady over the same period.

John Haagensen, who leases six properties in Glasgow, said the plans for long-term rent caps will force landlords to either sell or run properties at a loss.

He added: “It’s devastating news. We’ve already had rent controls for years. And we’ve already seen the results – massively high rents.

“We’ve been hounded for long enough by the Government – all I’m trying to do is house tenants. We have good tenants. But sooner or later we’re going to have to throw in the keys and sell.”

Jane Wood, chief executive of housing trade industry body Homes for Scotland, said the Bill could “have serious unintended consequences given that the rent controls introduced in 2022 have resulted in investment in new homes being diverted to other parts of the UK, while rents here continue to spiral.”

The Scottish Government was approached for comment.

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