The ban on tenant fees in Scotland has accelerated rent increases, that’s according to the Buy-to-Let Index compiled by Your Move, one of Scotland’s largest lettings agency networks, and part of LSL Property Services.
A new law introduced by the Scottish Parliament in November 2012 made it illegal to charge tenants fees when they take on tenancy, but the net effect, as was widely predicted at the time, simply transferred the costs onto rents, and then some!
Average rents in Scotland had been stable at around £508 with no change at all for almost two years. However since the fees ban came in 21 months ago rents have increased at a rate of 2.3% annually – considerably faster than the average rate of increase seen in England and Wales.
It means tenants are paying on average an extra £26 a month rent than they were before the legislation was introduced. LSL said the increase, which came after around two years of stable prices, has been higher north of the border than in England and Wales.
The Scottish Parliament’s intention was to stop tenants paying anything extra in addition to rent and deposits when they take up a new tenancy, but the subsequent rises mean that tenants are, on average, paying £26 per month for the life of their tenancy, far more than they would have done had they paid ingoing fees.
Gordon Fowlis, regional managing director of Your Move, an estate agency chain that is part of LSL, has said:
“Tenancy fees were outlawed in Scotland with the well-meaning intention of protecting thousands of households reliant on rental accommodation. But we can see that in reality tenants are starkly out of pocket. They are paying much more over a 12 month tenancy than they would have expected to pay for a single set-up fee, adding to the daily cost of living challenge. Before this policy was implemented rents had been flat, relaxing the burden on household budgets and giving tenants some breathing space to climb back on their feet after the dark days of the recession. Banning fees has heightened the financial strain on tenants, as greater costs are now incurred elsewhere through rents increasing at a faster pace.”
“After the consequences we’ve seen of previous government intervention, the biggest threat to the private rented sector is further unwarranted regulation. As we move into the final furlong before the referendum, all sides need to be careful not to scare landlords off the playing field as private renting is now a key integral solution to fulfilling Scotland’s housing needs. If private Landlords sell up and leave the rental market due to more well-meaning, but clumsy, regulation this could force a housing shortage for renters.”
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