Please Note: This Article is 7 years old. This increases the likelihood that some or all of it's content is now outdated.

Why do politicians legislate to stymie growth and investment in the private rented sector?

This is the question asked by John Blackwood, chief executive of the Scottish Association of Landlords, writing for The Herald Scotland recently.

As Landlords throughout Scotland brace themselves for some of the biggest changes to affect the private rented sector (PRS) in a generation, a similar process is playing out in Wales and other regions including England.

A seismic shift appears to be developing following the rapid growth of the rented sector across our nations, with deliberate moves by politicians to change the balance of housing legislation in favour of tenants, without, it would seem undue consideration given to what motivates landlords to invest or disinvest in the PRS or just how the landlord – tenant relationship works out in practice.

Although many aspects of housing policy are now devolved to the Scottish and Welsh Parliaments, the election and the broader political environment looks like is will have a major impact on the PRS across the Union.

Blackwood says:

“Over the last year, the Scottish Association of Landlords (SAL) has been informing members about the growing political interest in imposing rent controls on our sector and about removing the landlord’s right to terminate a tenancy at the end of the agreed lease period.

“With the General Election looming, these issues are set to stay, as the political pressure for change mounts.

“Whilst many of us would welcome the opportunity to modernise our current tenancy regime, landlords at present lack confidence in knowing how in the future they can regain possession of their properties when it goes wrong. Cutting the red-tape and creating a new, more easily understood, tenancy for landlords and tenants is welcome but care must be taken not to impose measures which damage the sector”, Blackwood says.

“Change inevitably brings challenges and a degree of uncertainty and as with all investment vehicles, politicians need to be mindful of investor’s reactions.

“Landlords are investors, choosing to invest in providing much needed housing and now, more than ever, we need to be growing and developing that investment potential rather than frightening investors off.

“Some landlord investors considering expanding their rental portfolio are telling us that, on hearing about these potential changes, they have decided to hold off for the time being because they are fearful of taking on new tenants without good knowledge of what legal rights he would have if he ever needed to end a tenancy…

“…So why do many politicians continue to introduce legislation that does nothing to stimulate growth and investment in the sector and threatens to make responsible landlords otherwise willing to invest instead sell up and leave the sector altogether?

“A recent independent poll commissioned by Scottish Association of Landlords revealed that 78 per cent of respondents valued a well-functioning private rented sector and, of greater importance, that 43 per cent of private tenants reported that they found it difficult to find accommodation in the previous five years.

“Politicians must be made aware of how the private rented sector functions to provide vital accommodation in Scotland.”

Although the Coalition Government has largely restricted PRS legislative change to simplifying and improving processes, and voluntary codes of practice to-date, with the exception perhaps of the “retaliatory eviction” measures, just passed into law in England, this could change dramatically with the election of a Labour Government in May.

Labour policies on the private rented sector announced so far are some of the most radical of all the parties in the election.

Labour have pledged making three-year tenancies the norm instead of the 6 or 12-month short-hold tenancies that most landlords and tenants have used and accepted since 1988. Labour is convinced that this change will give both landlords and tenants “more stability”, but there’s no clarity on how termination would be effected and which side could give it and when.

They have also pledged ‘predictable’ rents, particularly for families living on limited budgets. Although it would seem landlords would be able to increase rents, rent ‘caps’ would be very likely.

It is also thought that the fees letting agents currently charge tenants would be banned outright, a self-financing landlord registration scheme would be on the cards, and of course Labour fully supported the recent Lib Dem inspired Coalition legislation changes (The Deregulation Act 2015) that now restricts evictions when tenants raise repair issues, the so called outlawing of “revenge evictions”.

Please Note: This Article is 7 years old. This increases the likelihood that some or all of it's content is now outdated.


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