Private rented sector must be protected and nurtured

With the Housing (Scotland) Bill concluding its journey through parliament and about to become law it is an appropriate time to review the importance of the Scottish private rented sector (PRS) over the last 30 years. A recent major report, entitled ‘Changing characteristics and motivations of Scottish private rented sector landlords and their investments’ by the UK Collaborative Centre for Housing Evidence, did just this.

This report complemented the Scottish Government’s long-term analysis of PRS rents and summarises the findings of key Scottish private landlord surveys over three decades. It found that between 1991 and 2024 the sector has become dominated by small-scale, part-time, investor landlords.

The report stated that: “In the context of a housing emergency, and with alternative forms of private rented sector provision (i.e., build-to-rent and mid-market- rent) characterised by low levels of supply, the report concludes that policymakers need to focus on better understanding and supporting the small-scale private landlords that currently make up the bulk of the sector in order to prevent further attrition in terms of landlord and property numbers.”

It calls for greater support and understanding of small-scale private landlords through regular surveys and the establishment of a new landlord panel to advise and consult with government over the future direction of the sector. The report states that the absence of regular, reliable survey data has led to “an overreliance by policy makers on feedback from consultations, which are often completed by a limited number of interested parties, and make it difficult to claim that policy interventions are evidence-based. They therefore risk being ineffective and prone to unintended consequences.”

The Scottish housing system currently faces unprecedented challenges over supply, affordability, and energy efficiency. The pandemic, subsequent cost-of-living-crisis, and the current ‘housing emergency’ have “resulted in policy makers scrambling to generate solutions within a system that is not amenable to quick fixes, and which has been subject to years of cumulative legislative change. Many unintended, but not entirely unforeseen consequences have arisen in the PRS from recent interventions. For example, a rise in rental arrears following the introduction of the ‘eviction ban’ and an increase in market rents following the introduction of the ‘rent cap’.”

The report found that policies focused on the PRS would appear to discourage private investment and are likely to further exacerbate imbalances between supply and demand. It specifically focuses on the Housing (Scotland) Bills’ introduction of rent controls, and the recent increase in the Additional Dwelling Supplement from 6 per cent to 8 per cent. The report states that: “This increasing legislative burden, high costs, low yields, and the availability of lower risk and higher yielding investments elsewhere, have already made the sector less attractive to investment, and there is evidence that landlords are leaving the sector. Therefore, it is more important than ever to reflect on what we know about landlords and to use this knowledge to re-evaluate the current direction of travel with the aim of stabilising investment patterns.”

It is clear that this important report contains key ideas on how to grow the PRS in the future. Greater collaboration, consultation, and communication with landlords is essential if we are to ensure the PRS continues to play an integral role in the supply of homes in Scotland.