Scotland’s private rental sector (PRS) is often perceived as being dominated by rogues, rocketing rent prices and unfair evictions. Fortunately, that perception is very much at odds with reality.
The PRS in Scotland is thriving, with professional letting agents, decent landlords and high levels of satisfaction among tenant groups made up of distinctly different sub-markets such as students in halls of residence, families with children, as well as the largest group – single adults.
Moreover, the industry supports the Scottish Government’s PRS Strategy that there must be “improving management standards and quality of service for tenants and prospective tenants, as well as enabling growth and investment in the sector’.
That’s why the opportunity to share a detailed understanding of the PRS is timely. So what picture of the PRS do the statistics really paint and where are we heading?
GROWING DEMAND AND INCREASED DIVERSITY
A clear challenge facing the sector is encouraging existing investors to remain and to provide the environment for additional investors to increase supply of housing in the PRS as well as other tenures.
There are a total of 330,000 households living in Scotland’s private rental sector
The recently published Scottish Household Survey 2014 highlights how important the PRS is. It now houses the largest proportion (41 per cent) of young households in Scotland.
This same survey confirms there are a total of 330,000 households living in the PRS, which represents 14 per cent of the total 2.42 million households in Scotland.
Of these 330,000 households 26 per cent are estimated to be families with children.
It is worth noting that the proportion of families with children in the PRS changed very little between 2001 and 2011. In 2001 the equivalent figures were 41,400 families (23.6 per cent of total).
Research from Lettingweb found that at the local level,families who are living in the PRS are very evenly distributed across Scotland, and are a part of every community, whatever its deprivation level. The PRS is unique among all other housing tenures in this respect.
The Scottish Housing Survey showed there were more PRS households living in the least deprived areas than there were in the most deprived communities. This suggests that large proportions of households are making positive choices to live in the PRS. It is not a poverty-stricken tenure of last resort, as is sometimes suggested.
Rent levels in Scotland remain a very hot topic. However the Scottish Government’s own figures show that very few areas experience rent increases over the rate of inflation.
More recent analysis by Citylets of inflation adjusted rent increases (2008 – 2015) showed that in the four main Scottish cities, only 3-bed properties in Glasgow significantly outstripped inflation.
SUSTAINING THE INVESTMENT WE NEED
The PRS industry supports many of the Scottish Government’s proposals for tenancy reform, and believe that Scotland has a wonderful opportunity to create a distinct sector that is strong, modernised and sustainable.
However, there are serious concerns within the sector that a single Scottish tenancy, with potential introduction of rent controls, as well as the removal of the so-called ‘no fault’ ground, will create a market place that is less flexible and adaptable to the varied needs of both tenants, landlords and investors. Add to this mix the recent budget announcement on the loss of relief on mortgage interest payments for the higher taxed and one can understand why some landlords will already be considering their long term future in the sector, any additional shocks might well be a step too far.
In PRS 4 Scotland’s short survey of 1,746 landlords in May, two-thirds stated they would consider dis-investing if rent limits are introduced. The devil will be in the detail of any such proposals and we’re committed to working with policymakers to make sure they work for landlords and tenants alike.
Also published on The Scotsman on 29 September 2015.