Challenges Faced by Landlords in the Glasgow Rental Market
Contrary to common belief, the vast majority of landlords are not out to ‘get’ tenants. Quite the opposite, in fact. This article aims to shed light on the challenges landlords face in the Glasgow rental market at present. As a Glasgow Estate Agency and Letting Agency based in the West End, we can provide a unique overview of current market trends.
Impact of Scottish Government Policies on Scottish Landlords
To preface this, here’s a quote from our First Minister, Humza Yousaf, regarding the state of the Scottish property market:
“Westminster’s cost-of-living crisis has left tenants vulnerable, made all the more difficult by a market that can’t support demand,” said Yousaf. “The Scottish government will continue to work with vital stakeholders across landlord and tenant groups as it crafts a tailored approach to this crisis that suits Scotland’s unique needs.”
In our view, these “unique needs” have been created by the Scottish Government. The abrupt implementation of the 2022 Cost of Living (Tenant Protection) (Scotland) Act in September 2022, which capped rent increases at 3% and imposed an eviction ban until 31st March 2023 (extended to 30th September 2023 and possibly to 31st March 2024), has raised concerns within the landlord community. In practice they have caused havoc with day-to-day letting activity, pushing up the rental prices of new-to-market stock.
What are the Rent Increase Regulations in Scotland?
At present, the 2022 Cost of Living (Tenant Protection) (Scotland) Act allows a rent increase of 3% of the current rent. In some cases, landlords can apply for a 6% increase if they can prove a suitable increase in prescribed costs, mainly related to mortgage payments. Rents can be increased once every 12 months.
A Real-Life Example: The Financial Challenge for one Glasgow Landlord
Every landlord’s situation varies based on factors such as borrowing terms and personal circumstances. However, here’s a real-life example of a rental property in Glasgow’s West End. The landlord’s monthly mortgage repayment has increased by 98% this year, yet they have only been able to claim a 6% rent increase, after applying to the Rent Officer. The numbers speak for themselves.
This legislation primarily focuses on tenants’ rights, but what about landlords’ rights? Some landlords are clearly facing a significant rise in expenses, making it challenging for them to continue. To properly resolve the current issues, there needs to be some balance to the approach taken by the Scottish Government.
Is there a shortage of rental properties on the Glasgow Rental Market?
In short, yes. The last thing the sector needs is a further shortage of rental property, but it is exactly what this new legislation is causing. Demand for rental properties in Glasgow remains robust due to this shortage of available stock on the Glasgow rental market.
Is it a good time to invest in the Glasgow Rental Market?
Despite some landlords leaving the rental market, there’s still a steady influx of investment from both domestic and overseas investors attracted by Glasgow’s lower prices and higher yields compared to other major UK cities. As property prices slowly correct themselves, following sustained interest rate increases, shrewd investors are adding some great properties to their portfolios. The shortage in rental stock paired with the fact that new-to-market rental properties can be priced appropriately for current market conditions is making for some great investments.
This situation emphasises the importance of partnering with a proactive letting agent who understands market dynamics. At Yates Hellier, we prioritise our clients’ investment’s performance by ensuring correct initial pricing strategies, compliance and meticulous maintenance.
If you’d like to have a chat, feel free to call us on 0141 248 8726 or fill out the form below and one of our team will be in touch.
