A recent proposal by the Scottish Government seeks to introduce rent controls, yet exempts Build To Rent (BTR) operators, LandlordToday reports.
The proposal in question has arisen from a consultative document detailing potential changes to the rent control system. The primary stipulation is that these controls will apply to rent increases during and between tenancies. This indicates that a buy to let landlord may face restrictions on how much they can hike their rent, whether the existing tenant continues to stay, or they find a new one.
While acknowledging the variety of rent-increase practices landlords follow, the document anticipates a change in behaviour following the proposed control measures. Some landlords prefer to increase the rents between tenancies. Therefore, implementing caps during and between tenancies might lead landlords to now raise rents during an ongoing tenancy – a practice they would not have considered in a less-regulated environment.
Contemplating Exemptions for Build To Rent Operators
The proposed document, however, suggests the possibility of an exemption for BTR operators from these rent caps. According to the document, certain operators might perceive rent control as a discouraging factor to investment, ultimately leading them to withhold interest in certain developments.
Notably, exempting institutional BTR providers from this proposal of rent caps represents a potential shift in their investment interest. In recent times, some BTR operators have publicly announced their disinterest in Scottish property developments due to existing control mechanisms.
The Buy to Let Landlords’ Perspective
The proposed exemption for BTR operators, however, has been labelled as fundamentally unfair by Neil Cobbold, the managing director of the automated rental payment company, PayProp UK.
Not just the exemption, Cobbold has also critically reviewed other suggestions present in the Scottish Government’s document. According to him, these include:
- Allowing pets in rental properties
- Enabling tenant modifications to properties
- Expanding eviction protection
- Proposing alternative uses for unclaimed deposits
- Enforcing several initiatives related to the social rented sector
Cobbold argues that, although these proposals address some key issues in the Scottish rental sector, they enforce specific choices upon respondents, thus constraining them to select from the options provided.
Eviction Roadblocks and the Transformation of Tenancies
The Scottish Government’s consultative document also explores further protective measures against eviction. Notably, it suggests that evictions may be postponed during challenging times, such as winter or times causing financial distress to the tenant. It also proposes that a tribunal should consider if delaying eviction could adversely impact the landlord, either health-wise, financially or due to long-term disability.
Additional issues under consideration also include transforming all existing assured and short assured tenancies into open-ended private residential tenancies.
Lastly, the document also addresses tenant personalisation freedom in rented properties, such as allowing tenants to decorate or keep pets, and the appropriate methods to handle unclaimed tenancy deposits.
Conclusion
The Scottish Government’s proposal on rent control brings with it a wave of challenges and opportunities for potential property investors. Whether you are a buy-to-let landlord or a BTR operator, it’s important to understand how these changes could impact your investment decisions and strategy moving forward.