Price-of-living hire controls and political uncertainty in Scotland are prone to restrict the provision of recent build-to-rent houses, in accordance with a report.
The Evaluation of Scotland’s Hire Freeze and Impacts Report, launched by the Scottish Property Federation (SPF) in affiliation with researcher Rettie & Co, claims that the system of hire management launched below the Price of Dwelling (Tenant Safety) (Scotland) Act is deterring traders and builders, and is prone to disrupt the longer term supply of recent houses for hire within the nation.
The findings, first reported by Development Information’ sister journal Architects’ Journal, come after build-to-rent specialist Get Dwelling stopped work on a £200m scheme in Glasgow final month, citing “present market circumstances” and the three per cent hire cap on the build-to-rent market, as hire controls meant it was now not viable.
The Scottish Authorities stated final September that landlords couldn’t elevate the hire on their properties except their mortgage, service cost or insurance coverage premiums elevated. This hire cap ended on 31 March, however landlords should still solely elevate rents by 3 per cent.
In January, the SPF stated the preliminary hire freeze had already resulted in £700m value of housing developments being paused or misplaced fully.
The organisation has carried out interviews with 14 institutional traders, 9 of which stated Scotland was “unattractive” to the build-to-rent sector, with 4 claiming the nation was “uninvestable below present circumstances”.
The federation estimated that about 17,000 build-to-rent properties are within the pipeline throughout Scotland, together with 6,000 models with planning permission the place building has but to start on web site.
The SPF claimed that “regardless of the clear underlying market attraction”, traders see Scotland as a “political danger as a result of mixture of legislative uncertainty and the hire interventions [which are] seen as disproportionate”.
SPF director David Melhuish stated: “The influence of the emergency laws on the build-to-rent market during the last six months is evident. The shortage of long-term coverage certainty means traders largely view Scotland as a danger in contrast with extra secure places in different components of the UK.
“This example is a disincentive to funding and, as a consequence, traders are going to proceed to divert capital elsewhere. The rental market in Scotland, and crucially renters, will proceed to bear the brunt, as new housing provide is constrained and demand for lodging soars.”
He added: “At a time after we want extra housing, and a top quality rental sector, funding in Scotland is decreasing. The business and the Scottish Authorities needs to be working collectively to make sure build-to-rent funding is flowing into the nation.”