The majority of letting agents in Scotland are continuing to see landlords exit the market as a result of The Cost of Living (Tenant) Protection (Scotland) Act 2022, according to Propertymark.

In its evidence given to the Scottish Parliament’s Local Government, Housing and Planning Committee, the professional body also said the legislation is causing landlords to increase rents between tenancies to cover future costs.

The Cost-of-Living Act gives Scottish ministers temporary power to cap rents for private and social tenants and also introduces a temporary pause on the enforcement of eviction orders in certain cases. It was used last September to enforce a rent freeze on existing tenancies of the border, which will be replaced by a 3% cap on rent rises from 1 April 2023, with 6% hikes and evictions permitted in certain circumstances.

Ahead of the committee session, Propertymark gathered evidence from its members, with a letting agent in Lanarkshire highlighting the rise in mortgage costs for landlords and outlining that one landlord has had an increase in their premiums from £151 to £560. In addition, an agent from Inverness said that one landlord is between tenancies and her fixed mortgage is due to end in 15 months’ time but has increased the rent now in expectation of future costs and changes to legislation. 

Propertymark said the evidence indicates that the prospect of rent control is promoting rent increases at tenancy changeover and that landlords are fearful of the policy direction and are signalling an intention to sell.

The organisation also cited survey results showing that in November 2022, 83% of responding agents said that landlords would be inclined to increase rents between tenancies because of the Cost-of-Living Act, while this had risen to 94% by February 2023. Some 68% of agents also told the first survey that they had already seen an increase in notices to sell due to the temporary measures, while the February 2023 poll saw this figure rose to 78%.

Timothy Douglas, head of policy and campaigns at Propertymark, commented: “The Cost-of-Living Act is continuing to have an effect on landlord confidence, with the majority of agents still seeing them exiting the market. The crux of the housing problem is that demand is far outstripping supply, yet this legislation is having the opposite effect of pushing landlords out of the sector.

“Rent increases have never been a significant factor in the private rented sector, yet this legislation and the threat of further rent controls is forcing landlords to put up rents between tenancies to cover any future cost implications.

“Costs have increased for tenants, but also for landlords. Those on variable mortgages have seen their payments increase much higher than 3%, not to mention the other costs involved in property management.”