Rent freeze already damaging key rental investment

The Times says some Build to Rent investment has been paused as a result of the rent freeze imposed by the Scottish Government earlier this month.

Scotland First Minister Nicola Sturgeon says the emergency rent freeze and eviction ban will last until "at least" March 31 next year.

Although the rent freeze measure will require additional legislation, it will operate retrospectively so effectively means an immediate ban on rent rises.

Sturgeon comments: "By definition, these are temporary measures, but they will provide much-needed security for many during what will be a difficult winter. We envisage that both measures will remain in place until at least the end of March 2023."

Now The Times says institutional investors into the £3.5 billion BTR sector have been unsettled by the unexpected freeze.

One developer told the newspaper: “Investment in Scotland’s rental sector has just turned negative. Announcing this without any detail and without consultation is absolutely ridiculous.”

Build To Rent has struggled to gain traction in Scotland but a survey by Savills in April this year showed the BTR planning pipeline had grown 69 per cent since early 2020 bringing the total headline figure to 12,245 homes.

But Savills warned in that report: “The sector remains nascent with just c.1,000 homes currently operational, yet there is potential for the sector to reach over 100,000 homes at full maturity.” Edinburgh has around a third of Scotland’s BTR pipeline; Glasgow has much of the rest.

The rent freeze - initially the idea of the Scottish Green Party, which is in government in an alliance with Sturgeon’s Scottish Nationalists - has been fiercely opposed north of the border.

John Blackwood - chief executive of the Scottish Association of Landlords - comments: “I have been inundated by landlords saying they will be removing their vacant properties from the rental market, and I don’t blame them. Who on earth is going to let a property in the knowledge that they will be unable to meet their own financial and maintenance obligations if their tenants don’t pay the rent or their outgoings increase? Instead of helping tenants pay their bills, the Scottish Government has chosen to penalise people who have provided the homes politicians have failed to provide for decades.”