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Output poor says research

Landlords quit private rented sector as growth flattens

rent property to let

Rent growth is slowing according to new research (pic: Terry Murden)


 

More Scottish landlords will leave the private rented sector in the next year because of a lack of rental price growth, according to a study by property management firm. DJ Alexander.

Although the average private housing rental price has increased by 0.6% in Scotland over the last year in the medium-term growth is poor.

In Scotland annual rental price growth was last above 2% in June 2015 and has fallen steadily even sliding into negative territory four times since then.

In the last year across other parts of the UK average private housing rental prices grew by 0.9% in Wales, by 0.9% in England but there are enormous regional variations and medium-term growth is patchy.

David Alexander, managing director of DJ Alexander, said: “These figures highlight the tightening private rented market in Scotland and across many parts of the UK where margins are being squeezed and the casual landlord will be feeling the pinch.

“Many areas have almost static or barely rising annual price increases which, coupled with recent legislative changes which make it more expensive to be a landlord means that many will be pushed towards exiting the market.




“The tax changes introduced by George Osborne continue to reduce the offsets which make running a property more expensive while Chancellor Hammond has reduced capital gains tax (CGT) on selling rented property which makes the exit from the market more expensive.

“With the number of negatives increasing some Scottish landlords, many of whom only accidentally entered the market in the first place, may decide that now is the time to leave.”

Mr Alexander continued: “Although there probably won’t be many tears shed for private sector landlords leaving the Scottish market, they play an essential part in providing vital housing stock.

“The Scottish private rented sector has doubled in the last 15 years and now accounts for 15.2% of all housing stock with owner occupied on 58.1% and social housing standing at 23.0%) and houses many hundreds of thousands of people. If the market contracts too quickly there will be many people unable to find suitable accommodation.”

“Rental prices will rise and fall with demand, and investors and individuals must understand this. But it is also clear that the private rental sector plays a crucial role in providing homes for many people and the less attractive this market is for investors then fewer people will be inclined to be involved.”



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