While demand for rental property remains strong, landlords always have to be mindful of tenants’ ability to pay higher prices, according to the Scottish Housing Regulator.
Returns achieved by landlords in Scotland remain highly competitive when compared to other asset classes, the latest figures show.
The average monthly rent in Scotland hit £574 in September, the latest data from Your Move Scotland reveals. However, with rental price inflation running ahead of general inflation as measured by the consumer price index, buy-to-let landlords are being urged to recognise that tenants have, or are, reaching an affordability ceiling.
Speaking at the Glasgow and West of Scotland Forum of Housing Associations’ (GWSF) annual conference last week, George Walker, the Scottish Housing Regulator’s chair, reflected on the impact of the recent inflation figures.
He said: “You’ll know that inflation rose recently to 3%, the highest rate for more than five years. Most tenants in employment have seen earnings rise at rates either below inflation or indeed, not at all. Tenants on benefits have had to manage freezes on the uplift in benefit rates and the introduction of caps.”
Walker pointed to feedback from the Regulator’s National Panel of Tenants and Service Users, noting that two thirds of the Panel have concerns about future rent affordability.
He offered the following advice to landlords: “We look for you to consider tenants’ ability to keep paying rent in the longer term when setting rents. You should demonstrate transparency on costs and a vigorous pursuit of value for money to us and to tenants.
“We expect you to give tenants genuine options and choices during rent consultations and have a dialogue about costs versus service levels. Be clear on how you will take tenants’ views into account. And vitally, be clear on what is affordable for your tenants now and in the future.”