The cost of living crisis and soaring fuel bills mean landlords may have to rethink the concept of all-inclusive rents.
That’s the view of David Alexander, chief executive officer of DJ Alexander Scotland - part of the London’s Group - who says rent increases are likely to be necessary.
“Landlords who offer all-inclusive rents may have to re-think their position. With utilities already rising at unprecedented levels and forecast to increase again in the Autumn it will be very hard to keep increasing rents to meet these greater costs.
“It is currently more essential than ever that landlords, investors, and agents should take care in explaining the reasons for rent increases whilst tenants, their representative organisations, and politicians must also take a realistic approach and understand the necessity for rising rents.
“Rental prices must rise to keep up with inflation and such increases are entirely necessary to cover greater costs if the private rental sector is to remain viable.”
He continues: “Highlighting rent rises in isolation misses the point that all goods and services are currently increasing at a higher-than-normal rate and rents are simply no different than any other market.
“All goods and services, must rise each year by at least inflation just to remain static.
“… Rents will increase substantially more in the coming year. This is not just because of skyrocketing inflation and the cost-of-living crisis, but to a shortage of stock and growing demand. We are seeing the welcome return of EU nationals to fill jobs, but this places an enormous pressure on the private rented sector which is the biggest supplier of homes to workers from outside the UK.”
DJ Alexander is Scotland’s highest profile and largest lettings agency and says rents in Scotland rose by 2.9 per cent in the 12 months to April 2022 compared with 2.5 per cent in England.
Although the Scottish annual rate has been higher than England and Wales each month since July 2021, over the long term since 2015, rents in England, Northern Ireland and Wales have risen at a higher rate than Scotland.
In the seven years since February 2015 up until April 2022 rents in Northern Ireland have increased by 19.9 per cent; in England 13.5 per cent; in Wales 8.0 per cent; and in Scotland 6.8 per cent.
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