Rent Controls hit capital values according to letting...

Landlords and owner occupiers alike could lose the most financially from rent controls according to a prominent rentals expert.

The claim comes from David Alexander - managing director of DJ Alexander Ltd, part of the Lomond Group’s lettings operations ion Scotland - has first hand experience of the rent control threat, currently from the Scottish Government.

He says analysis of countries where rent controls have been imposed shows that the biggest losses were experienced by homeowners in the areas where this policy was imposed. Rent controlled zones were viewed as less desirable in the property market resulting in falling prices and valuations in these areas declined.

Alexander says: “The property market is driven by mood and anything which potentially dampens that mood has an impact on value. The proposed introduction of rent controls in Scotland, which is a policy primarily targeting landlords and property investors, will actually impose a greater financial burden on those homeowners who live in the areas where these zones are established.

“It is one of the rules of unintended consequences that a policy that targets one group inadvertently impacts more severely on another group. These recent reports, and others before them, have found that rent controls have a severe impact on house prices in the area they are introduced and that homeowners are the ones who end up paying.”

He continues: “The further irony is that many landlords and property investors leave the market as a result of rent control policies being introduced which results in higher rents, and less availability for tenants.

“Housing policies are always complex and always fraught with the potential to hit a part of the market which wasn’t intended but this one is guaranteed to cause financial problems for many Scots not involved with the private rented sector. It would be helpful if the Scottish Government, prior to introducing any rent control policy in our towns and cities, that Scotland’s homeowners were informed of the potential impact on property prices in the areas where this policy is to be introduced.”

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