Linking rents to wages an over reaction says Apropos by DJ Alexander Ltd

David Alexander joint managing director of Apropos by DJ Alexander

THE PROPOSED “Mary Barbour Bill” by the Labour party in Scotland is a broad solution to a very localised problem according to analysis of latest data by a leading property management company.

Apropos by DJ Alexander Ltd, one of the UK’s largest family-run property management businesses, believes that the Fair Rent (Scotland) Bill, as it is officially known, would tie private sector rent rises to average wages at a time when 15 out of 18 areas of Scotland have experienced below inflation advertised rent increases between 2010 and 2018 and when average wages increased by 15.4% over the same period.

Between 2010 and 2018 the three areas with above-average rent inflation were Forth Valley (0.8% above inflation); Greater Glasgow (12.6% above inflation); and Lothian (23.6% above inflation). In 2018 the average rent in Scotland for a one-bedroom property increased by 1.7% and for a two-bedroom by 1.5% in a year at a time when inflation was 2.4%.

David Alexander joint managing director of apropos by DJ Alexander Ltd, commented:

“The importance of the Private Rented Sector (PRS) in Scotland has never been greater. Between 1999 and 2018 the PRS in Scotland has grown from 5% to 14% of total housing stock whilst social housing has declined from 32% to 23% over the same period. The need for a strong and sustainable PRS is, therefore, essential in providing homes for Scotland’s growing population.”

“Scotland’s 158,505 landlords provide 414,000 properties yet pay substantially higher sums both to buy properties and in personal taxation than their counterparts south of the Border. Their costs are higher at the same time that rent rises across nearly every area of Scotland are below inflation.”

David continued: “Clearly rental demand is greatest in Edinburgh and Glasgow and rents have been rising at a greater pace in Lothian and Greater Glasgow. But this is due to the enormous growth in population, particularly in Edinburgh, over the last ten years or so resulting in demand outstripping supply in the housing market.

Between 2008 and 2018 Edinburgh and Glasgow’s population grew by 13.0% and 8.9% respectively at a time when the Scottish population increased by 4.6%. Edinburgh’s increase was the second-largest percentage growth in the UK (after Manchester).”

“At the same time, Edinburgh has the highest percentage of working-age people in employment and the highest skilled workforce in the UK compared to any other major UK city. Scotland’s capital also has the third-highest average hourly pay of £15 per hour.”

David concluded: “If legislation is introduced which seeks to limit rents in growth areas such as Edinburgh and Glasgow the economic impact could be severe. If the PRS reduces in size, there is insufficient social housing being built to house the tens of thousands of workers who want to work in Scotland.

“If landlords are pushed out of the market by unrealistic financial constraints at a time when margins are already being squeezed by financial, legislative and regulatory changes then landlords will leave the market. A better solution would be to work with landlords to ensure the PRS is operating fairly, efficiently and transparently offering the best housing solutions to individuals. This could be coupled with an immediate housebuilding programme to build affordable housing, which might usefully be linked to key worker incentives. Legislation which simply equates average incomes to rents will produce a disproportionate impact in different parts of Scotland and will not achieve the desired aim of making Scotland’s two largest cities more affordable.”

The latest stories