DJ Alexander warns private rented sector will shrink if reforms go ahead

DJ Alexander warns private rented sector will shrink if reforms go ahead

As the consultation period for the Scottish government’s ‘A New deal for Tenants’ ends on Friday, DJ Alexander Ltd has warned of the potential outcome if this proposal becomes law.

The firm, part of the Lomond Group which is the largest lettings and estate agency in Scotland, said that the Scottish government should be concerned about what will happen to the private rented sector (PRS) and the wider housing market in the coming five years if they implement the proposals outlined in their paper.

DJ Alexander believes that by 2027 – two years after the legislation is proposed to be implemented – the likelihood, based on lessons from similar proposals in Berlin, Stockholm, and San Francisco, is that the private rented sector will have shrunk in size in Scotland; overcrowding in homes will have increased; waiting times for homes in the PRS will be longer; rents will be much higher for newer tenants than for incumbents; and the Scottish economy will suffer because of a lack of homes for EU workers.

David Alexander, chief executive officer of DJ Alexander Scotland, said: “Unfortunately this paper has been created for ideological reasons rather than as a practical approach to effective legislation. It seeks to address a problem that the paper itself denies exists. While the Scottish Government states that rents are soaring and becoming unaffordable the consultation paper states that “Two-bedroom PRS rents over the last eleven years have risen at a rate comparable to inflation, 25.1 per cent compared to inflation of 24.3 per cent over the same period.

“Median gross earnings have also increased broadly ahead of rents (26 per cent since 2010 compared to 25 per cent rise in rents) and there has been an estimated increase of 36 per cent in the median monthly household income in the private rented sector from 2010 to 2020.”

He continued: “Clearly there are higher rent increases in the most popular areas but that is simply market forces. Individuals can choose to live in less expensive areas which would represent a lower percentage of their income.”

“The PRS in Scotland is already, rightly, the most heavily regulated and controlled rental market in the UK with no administrative fees; no section 21 evictions; a rent tribunal to mediate in conflicted cases; the strongest security of tenure in the UK; and one month notice for tenants to withdraw from rental agreements. Therefore, the PRS in Scotland is already a fairer deal for tenants than any other part of the UK.”

Mr Alexander concluded: “There is undoubtedly an issue with demand exceeding supply in the Scottish housing market. There are too few homes to sell and rent and prices are rising in response. However, the answer is to build more homes, to expand the social housing sector, to boost the home building sector, and to encourage greater investment in the private rental market. This may not generate headlines, and is certainly more expensive and complex to implement, but it will ultimately produce a more effective, fairer housing market in the future.”

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