A significant rent gap is emerging between those already in tenancies and those seeking new accommodation despite a Scottish Government cap on rises, a report has shown.
The latest quarterly report from leading estate agents Citylets priced the average cost of rent across the country at £1,081 over the period April to June 2023 – an increase of 11.4% compared to the previous year and a 35.5% change in five years.
The cost surpassed £1,000 for the first time in the first quarter of 2023, costing tenants an average of £1,007 per month.
Experts suggest it is resulting in an “apparent” rent gap between those who have already secured accommodation and are covered by the Scottish Government’s Cost of Living (Tenant Protection) Scotland Act 2022 and those who are looking to secure a let property.
An initial rent freeze was announced in September 2022, before being extended until March 31 2023 where it was then replaced by a cap preventing private landlords from increasing the rent my more than 3% which will not expire until September 30 2023.
Edinburgh and Glasgow were the areas recorded with the highest monthly increase, with rents priced at an average of £1,477 and £1,141 respectively, according to the data.
In Dundee, rent averaged £891; £871 in West Lothian; £835 in Aberdeen; £768 in South Lanarkshire and £745 in Renfrewshire.
Renfrewshire was the only area assessed which had not witnessed a double digit change compared to the previous year, with a 7.4% increase in average rents from 2022.
The report states the increases underline “what many in the industry feared from the outset that the new legislation would acerbate the supply demand imbalance”.
It added: “The rent gap between those already in accommodation and those seeking new properties to rent will now be apparent for many would-be movers looking to move within the sector on a like-for-like basis and will likely acerbate supply choice further.”
Aberdein Considine’s Adrian Sangster, contributing to the Citylets report, said: “The media have recently been referring to a ticking timebomb in the mortgage market.
“Scotland’s PRS (private renting sector) timebomb started ticking several years ago and despite many warnings, the Scottish Government appear happy to let it explode with those they claim to be protecting, suffering the most.”
It comes after the Everyone Home Collective released a report stating the private rented sector could help in Scotland’s homelessness crisis amid a shortage of social housing.
The lobby group, consisting of 40 charities and academics, suggested landlords could be incentivised by Government ministers to improve access and affordability to lower income households.
Tenants’ rights minister Patrick Harvie MSP said: “Our emergency legislation has led the way within the UK at a time when rents have been rising across the UK. It applies to most existing tenants and places a cap on in-tenancy rent increases, stabilising rents to help tenants to stay in their homes.
“Since April 1 2023, private landlords with a tenancy subject to the cap have been able to increase a tenant’s rent in-tenancy by up to 3% or can apply to Rent Service Scotland for approval of an increase of up to 6% in specific circumstances.
“Anywhere else in the UK, private tenants have faced a double whammy of uncapped rent rises both during and between tenancies.”
“We agree that the private rented sector has a role to play in helping provide more people with homes. That is one reason why we ended no fault evictions in 2016 and further strengthened eviction protection last year, again well ahead of anywhere else in the UK.
“That is also why we consulted on our New Deal for Tenants draft rented sector strategy which sought views on improving accessibility, affordability choices and standards across the whole rented sector in Scotland.”
Aditi Jehangir, national secretary at Living Rent, a trade union supporting tenants, said those in rented accommodation “bear the brunt of the housing crisis every day”.
She said: “In Scotland, we have had the rent freeze and then rent cap which have protected private tenants from rent increases within tenancies. But these measures just didn’t go far enough. Landlords have jumped at every opportunity to increase rents, using loopholes such as joint tenancies, pressuring tenants through eviction threats or simply maxing out new market rents.
“And that’s why we are facing these insane rent increases: because landlords are seeking every opportunity to exploit us and will continue to do so with impunity until the Scottish Government brings in stricter and more robust rent controls that cover the property (and not just the tenancy), tackle quality issues and bring rents to an actually affordable level.”