House sales in Scotland have fallen for a fifth consecutive month as rental demand rises amid a rent freeze approved earlier this month.
The outlook for the housing market remains challenging amid a fall in market activity during September, according to the latest RICS UK Residential Market Survey.
Participants also expressed concern regarding the impact of new government legislation on the supply of rental properties, potentially pushing up prices and reducing choice.
The Cost of Living (Tenant Protection) (Scotland) Bill was passed in Holyrood earlier this month after being expedited as emergency legislation.
Following its approval, tenants have increased protection from rent increases and evictions for six months amid a cost of living crisis that has seen prices soar.
The Bill gives ministers temporary power to cap rents for private and social tenants, as well as for student accommodation.
Ian Morton MRICS, Bradburne & Co in St Andrews, said: “This may reduce the confidence of buy-to-let investors adding to their portfolios and in return not helping the severe shortage of rental stock.”
The survey found 24% of respondents reported a fall in new buyer enquiries in September, up from 20% in August, making October the fifth month in a row in which buyer interest has dropped.
According to RICS, sales expectations over the next three months also remain negative, with 5% of Scottish respondents expecting sales to fall in the three months ahead.
The outlook for prices has also worsened, with 24% of respondents anticipating that prices will fall over the next three months, up from 21% in the August report and 1% in July.
Euan Ryan, senior public affairs officer, RICS said: “RICS welcomes the Scottish Government’s focus on ensuring tenants have access to secure, high quality, safe and affordable tenancies amid significant economic challenges.
“We are also strongly supportive of efforts to improve the maintenance and energy efficiency of properties.
“However, we are concerned over the low supply of rental properties, which can lead to increased costs and reduced choice.
“Care must be taken to ensure that the Government’s current initiatives do not exacerbate this issue and prevent necessary investment in the sector. The Government must also bolster its own role in the delivery of affordable homes for rent to ensure adequate supply.”