Looming rent controls may be deterring landlords from buy to let

A leading market analyst says the looming threat of rent controls may be deterring landlords entering the buy to let sector, or deterring existing ones from expanding their investments.

Doug Shephard, director of the Home website – which publishes a lengthy and authoritative monthly rentals and sales market snapshot – makes the observation in his October report.

Home says: “Rents have stabilised but this is despite falling supply, suggesting that other factors such as high prices and looming rent controls may be disincentivising landlords.”

Rent controls are definitely on the horizon in Scotland, where the Green Party’s recent involvement in the ruling coalition with the SNP has been undertaken on the explicit agreement that the Scottish Government will introduce rent controls within five years. In England and Wales, pressure groups such as Generation Rent and Shelter have been pressing the Westminster government for similar controls.

The latest Home report says that a scarcity of rental properties persists in all English regions, plus Scotland and Wales. 

Rents are up 5.3 per cent across the UK in the year since October 2020. However, despite reduced supply, Scotland and Wales indicate the lowest rental growth of 1.0 and 0.4 per cent respectively. 

The largest annualised average rent hikes remain in the South East of England (up 7.3 per cent) and the East of England (up 8.1 per cent).

Written by: Houseladder