Blog: ‘Generation rent’ is an opportunity for Scotland
Last week’s media coverage of rising house costs and predictions of a growing private rental sector has again brought the issue of Scotland’s housing needs into focus. But while public perception traditionally favours home ownership, a stronger private rental sector will benefit all of Scotland’s residents, writes Heather Pearson.
It is widely predicted that house prices in Scotland will be among the fastest to rise in the UK over the next few years. The issue was highlighted again last week by PwC following the release of its regional analysis which expects Scotland’s average house prices to rise to £250,000 by the end of the decade.
With the addition of more stringent credit conditions and larger deposit requirements contributing to the number of people seeking rental properties, the amount of private tenants in Scotland is also expected to grow exponentially to outnumber homeowners by 2025.
Tagged ‘generation rent’, Scotland’s private rental sector is forecast for steep growth as an increasing number of Scots are being priced out of property ownership and renting is the only option. It should not be forgotten however that within this sector is also an increasing number of social housing tenants where, due to a lack of supply of social housing, this is also their only option.
Yet, despite the hysteria over a shrinking property ownership class, the rise of a strong, well-run private rental sector is to be encouraged and does present some opportunities for Scotland. It is important therefore that the diverse interests of parties either living in or involved in this growing sector are considered, as only then will it thrive.
From a consumer’s perspective, there is work to do in changing expectations so that renting is viewed as a viable and sustainable alternative to home ownership and in order to do so the product needs to evolve and adapt to meet the aspirations of ‘generation rent’. This work is already ongoing and demonstrated by Scottish Government’s Private Rented Sector Strategy which includes further reform of the regulatory and tenancy system and Homes for Scotland’s Building the Private Rented Sector.
It is a well-known fact that approximately 80 per cent of current landlords within this sector own less than 5 properties and many are “accidental” landlords in part due to the economic crisis. For those, keeping up-to-date with and complying with the increasing regulation and standards being introduced to the sector can be challenging.
The Scottish Government has also signalled its desire to bring more institutional investors into the housing market to increase both the quality and quantity of supply and this has the potential to transform the sector.
The shift therefore towards a more professional property rental sector, combined with a rising demand for rental properties, presents an ideal opportunity for professional property managers to step in and offer their services in the private rental sector and weed out the “rogue” landlord.
For the social housing provider there are many opportunities to become involved in the private rented sector and many are already. They are organisations which are well-resourced and necessarily up-to-date with the legislation and regulatory requirements of the rental so can offer real value to landlords for whom property management is not a full-time profession. They have a track record of managing properties at scale and have considerable advice resources which tenants can access in the event of a change in fortune or for those tenants who should already be within the social housing sector.
The regulatory framework within which they operate is attractive to the institutional investor and as most are also charities they also tick the corporate social responsibility and ethical boxes as the fees generated from this service will be ploughed back in to the social housing sector to deliver further housing and services.
Whether or not social housing providers are involved, however, an increase in professional property management practice across the private property rental market is both vital and likely as the sector grows. It is part of a robust portfolio of housing options being developed through ongoing reform and a stronger private rental industry will benefit Scotland’s living situation overall.