The Bank of England has sounded the alarm over a worsening crisis in the rental market as high taxes and red tape force landlords to sell up.
The warning comes as new data on the Scottish market suggests that the SNP-Green rent restrictions are making leasing property more expensive for many tenants.
A "chronic" shortage of stock is now driving up prices at record rates - and one of Scotland's leading lettings experts has urged the Scottish Government to sort out the "mess" it has created in the sector.
In its Monetary Policy Report published yesterday, the Bank said demand for rental properties has continued to outstrip supply as “the number of landlords choosing to exit the market increased”.
Landlords have blamed a combination of factors, according to conversations held by the Bank, including “tax and regulation, higher maintenance and borrowing costs, and an inability to recoup increased costs in rents”.
Successive rate rises have meant that the average quoted rate for a new buy-to-let mortgage has jumped from 2.8% in December 2021 to 5.95% at the start of February, according to data experts Moneyfacts.
For a landlord with a £150,000, interest-only loan, this would mean monthly payments would more than double from £350 to £743.
However, in Scotland, rent rises are to be capped at 3% and evictions will remain banned under Scottish Government plans. This, together with the 6% additional tax landlords have to pay when acquiring buy-to-let property, has forced many to exit the sector.
The impact has been laid bare by a new Citylets report, which shows that a stock shortage has fuelled an "unprecedented" 12% jump in open market rents, suggesting that legislation designed to help tenants is, in fact, making it more expensive.
Adrian Sangster, National Lettings Director at Aberdein Considine, said landlords and tenants were both suffering as a result of the Scottish Government's policy failures.
“The chronic shortage of PRS properties available continues, whilst demand seems to be ever increasing," he said.
"As a result, rents throughout Scotland continue to increase along with the stress levels of many people desperate to find a home. The reasons why there is such a shortage have been well documented so I won’t repeat them.
"The political football that the Scottish PRS has become, was pumped up, kicked around and burst by politicians. It’s now landlords and tenants who are suffering for their failures.
"I hope the New Year’s resolution being written in Bute House is to apologise for the ideological policy failures which have created the mess, and to promise to take a common sense approach to sorting it out."