Uncertainty and discouragement must stop if landlords are to provide the accommodation needed for Dundee to grow, says Amanda Wiewiorka (Director, Wardhaugh Property)
For the past two decades Dundee has been at the centre of what could be one of Scotland’s greatest city regeneration stories. The growth of the biotech sector, the video games industries and the variety of education and research opportunities, not to mention the transformation of the Waterfront are the signs of a city that is developing rapidly. That is good not only for Dundee and the wider Tayside region but for the whole of Scotland.
In the Private Rented Sector (PRS), we have seen a similar transformation in the city. For years, the market in Dundee was flat with rent levels and yields low, restricting the ability of landlords to either expand their portfolios or improve existing properties. However, in the past couple of years all that has changed – yields are increasing and investment has been on the up. As a result, there have been more properties available for rent, including landlords bringing derelict homes back in to use, as well as an increase in quality and standards, providing more value for money for tenants.
This increase in the supply and standards of accommodation is vital for any region looking to grow and thrive, be that the rented accommodation, hotel rooms or new housing for families or students. However, it is the PRS, in particular, that provides the kind of high-quality and flexible accommodation that employers and workers require, be that in Dundee itself or in the wider Tayside area.
However, this optimistic outlook is being threatened by tax changes and other uncertainties that are making it harder for landlords to invest either in new properties or in renovations and improvements. For example, tax changes brought in last year by Westminster and Holyrood are already starting to choke off investment. This, coupled with the continued uncertainty around the EU referendum vote which we are told could reduce the attractiveness of Scotland for business investment and to students, is making landlords cautious and highly risk-averse. Although there was a rush of buyers prior to April when the increase in the Land and Building Transactions Tax (LBTT) took effect, we now hear from landlords in Angus and Dundee that they are holding back on investment until the uncertainty around the EU Referendum has passed.
Unless there is a halt to actions which create uncertainty or discourage landlords from investing in more privately rented property, there is a real danger that the fantastic economic turnaround we are seeing take hold in Dundee could stall, with far-reaching implications not only for the city but for the wider Tayside region and Scotland.