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PRT - a calamity or an opportunity?


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Good evening all.  I am a new investor, in Glasgow.  I have a four bed flat in Hillhead and  a five bed which I am in the process of acquiring.  I am entering the HMO market, setting up a limited company and intend to grow a portfolio.  I was formally a litigation solicitor in the property/landlord and tenant sector.

 

It is fair to say that the Scottish residential letting sector is nervous of the new PRT regime (Private Rented (Tenancies) (Scotland) Act 2016).  Short Assured Tenancy agreements are a thing of the past (unless your tenant is already signed up to one,....for now).  The new tenancy regime seems to be worrying landlords, particularly those in the student market.   HMO agents are waiting to see how the changes will effect their clients.   It is suggested that there will be empty flats during the 'dead months' of June, July and August.  Others believe that tenants will be so keen to secure their  preferred flat for the following academic year that they opt to 'stay and pay' during the summer?  Maybe they will, because there is strong demand for student accommodation in Glasgow, but will this continue?  Further, even if demand remains strong, are students (or their parents) really going to cover the rent in the summer months when they cant be forced to pay [I accept that this assumes under the old/existing regime, tenants and personal guarantors could be reasonably and practically forced to pay rent if the property was vacated in May - from talking to people, it seems most tenants paid up during the summer months without a fuss, but it is further suggested that this will not continue under PRT]. 

 

Is anyone thinking about this?   The potential dead months are the summer months, ie the tourist season (or a large part of it).   Are any of you who are HMO/student  landlords looking into the short term holiday let market as a means of filling potential dead months (or even as a means of increasing gross yield)?  I know what many will say - each market has its own property profile and they are at opposite ends of the 'quality' continuum!  That might be party true, but here's the thing:  It seems likely that all landlords are going to come under increasing regulatory and quality-control pressure.   At present, most sectors have relatively light regulation (HMOs excepted).  Those landlords with HMO properties are likely to be already compliant (or semi compliant) if, for example, the holiday let market gets regulated.   Further, a 'really nice' flat will always be easier to fill with students or tourists and local authority inspectors are more likely to find favour with flats which have been well refurbed.  Are student tenants really incompatible with corporate/holiday lets over the summer?  I don't know.  My experience of student tenants if very positive.

 

Are Landlords with student tenants worrying about empty flats during the summer months?   Is anyone looking at this as a possibility and thinking of solutions? 

 

I'm open to ideas, comment, discussion and criticism!

 

Regards,

 

Jamie

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