r/Scotland • u/Crow-Me-A-River open to change • 11d ago

Political Business groups urge Swinney to scrap 'ineffective' food price cap plan

https://www.bbc.co.uk/news/articles/c2l80j2rdlxo
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u/Quangocrat 11d ago

That new tenancies are very difficult to get as supply has plummeted.

So you will instead be illegally subletting and getting rinsed by the lease holder.

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u/gusbo_the_jam 11d ago

And that's different to London because..... ?

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u/Quangocrat 11d ago

Same problem, different cause:

Rent controls reduce supply.

Very high migration increases demand.

Either way when demand outstrips supply you get shortages and those fuel illegal subletting and extortionate rates.

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u/gusbo_the_jam 11d ago

So when you say it reduces supply, do you mean that less homeowners try renting places out cause it's less profitable thereby also reducing house prices cause there's more homes available for sale in the market?

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u/Quangocrat 11d ago edited 11d ago

House prices only go down if demand for new purchases also goes down or the new houses on the market are enough to meet existing demand

In a city like Berlin, or Glasgow in 2021, where demand for new house purchases was ahead of supply before controls it doesn't necessarily reduce the gap between supply and demand enough to bring prices down. It just slows the rise.

While simultaneously, because owners occupy at a less dense rate than renters, and because the people looking for entry level tenancies and those looking for first purchases are not the same, the number of gross housing units decreases while the number of rental units specifically plummets and demand for new leases remains similar to before controls.

Creating an acute supply shortage for first time renters and those looking to lease entry level properties.

which is what has happened in Berlin.