Agents Furious at Permanent Rent Controls proposed by politicians

Agents have expressed their anger at permanent rent controls proposed by the SNP and Green Party politicians running the Scottish Government.

The proposal in the new Housing (Scotland) Bill - launched yesterday - states that it will be possible to designate all or part of the area of the local authority as a rent control area. But this can only be done if Scottish Ministers are satisfied that restricting the rate of increase in rent payable under private residential tenancies in the area to be designated is necessary, and proportionate for the purpose of protecting the social and economic interests of tenants, and is “a necessary and proportionate control of landlords’ use of their property in the area.”

Rent “may not be increased by more than an amount specified in the regulations which may include— (a) a specified percentage (which may be 0%), (b) an amount falling within a specified range, (c) an amount calculated with reference to one or more specified factors, or (ii) other specified criteria (including a formula).”

Timothy Douglas, Head of Policy and Campaigns at Propertymark, says: “The Scottish Government’s continued quest for rent control and restrictions on rent increases are laid bare in the Housing (Scotland) Bill. The measures will do nothing but add extra burden on landlords and local authorities with no additional reward for tenants at a time when resources and finances are under extreme pressure. 

“More practical rules and timeframes are needed around changes to let property and requests for pets as well as notice periods for departing joint tenants. 

“Fundamentally, though, the long-term aim for the Scottish Government must be to re-balance supply and demand levels for private rented property. A review of all recent tax changes that impact private landlords is urgently needed and must form part of these reforms.”

And David Alexander, the chief executive officer of Scotland’s largest lettings agency, has expressed his anger too.

Alexander, who runs DJ Alexander Scotland - part of Lomond - comments: “So once again rent control areas are being proposed without evidence that they have ever worked anywhere in the world. The recent experience in Scotland of the rent cap introduced in October 2022 has resulted in unprecedented demand and rents rising at their fastest ever rate, and a housing sector that is in crisis with four local authorities having said they were experiencing a housing emergency.

“The problem is this Bill will be extremely difficult to implement in practice. Will a designated rent control area be an entire council area, specific areas, and how will councils be able to collate all of the relevant data on tens of thousands of rents if the system is to be able to accurately assess rent levels and rent increases. Will cash-strapped councils even have the resources to get this information, pull it together into a report and monitor its implementation. Will there be more funding for councils to do this and what is in it for them.”

The Bill states: “If there was a relevant rent level increase during the period of 12 months before the start of the current tenancy, the initial rent under the current tenancy may not be more than the final rent under the immediately preceding tenancy. If there was not a relevant rent increase during the period of 12 months before the start of the current tenancy, the initial rent under the current tenancy may not be more than the final rent under the immediately preceding tenancy as increased by the permitted amount for the area in which the property is situate.”

In response to this Alexander comments: “This means that the initial rent is key as increases will only be allowable in designated rent control areas at a level decided by Scottish Ministers and this can include a 0% increase. Why would landlords and investors want to be involved in this?

“It is unlikely, therefore, that this will work in practice, and it certainly won’t be beneficial to tenants. Crucially it also ignores the fact that landlords, property investors and corporate institutions have the very real option of relocating elsewhere or of simply walking away from the sector. Given this bill seeks to limit rent increases between tenancies there may be many property investors who feel that enough is enough.

“At a time when funding for more social housing has been slashed it seems odd to target the only alternative tenants have in Scotland which is the private rented sector. Demand is at record levels, rents are rapidly rising, and this legislation is aimed at restricting the revenue of landlords and investors who have the option of selling up and moving a few miles south of the Border where similar restrictions on their investments are not in place.”