The Scottish Government recently introduced a draft bill to parliament that seeks to drastically change how rents in the private rented sector are set. The bill may well be amended during the legislative process and is not likely to take effect until 2028 at the earliest.
The bill proposes that all Councils will have to assess the rents in their areas at least every 5 years and recommend whether Scottish Ministers should impose rent controls. If rent control areas are designated, annual rent increases would be restricted by a percentage or formula for mid-tenancy increases and between tenancy increases in those areas for up to 5 years.
The effect of this would be to remove a landlord’s right to reset the rent to a market level between new tenancies.
We do not believe the Scottish Government has thought through the unintended consequences of this policy. There are two key consequences of how rent controls would impact a designated area :
- if landlords cannot increase the rent between new tenancies, they will have little incentive to repaint and re-carpet and even less incentive to spend on major upgrades for new kitchens, bathrooms or heating systems. This will inevitably lead to a lower standard of accommodation in the rental sector. This is not good news for tenants or landlords.
- if landlords cannot make an attractive return on their investments due to limits on the rent they can achieve, they are likely to sell up which will reduce the supply of rental properties and ultimately increase rents in the long term for tenants.
We strongly oppose the rent control element of the bill. Rent controls do not work and ultimately drive down the quality and quantity of rental properties and lead to higher rents in the long term. The Scottish Government should be focusing on increasing the supply of housing – building more social housing and encouraging greater access and affordability for new build private housing.
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