Rent control alone is not the solution to Scotland's housing challenges. Echoing Propertymark’s briefing to MSPs before the debate, Meghan Gallacher, Conservative MSP, called on the Housing Minister to admit that the Scottish Government’s rent control policy has driven up rents, priced thousands of Scots out of their homes, and resulted in the loss of thousands of private rented houses and flats. Additionally, she drew attention to the risk that billions of pounds of investment will be lost as a result of permanent rent controls, worsening the housing emergency.
Overall housing quality will suffer
Upgrades such as redecorating, replacing furniture, or installing energy-efficient systems are typically undertaken during vacancies. Rent controls linked to the property remove the financial incentive for such investments and create challenges for landlords that will have a broader effect on housing quality and overall market dynamics.
Whilst the Housing Minister’s decision to link rent caps to inflation is a step in the right direction, we were pleased to hear Mark Griffin, Labour MSP, state his intention to bring forward an amendment to pin rent controls to tenancies instead of properties. This move is essential to ensure property owners have the resources to maintain and improve private rented sector (PRS) homes.
Availability of homes at risk
Previous policy decisions have led to skyrocketing rents in Scotland, with the average monthly rent increasing 7.2% to £973 in the 12 months to September 2024. Our member data shows that on average there are ten applications per property from prospective tenants.
In the New Deal for Tenants, the Scottish Government talked about affordable rents, the supply of rented homes, and raising standards. However, the legislation does very little to increase the supply of private rented homes and only offers rent control as the solution to improve affordability for renters.
Rent levels are high because there are too many people who have to rent, and not enough homes available. Rents can only be reduced sustainably by increasing the overall supply of all types of homes, so that more people can get a social home or buy their own with a mortgage, and fewer private renters have to compete over each available home.
Define Rent Control Areas clearly
Arianne Burgess, MSP, from the Local Government, Housing and Planning Committee agreed with Propertymark that the Scottish Government must ensure that Rent Control Areas (RCAs) are clearly defined and easily understood. Currently, the designation of an RCA is open-ended and can be applied by local authorities differently across the country.
To help tenants and landlords, the legislation must set out if a designation is street, ward or area-wide. This would also ensure implementation is more consistent.
Good data is fundamental to good decisions
Burgess also expressed concerns about the capacity of local authorities to collect the necessary market data to inform decisions on rent control areas, drawing a comparison with the existing legal powers to designate rent pressure zones, which have not been used since they became law in 2016 due to a lack of reliable rent information.
Propertymark supports the call for a national approach to data collection and analysis, led by the Scottish Government, which prioritises understanding the reasons behind rent increases. This could be achieved by amending the Rent Notice under the Private Residential Tenancy to include actual rents paid, not just advertised rents, allowing officials to monitor trends at local and national levels.
Rent controls are not the answer to tackle the housing emergency in Scotland. Increasing the supply of homes to rent, reducing landlord costs and removing the tax burden to buy a property to let, will make renting more affordable for tenants.
Furthermore, the proposals and details for rent control areas in the Bill are limited, at best and offer no clarity for existing agents working with landlords or for new would-be landlords thinking of entering the sector.
Significant amendments to the legislation are needed if the Scottish Government want to raise property standards and make renting more affordable. This must include removing the application of rent control measures between tenancies to allow upgrades such as redecorating, replacing furniture, or installing energy-efficient measures.
