Scottish government pursues rent controls with a vengeance

Holyrood MSPs yesterday passed through emergency legislation to freeze most rents until the end of March 2023. The legislation was on a fast track from earlier this week and passed its final stage yesterday.

After hearing that some residential rents had increased by up to 30 per cent in Scotland, a Holyrood committee headed by Tenants’ Rights Minister Patrick Harvie pressed forward with the move to bring in the freeze.

The Cost of Living (Protection of Tenants) (Scotland) Bill was backed by 88 votes to 29 earlier this week and it passed quickly along a fast-track route through the Scottish parliament’s scrutiny process to its conclusion yesterday.

The legislation gives Scottish ministers temporary powers to cap rents for both the private sector and social tenant sector, with the cap being set at zero, in other words, current rent levels.

The Bill says the rent cap will apply from 6 September until at least 31 March 2023. What’s more the legislation gives additional powers to extend or vary the cap for two more six-month periods and it is accompanied with an eviction ban when the reason for an eviction claim is as a result of financial hardship.

Unsustainable rental market!

Blaming the move on a “completely unsustainable” rental market during a “cost of living crisis”, Scotland’s MSPs voted for the move with an overwhelming majority but with Scottish Conservatives voiced their opposition.

The legislation is said to include some safeguards in exceptional circumstances for social as well as private sector landlords; providers of college and university halls plus purpose-built student accommodation will also be included in this, as well as the provisions on evictions.

Landlord representatives also voiced strong opposition to the move stating that it would force many of its landlord members to decide to leave the private rented sector.

Tenants’ Rights Minister Patrick Harvie of the Scottish Green Party has said that the bill is an “emergency response” by Holyrood to the “cost of living crisis”, but said it would be “balanced” giving some exceptions to the rent freeze where landlord face increased property costs, mortgage interest payments and some insurance costs.

The Scottish MSPs said as the emergency legislation was approved:

“Tenants will have increased protection from rent increases and evictions during the cost of living crisis under temporary legislation passed by the Scottish Parliament.

“The Cost of Living (Tenant Protection) Bill gives Ministers temporary power to cap rents for private and social tenants, as well as for student accommodation. The Bill also introduces a moratorium on evictions.

“This cap, which applies to in-tenancy rent increases, has initially been set at 0% from 6 September 2022 until at least 31 March 2023. Ministers have the power to vary the rent cap while it is in force. The measures can be extended over two further six-month periods.

“Enforcement of eviction actions resulting from the cost crisis are prevented over the same period except in a number of specified circumstances, and damages for unlawful evictions have been increased to a maximum of 36 months’ worth of rent.

“The temporary legislation balances the protections that are needed for tenants with some safeguards for those landlords who may also be impacted by the cost crisis.”

Tenants’ Rights Minister Patrick Harvie says:

“I am pleased that Parliament has passed this Bill to support tenants through the current cost of living crisis. People who rent their home are more likely to live in poverty or be on low incomes than other people, and many will be anxious about keeping up payments on their homes as their everyday expenses rise.

“With this Bill now set to become law, tenants in the social or private rented sector, or in student accommodation, will have stability in their homes and housing costs.

“I’m hugely grateful to MSPs for scrutinising and agreeing this legislation this week, ensuring these protections can be brought in with the urgency that this crisis demands.”

The Scottish Government is soon to launch a digital marketing campaign to raise awareness of the new legislation and what it means for tenants and landlords.

John Blackwood chief executive of the Scottish Association of Landlords has said that landlords’ interest rates on mortgages were going up and in future access to mortgages would become a major problem for residential landlords.

Mr Blackwood had told MSPs that he was worried about investor confidence in the private rented sector and that “Some existing landlords will quite frankly not be able to continue.” Timothy Douglas of Propertymark, representing Scottish letting agents, has argue that the plans will reduce supply and increase rents further.

There was also strong opposition from the social housing sector, with Aaron Hill of the Scottish Federation of Housing Associations (SFHA) voicing his concern about the rent freeze being extended beyond 31 March – it has said it would “be ineffective and prevent long-term solutions from being pursued.”

The rent control controversy

The idea of controlling rents by Government edict, often going against market forces, is a controversial political issue around the world.

Rents rising rapidly across the UK cities have brought the prospect of Government imposed rent control policies to the fore, with political debate focussed in Scotland, Wales and London. The Scottish National Party/Scottish Green Party coalition has now for the first time – outside of a pandemic – passed a nationwide system of rent controls, in an attempt to make housing more affordable.

Rents have been rising steadily throughout most of the UK’s biggest cities, making rental housing less affordably for millions of people.

However, landlords claim that this situation is partly due to anti-landlord legislation – increasing regulations and higher taxation – that is driving more and more landlords out.

As well as the “landlord flight” effect, rent controls are said to affect labour mobility, where tenants on artificially low rent are reluctant to moved around for work, and the general condition of the rental housing stock, when landlords are making insufficient money to carry out repairs and improvements, deteriorates over time.

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