Housing issues will not be solved by rent control
Propertymark members continue to express a clear strength of feeling against rent control. We are campaigning for the Scottish Government to shift focus to other actions, including reducing the 6% surcharge Land and Buildings Transaction Tax puts on buy-to-let property, building more social housing, and returning empty homes to use.
Rent control policies do not just impact rents. The implementation of rent controls reduces house prices and can change landlord behaviour, making them more selective about potential tenants and marginalising certain groups, or disincentivizing spending on remediation and improvements, affecting housing quality.
Designation of rent control areas
The Bill proposes that local authorities should assess rents in their area and make a recommendation to MSPs about whether to impose rent controls in all or part of that area.
If passed at Stage 2, the amendment would limit rent increases to CPI + 1% of the existing rent. Where CPI is more than 5% the increase permitted would be capped at 6% of the existing rent. Rent increases in areas where rent controls are in place would be limited to one increase per property in any 12-month period, even if the tenant changes within that time.
Propertymark has raised concerns about the practicalities of the proposed requirements for rent assessments and reports, as well as the designation of rent control areas, including the capacity for already overstretched Local Authorities (LAs) to carry out these activities on top of existing statutory duties.
The Scottish Government insists it will work with LAs to ensure they have the resources they need, but we are concerned that impact assessments that go alongside the legislation are yet to be published.
Safeguards and exemptions for landlords
The Scottish Government have said they are considering exceptions to rent caps, for example when a landlord has invested in certain improvements to a property. It is also proposed that ‘new to market’ tenancies would be exempt from controls under certain circumstances, including
- The first tenancy of a property which has not been let as a principal home before.
- The first tenancy of a property following it being purchased with vacant possession by the current landlord.
- The first tenancy of a property which has been empty for a prolonged period.
- The first private residential tenancy of a property where the previous tenancy was a regulated tenancy under the Rent (Scotland) Act 1984
The Minister has confirmed that a consultation will be launched in early Spring 2025 to gather views on how exemptions should be applied.
Retaining investment in the sector
Emma Roddick, MSP, (SNP for the Highlands and Islands) who is a member of the Local Government, Housing and Planning Committee, stated that the introduction of rent controls will help increase investor confidence in the Scottish PRS.
However, Propertymark has provided evidence to Ministers of the ongoing damage to the sector caused by the Cost of Living legislation, an increase in the rates of Additional Dwelling Supplement for buy-to-let property, and the fact that landlords do not have access to grants to fund energy efficiency improvements. We continue to call for a review of all costs and taxes impacting private landlords as part of the Bill.
Representing our members
Propertymark will continue to lobby the Minister and MSPs for further amendments and work with Scottish Government officials so they fully understand the impact and unintended consequences of the proposals.
Feedback from Propertymark members is highly valued, and we will work closely with our Regional Executives from across Scotland to focus our campaigning. To provide input, please email [email protected] or contact your Regional Executive.
Whilst the Minister is beginning to recognise that landlords and investors are vital to solving the housing crisis in Scotland, and inflation-linked rent increases will support investor appetite, further changes are still needed to strengthen the legislation and give more confidence to letting agents and their landlords.
The Bill in its current form does nothing to address the demand for private rented property and the proposals for rent control areas, in terms of data collection, designation and reporting timescales are inconsistent.
Furthermore, rent control measures between tenancies removes any incentive for landlords to invest or upgrade properties and the Scottish Government must reduce the tax burden on landlords to bring down the cost of renting for tenants.
