The Scottish government has committed to introducing rent controls as part of the Scottish Housing Bill – but experts warn that it could hurt investment in the sector.
As part of first minister John Swinney’s Programme for Government – announced earlier this month – he said the government’s Housing Bill would be amended to boost tenants’ rights and introduce long-term rent controls.
When the coalition between the Scottish National Party and the Green Party collapsed earlier this year, it was asked whether housing policy might become less radical. But as a minority government, the SNP will have to rely on other parties to pass their bill – and the Greens, who could give them the votes they need, have warned them not to water it down.
Rent controls are also popular with Scottish voters, according to a YouGov survey for think tank Future Economy Scotland. More than 80% of respondents either strongly supported or tend to support them.
What will happen to housing investment if rent controls come in?
State investment in housing is set to go up. Elsewhere in the Programme for Government, the first minister pledged almost £600 million for affordable housing in Scotland, of which around £100 million will be spent on building 2,800 mid-market rental homes.
But this could be outweighed by private investors pulling back from rented housing as rent controls are introduced. Earlier this month, developer Ediston announced plans to convert two planned blocks of Build to Rent homes in Edinburgh to student accommodation. While the company partly blamed high interest rates and construction costs in a letter to local residents, they added that the government’s rental restrictions meant that “Build to Rent projects in Scotland are no longer deliverable for the foreseeable future.”
Separately, the Scottish Property Federation, which advocates for the country’s real estate industry, estimates that £3.2 billion in direct housing investment is under threat from the Scottish Housing Bill. And according to a survey of Scottish estate and letting agents by Propertymark, 59% have noticed more landlords selling their properties or leaving the market completely.
But the issue of rent controls may be more nuanced than these reactions seem to indicate – their impact will depend enormously on how they are implemented. As things stand, the Housing Bill will allow Ministers to designate all or part of a local authority as a rent control area. Within such an area, rent increases may be capped at a specified percentage or amount (which may be 0%) or an amount calculated with reference to other factors, such as inflation. Designation of an area as a rent control area will moreover automatically expire after five years if not cancelled sooner.
If few rent control areas are set up, or maximum rental increases are set high, the effect on the rental market will be less – although developers and landlords would still need to have confidence that future governments will not set stricter limits.
Other devolved headlines
Housing emergency declared in East Renfrewshire – Scottish Housing News
Second homes for sale in Pembrokeshire treble after council tax hike – BBC
Council to reject new homes over fears non-Welsh speakers would live there – Wales Today
