― Scotland’s housing market should offer people a quality public rental option, whether for young professionals not ready to enter the mortgage market, lower income renters who have few good rental options or families at any point on the income scale who simply don’t want their lives dictated by mortgages. Public policy should also seek to constrain house price rises but also drive up the highest possible thermal performance for new build houses.
― Scotland also needs forms of stimulus after the Covid lockdown and public rental house building linked to an industrial strategy to create many more domestic supply chains can create that stimulus.
― There is a financing model which means this can be achieved at unlimited
scale without public subsidy, involving three steps:
- Use ‘Land Value Capture’. At the moment the public buys land and pays
for it as if planning permission had already been granted – but planning
permission is a value added by the public sector and the public sector
can capture that value rather than give it away by buying land only at
its current use value and not its later value with planning permission. - Then borrow from the Scottish National Investment Bank over
mortgage-style periods of time (30 years) and spread the cost of the
borrowing over that period so that rents are low. - Finally, build in a proper maintenance budget so these remain high-
quality houses in perpetuity. It is also possible to sell off a limited
number of plots (for self build) and a small proportion of the houses.
This can give the public developers some additional budget to include
extra public infrastructure in new developments.
― To achieve this the Scottish National Investment Bank should be given
immediate dispensation to operate as a proper bank and local authorities
should open ‘lists’ for families who want to live in one of these houses.
Supply can then be allowed to meet demand.
Rents
Initial rents should be set against a points system to reflect the value of the property. Rent increases be capped at a rent affordability index to ensure increases do not push tenants into hardship. A move towards indefinite tenancies as default, away from short-term contracts. Ensure that all tenants are entitled to a hardship defence in relation to evictions. Create a Scottish Living Rent Commission, to oversee these recommendations and to serve as a centre of expertise for the Scottish Private Rental Sector.
Rents in Scotland are increasing faster than many tenants can afford, and many are being forced into poverty by these increases. Women are particularly hard-hit by high rents due to a gender pay gap of almost 18%. PRS tenants are disproportionately young, non-white and non-British, meaning there is a crucial equalities aspect to making the PRS fairer. High rents, insecure tenancies and poor quality housing have an enormous public cost; directly through housing benefit and discretionary housing payments; and indirectly through the costs associated with homelessness and the health impacts of damp and cold housing. Scotland’s tenants are amongst the least secure in Europe.
In order to bring rents under control and to give tenants security of tenure, we propose the following changes: That initial rents be set against a points system to reflect the value of the property That rent increases be capped at a rent affordability index to ensure increases do not push tenants into hardship A move towards indefinite tenancies as default, away from short-term contracts Ensuring that all tenants are entitled to a hardship defence in relation to evictions The creation of a Scottish Living Rent Commission, to oversee these recommendations and to serve as a centre of expertise for the Scottish Private Rental Sector