The Rent Controls Scotland Needs

This paper makes the case for national rent controls and outlines the problems with the current system of rent pressure zones which have so far been inadequate at preventing the problems high rents and rent insecurity in Scotland.

Instead, rent controls could be designed around a points-based system links to the quality and amenities of a property (rather than market rates) and would be attached to the property rather than the lease.

A new Scottish Rent Affordability Index would peg maximum rents at affordable levels.

A Scottish Living Rent Commission would act as an umbrella body and a centre of expertise and regulation in the private rented sector.

The Private Housing (Tenancies) (Scotland) Act 2016 granted the Scottish Government the power to introduce localised rent controls or rent pressure zones (RPZs) if local authorities could convince them that:

• Rents payable within the proposed rent pressure zone are rising by too
  much.
• The rent rises within the proposed zone are causing undue hardship to
  tenants.
• The local authority within whose area the proposed zone lies is coming
  under increasing pressure to provide housing or subsidise the cost of
  housing as a consequence of the rent rises within the proposed zone.

Despite this legislation, or perhaps because of the limitations of it, rent controls are yet to be implemented anywhere in Scotland, and there are significant grounds to be sceptical that they ever will be. Most notably — as bodies such as Shelter Scotland , Edinburgh City Council and the Highland Council have noted — because there is currently no comprehensive survey of rent level data available on which to make such an assessment.

This paper makes the case for an amended system of genuinely effective, national rent controls, outlines the problems with RPZs, and proposes an alternative model that represents the kind of rent controls Scotland needs.

The key points it makes are as follows (with full detail in the main report):

The case for rent controls:

• Rents in Scotland are far too expensive, with increases continuing to outstrip both inflation and wage increases for many tenants.
• The quality of Scotland’s private rented housing stock is woefully inadequate.
• There has been significant growth in the private rented sector (PRS) since it was deregulated in the 1980s—meaning that issues in the PRS now affect far more people than in previous decades.
• Lower-income groups are more likely to live in the PRS and are thus disproportionately affected by rising rental costs in the sector.
• Better regulation provides an opportunity for substantial savings to the public purse.

The problems with RPZs:

• The burden of proof on local authorities is unreasonable and creates unnecessary barriers in making successful applications.
• RPZs only create rental limits within tenancies and do not prevent rent hikes between tenancies—doing little to stabilise rents in the long term.
• RPZs only limit increases in rent, so do not address the fact that rents in much of Scotland are already too high.
• RPZs do nothing to improve the quality of Scotland’s PRS housing stock. As detailed below, we believe this is a significant missed opportunity and that proper rent controls represent a powerful tool to improve the quality of Scotland’s PRS stock. The 2016 Act sought to provide greater tenant security, but without workable controls on rent, landlords can easily force out tenants through
  rent increases.
• RPZs can only be applied to small, localised areas, so cannot address the scale and degree of the rent problem in Scotland.

The rent controls Scotland needs:

• A points-based system of rent controls linked to the quality and amenities of the property, not simply market rates.
• A points-based system which attaches limits to the property, not the lease.
• A new Scottish Rent Affordability Index to peg maximum rents at affordable levels for tenants.
• A Scottish Living Rent Commission to act as an umbrella body and a centre of expertise and regulation in the private rented sector.