Scottish rent cap addressed a problem ‘that didn’t exist’

Scottish private sector rents have risen at a rate in line with inflation over the last nine years, according to a new analysis.

The data from letting agents DJ Alexander shows rents increased by 40.7% between January 2015 and February 2024.

However, inflation rose by 32.25% over the same period, resulting in a net increase of just 8.45% – or an average annual rise of 0.94%.

This comes despite the introduction of rent cap legislation in October 2022 – legislation which the firm says addressed a problem ‘that didn’t exist’.

And since average house prices rose by 41% over the same period, rent rises have simply kept pace with the wider housing market.

The increase in Scotland’s rents

The analysis also found that most of the increase in Scotland’s rents has occurred since the introduction of the Cost of Living Act in October 2022.

The firm says that rents rose by 22.3% between January 2015 and October 2022, but have climbed by 14.4% since then.

David Alexander, the chief executive of DJ Alexander, said the data suggests the rent freeze legislation has backfired.

He explains: “Rather than reduce the rate of rent rises, it has resulted in a substantial increase in prices.

“As a result of this legislation, tenants have experienced a greater rate of rent rises in the last year and a half than they did in the previous seven years.”

Rents had risen by less than 1% for nearly eight years

Mr Alexander questions the need for the legislation in the first place, highlighting that rents had risen by less than 1% for nearly eight years before its introduction.

He says: “Given that rents had risen by less than 1% over nearly eight years you would have to question whether this was legislation introduced to resolve a problem that didn’t really exist and has actually resulted in a much poorer outcome for the key people involved.

“The obvious conclusion from this data would be to say that interfering in the market has produced an unwanted result which is not beneficial to tenants.

“Yet somehow the latest data has made some members of the Scottish government believe that this is proof that further restrictions on the private rented sector are required to reduce rents.”

He added: “The reality is that it will simply make the situation worse and harm tenants more by restricting the availability of homes to rent.”

Mr Alexander also points out that Scotland needs more private and social rented properties to help bring rents down in the long term.

He said: “The current trajectory can only produce a greater housing emergency across the whole of Scotland resulting in fewer homes at a time of greater demand.”