Industry body warns rent controls could hit investment as Scottish Housing Bill nears final stage

An industry body is warning of the potential consequences of introducing rent controls in Scotland as the Scottish Housing Bill nears its final stages before becoming law.

Propertymark cautions that such measures could deter investment but welcomed the Scottish government’s efforts to provide clarity.

Under the bill, in designated rent control areas, annual rent increases will be capped at CPI + 1%, up to a maximum of 6%.

Elsewhere in the debate, politicians criticised the Scottish Greens for demonising private landlords.

Lines the pockets of private developers and property owners

During the stage 3 debate, Scottish Green MSP Maggie Chapman pushed for an amendment to give ministers the power to implement a different rent control scheme on the student sector.

The Scottish Greens claim students should have the same protections as private renters and accused private developers of “lining their pockets.”

Scottish Green MSP, Maggie Chapman, said: “We know that the purpose-built student accommodation sector is getting out of control. Students in Vita Fountainbridge in Edinburgh, for example, are being charged £554, not per month, but per week. That just lines the pockets of private developers and property owners at the expense of students, at a time when we know that student homelessness is on the rise.”

In response, Cabinet Secretary for Housing Màiri McAllan says the Scottish government would reject the amendment and confirmed the Scottish government would exempt purpose-built student accommodation from rent controls.

She said: “The student accommodation sector operates very differently from the mainstream private rented sector, and rent increases in student tenancies do not generally take place mid-tenancy; instead, they are for a fixed-term duration, which is aligned with the academic year.”

If we demonise landlords we exacerbate the housing crisis

Elsewhere during the debate, the Scottish Greens were criticised by politicians for demonising landlords.

Scottish Green MSP previously claimed renters “are at the mercy of rogue landlords who are more interested in lining their pockets than they are in providing a stable home.”

Independent Scottish MSP Fergus Ewing criticised Ms Chapman’s stance towards landlords and pointed to an example from his own constituent.

He asked Ms Chapman: “What would the member say to my constituent, who wrote to me this week to say that she has one flat with a tenant who has not paid rent for six months, with arrears of £3,150, and she has incurred mortgage maintenance payments of nearly £2,000? She has proceeded to the First-tier Tribunal for Scotland and, due to there being a backlog of more than three months, the arrears are likely to be £4,800 by the time that the matter is settled.

“That person is not rich; she is an ordinary person. What advice would the Green Party give to people like that? How can they be expected to continue to rent out properties if that is the treatment that they must suffer in Scotland?”

However, Ms Chapman refused to answer the question, saying she would “comment later in the bill process.”

Edward Mountain, a Scottish Conservative also criticised the Scottish Greens stance towards landlords.

He told the debate: “Having been in the industry for 30 years, I take grave exception to the general characterisation that she makes of landlords. That is not my view of landlords. Maybe it is just that I work in the Highlands and in more rural areas, but landlords are not out to make life difficult for tenants. In fact, long-term tenants are much better for landlords than short-term tenants.

“Maggie Chapman’s characterisation does the industry a vast injustice. I point out to her that there are 300,000 let properties in Scotland. If we demonise all landlords and get rid of all that accommodation, it will just exacerbate the housing crisis that we face.”

Rent controls discourage investment

The debate also discussed rent controls with the Scottish government confirming designated rent control area, annual increases will be capped at CPI+1% up to a maximum of 6%.

However, Propertymark warns they discourage investment and create uncertainty for private landlords.

Propertymark says on its website: “Rent controls deter investment, reduce the number of homes available to rent, and create uncertainty for landlords and agents.

“Although we remain concerned about their long-term impact, it is positive that the Scottish government has listened to our calls for greater clarity and introduced changes at Stage 2. The Bill now states that in any designated rent control area, annual increases will be capped at CPI+1% up to a maximum of 6%.

“This formula is less restrictive than earlier proposals but still risks discouraging investment in the private rented sector, particularly at a time when landlords face rising mortgage costs, maintenance bills, and tax pressures.”

Propertymark also called for further exemptions before the bill becomes law including  landlords who make significant improvements to their properties should be exempt from rent control restrictions and landlords who have kept rents affordable over time must not be penalised.

Timothy Douglas, head of policy and campaigns at Propertymark, warns the final version of the bill must not reduce the supply of homes in Scotland.

He said: “As the Housing (Scotland) Bill reaches its final stages in the Scottish Parliament before passing into law, MSPs must ensure the legislation is fair for landlords, tenants, and agents, that it drives up standards, and, crucially, that it does not reduce the number of much-needed homes to rent in Scotland.”