Scottish Parliament to consult on rent controls – Will we all follow?

by Readers Question

14:50 PM, 3rd June 2019
About 5 months ago

Scottish Parliament to consult on rent controls – Will we all follow?

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Scottish Parliament to consult on rent controls – Will we all follow?

There has been a trend in the Private Rental Sector for the UK to follow Scottish legislation and the general theory is that the various pieces of legislation have been introduced in Scotland and the market is still working well.

In reality the changes to the market in Scotland has come at a heavy price to tenants (particularly in Edinburgh). Rents have soared as landlords have moved over to the unregulated short term lets market.

From 2007 to 2013 Rents rises in Edinburgh followed inflation however since 2013 rents have risen 30% above inflation. https://www.citylets.co.uk/research/datahub/ This ties in with the introduction of various pieces of legislation such as the ban on agency fees, Installation of mains wired smoke detectors, Legionella Risk Assessment and Electrical Safety legislation.  In recent years there has also been the introduction of a new tenancy regime that limits the control landlords have for dealing with anti-social behaviour.

Now to deal with soaring rents the Scottish Government are consulting on introducing Rent Controls. In reality without admitting that they have over-regulated the sector and rolling back the legislation this is the only way that they will stop rents from increasing. Unfortunately, this will only result in an affordability crisis turning into a supply crisis as has happened in Sweden.
https://www.scottishhousingnews.com/article/scottish-labour-brings-forward-private-rent-reform-bill

A proposal for a Bill to protect private sector tenants by introducing measures to limit rent increases and to increase the availability of information about rent levels has been introduced by Scottish Labour. Proposed by Pauline McNeill MSP, the party said its Mary Barbour Bill will see the introduction of a new points-based system to enforce fair rents.

It would also see rents linked to average wages to ensure they are affordable, give tenants the power to challenge unfair rents or submit rent reduction claims and ensure that all private rented properties meet proper standards for health and safety and energy efficiency. Rules on restricting rent increases to once every 12 months was a key part of the Scottish Government’s Private Housing (Tenancies) (Scotland) Act, which came into force in December 2017.

However, Labour said the Mary Barbour law would regulate the private rented sector to ensure that no one is “forced to rent a home that pushes them into poverty”. Speaking at FMQ’s last week, Scottish Labour leader Richard Leonard said: “We have seen the return of private landlordism and rents have soared whilst wages have stagnated. “According to the Scottish Government’s own figures, over forty per cent of all children, living in the private rented sector are now living in poverty. That is 60,000 children.”

He added: “We think that private rent rises should be capped and controlled. So Nicola Sturgeon has a choice, will she take the side of rogue landlords and a broken housing market – or she can back Labour’s plans, and back our Mary Barbour Bill.”

An online consultation on the Bill has been launched and will close on August 6.

Arnie



Comments

Rob Crawford

15:19 PM, 3rd June 2019
About 5 months ago

"So Nicola Sturgeon has a choice, will she take the side of rogue landlords and a broken housing market – or she can back Labour’s plans, and back our Mary Barbour Bill.” Typically Labour consider all landlord as rogue!

Arnie Newington

17:44 PM, 3rd June 2019
About 5 months ago

Reply to the comment left by Rob Crawford at 03/06/2019 - 15:19
The SNP in Scotland have outflanked Labour successfully to the left e.g. free prescription charges and bridge tolls. So I would be very surprised if they didn't bring in rent controls as not to do so would push them to the right of Labour.

Larry Sweeney

23:20 PM, 3rd June 2019
About 5 months ago

The SNP have already raised taxes.
Now they want to restrict the mobility of tenants by introducing rent controls which cause shortages. More socialist clap trap.

Jireh Homes

10:48 AM, 4th June 2019
About 5 months ago

Many thanks Arnie for bringing this to our attention. Responded to the consultation and encourage all other Landlords resident or having properties in Scotland to do like-wise.

Appalled Landlord

14:03 PM, 4th June 2019
About 5 months ago

Lifetime tenancies and artificially depressed rents are what almost killed the private rented sector before 1988. A former Rent Officer has described the Alice in Wonderland rules he had to follow, and their consequences:

Before 1988
The picture was pretty miserable, with landlords unable to remove a tenant in occupation (a “sitting” tenant) and the controlled rent meant that the capital value would be typically half what it would be if the property could be sold with vacant possession.
Therefore, letting a property was a reluctant and risky choice.”

“Before 1988, the private rented sector contained just 9% of UK housing stock and the percentage was falling.
Most private tenancies fell under the Rent Act 1977 which granted to a tenant of unfurnished, self-contained (so not rooms) accommodation the right to remain in occupation provided that they adhered to the terms of the tenancy.
In effect, a tenancy for life.
To ensure that this protection could not be circumvented by the landlord increasing the rent so as to make the property unaffordable, the rent was controlled by a Government agency, the Rent Officer Service.
Its officers – including myself – set Fair Rents under a formula contained in the Rent Act.
Rent officers had regard to the age, character, location, size and state of repair of a property in order to set the Fair Rent.
However, and critically, the officer had to imagine that the supply of such properties was equal to the demand, and determine a Fair Rent which had no scarcity value attached to it.
We would inspect the premises and consider comparable evidence of other Fair Rents.
We never considered market rents in part because the market was dysfunctional, with very little evidence other than a small number of fully furnished lettings by ex-pats, army officers, policemen and vicars of the family home while they were working away, and the furnished student letting market.
The other reason was that if such “unregulated” rents were higher than a Fair Rent, this was probably because of their scarcity value, which under the Act we were obliged to ignore.
Rents could be reviewed every two years unless in between there had been carried out significant works of improvement by the landlord.
The Fair Rent was the maximum that the landlord could legally charge and overpaid rent could be recovered through the courts.
Any attempt to coerce the tenant into leaving or indeed bribe them to move along were actions punishable by criminal penalties under the Protection from Eviction Act.”

“There was a reluctance by landlords to invest and the stock that I saw was generally in a poor state of repair with elderly tenants paying a low rent but unhappy with their lot.
There was hardly any accommodation available to let.”
https://www.propertyindustryeye.com/opinion-abolishing-section-21-and-restoring-rent-controls-could-return-us-to-bad-old-days/
So Pauline, if you fail to learn from history, and succeed in enacting your Alice in Wonderland law, you are quite right, no-one will be “forced to rent a home that pushes them into poverty”.  Because they will not be able to find one to rent.

Arnie Newington

14:15 PM, 4th June 2019
About 5 months ago

Interesting post AL I know that a lot of people had properties sat empty when they were abroad as they were scared to let them in case they couldn’t get them back.

The 1988 act was not well received in Scotland at the time and one of the reasons there is a ban on fees here is because part of the act that was repealed in England regarding premiums was not repealed in Scotland.


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