Scottish rent cap consultation sparks confusion concerns

A consultation on exempting certain properties from rent caps has been labelled as a sign of confusion in the Scottish government’s housing strategy by one property expert.

David Alexander argues that the proposal fails to provide the much-needed clarity for the private rented sector (PRS).

He spoke out after Housing Minister Paul McLennan announced the consultation to address demands for clearer rules on how rent controls will function.

The minister said that the government aims to balance the needs of tenants and landlords by focusing on local conditions to stabilise soaring rents while safeguarding landlords’ property rights.

The consultation explores allowing landlords to raise rents above the cap in cases of property upgrades or when rents have been consistently below market value.

It also proposes exempting build-to-rent (BTR) developers, who are seen as long-term investors providing a stable housing supply, potentially creating a two-tier market.

Rent caps are flawed

Mr Alexander, the chief executive of DJ Alexander, said he welcomed the consultation but warns that it merely ‘tinkers at the edges’ of a flawed policy.

He said: “Rather than providing a workable solution, it is actually an admission that rent caps are a flawed policy that will only make the situation for renters worse.”

He adds that the proposal risks fostering greater uncertainty and delaying meaningful action to address PRS challenges.

Ireland has a housing crisis

Highlighting the need for bold action, Mr Alexander points to Ireland’s approach to a similar housing crisis.

Ireland’s Taoiseach, Michael Martin, recently emphasised the need for private sector investment, stating, “We need to pivot more strongly to getting more private sector investment into the market.”

A recent OECD report suggested allowing Irish landlords to reset rents between tenancies to retain investors and boost rental supply.

Big ideas for change

Now Mr Alexander is urging the Scottish government to adopt similarly ambitious policies.

He explains: “What we need then are big ideas to create more change.

“The Irish government seems to be considering quite a powerful policy of financial incentivisation to deliver growth in the private rented sector, and this, along with a realistic re-evaluation of any policy on rent caps, would certainly go some way to addressing the current issues for landlords and investors in Scotland.”