Housing has been a priority for the Scottish Government since the SNP was elected as the Scottish Government and aimed to create a system which would be a blueprint for the rest of the UK. The private rental housing market was substantially reformed in Scotland in December 2017. The new open-ended, private residential tenancy agreement was introduced, the grounds for eviction simplified and the First Tier Housing Tribunal was born. Further reforms have followed, some temporary, such as the ban on evictions as a response to Covid, but the most significant of which since 2017 has been the introduction of a rent freeze and the further tightening of the controls on evictions. From September 2022 the landlord of a private residential tenancy may not increase the rent payable by more than the permitted rate.

The first thing to say is that the market accepted and adapted to what were not insignificant changes in 2017. Tenants and landlords alike have got used to the new private residential tenancy agreement, notices to leave and applications to the Housing Tribunal. Secondly, the Housing Tribunal appears to be working well, with few complaints, and has alleviated the burden upon the already stretched Sheriff Courts.

Notwithstanding these changes, Shelter Scotland is running a campaign designed to raise awareness of what it describes as a “housing emergency”, citing the loss of social housing, lack of affordable homes and rising rents as the problem. Rent increases, whilst barred for existing tenancies, are widely reported, with the system now encouraging landlords to raise rents when possible, to hedge against the impact of future regulation. In June 2023 average rental prices in Scotland were 16 per cent higher than in June 2022. Another increasing statistic, which will come as no surprise to anyone walking around the streets of any Scottish city centre, is the number of people reported homeless. In Edinburgh, where homelessness is the highest of any local authority in Scotland, it has been reported that homelessness had increased by 17 per cent between March 2022 and 2023.

Claire Thornber is a Partner, Addleshaw Goddard

Similarly, landlords complain that the tenant-friendly policies are a disincentive to remain in the market when combined with increased borrowing costs and changes to tax thresholds. The buy-to-rent “side-hustle” of recent years now seems complicated and has no guarantee of a return.

Potentially more significantly, the most recent legislative changes in Scotland may be deemed unlawful. The outcome of a judicial review of the Scottish Government's rent control and eviction ban legislation – fronted by the Scottish Association of Landlords, Scottish Land and Estates and Propertymark – is awaited.

In short, whilst it is not all bad, the UK Government would be wise to consider the Scottish experience before enacting any changes. Likewise, the Scottish Government would do well to pause before proceeding to introduce long-term rent controls.

Rent freezes and the tightening of the rules around evictions have so far proved insufficient and have strangled supply, exacerbating the problem. With the UK and Scottish Governments falling short of their own targets to deliver more homes, is the real solution to address this supply problem, deliver more affordable homes and/or find ways to attract, not dissuade, more private landlords to the market?

Claire Thornber is a Partner, Addleshaw Goddard

Could Scotland's private rentals system prove instructive for England? - Claire Thornber