Proposed housing bill could have unintended consequences for landlords and tenants - John Blackwood

Improving housing is a tricky area for governments and others. As a policy objective it is critical because it impacts on all of our lives as well as the wider economy. As a political goal it is attractive because voters know its importance and feel they understand it.

John Blackwood, Scottish Association of Landlords

The difficulty arises in agreeing specific objectives and how to achieve them, because “housing” is a lot more diffuse and complicated than sometimes thought.

As Scotland’s largest membership organisation for landlords in the private rented sector, it is a position we understand. People with a preconception of us as “lazy landlords” who don’t work a real job are surprised when they find out most of us work long hours, at times to look after our tenants and their homes.

They are equally surprised when they find out most landlords welcome new requirements which seek to drive up standards. For example, in the furore last year when people realised owner-occupied homes would require additional fire safety measures, landlords looked on with some bemusement, those rules having been in place for us for a number of years.

It is in that spirit we have been engaging constructively with Pauline McNeill MSP as her Fair Rents (Scotland) Bill progresses through the Scottish Parliament and I fully understand why she is pursuing this legislation. The stated aim of the Bill, “to improve the way rents are set in private rented housing… reduce poverty and support low-income tenants and their families”, is one we would agree with and want to help pursue. The Bill contains some very helpful proposals, including a requirement for landlords to provide more information on actual rent levels and an analysis of how affordable the sector is. Having this kind of information could help improve the private rented sector in any number of ways.

My concern, however, is that the Bill proposes solutions before any of that helpful information is available. Why not swap this round? Get the information, absolutely, but then let’s agree an effective way forward to use this information to actually deliver the Bill’s objectives.

Implementing new measures without detailed information and data could have a negative effective or, at the very least some unintended consequences. For example, it would quite possibly lead to more frequent rent increases. The Bill proposes rent rises be limited to inflation plus 1% each year which landlords would be likely to implement in such a system even though more than two-thirds do not currently increase rents mid tenancy.

A second unintended consequence of limiting rent rises like this would be to take away the flexibility currently available to landlords to reduce rents. For example, 41% of landlords have reduced rents for their tenants during the Covid-19 pandemic but a cap on rent increases would prevent any return to the “old” rent and thus act as a barrier to those considering reducing rents to help tenants in financial difficulty.

Finally, a rent cap would increase risk and cost for landlords and investors. This could lead to a reduction in supply of private rented housing at a time of increased demand and, combined with a shortage of social housing, leave people struggling to find a suitable home at all.

I want to be clear that landlords are not against reform and change, quite the opposite. To continue to be successful, we must be innovative and adapt to the changing needs of our customers and society. But that change must achieve clear goals and be based on real data and expert analysis.

Although I don’t agree with some of the measures in the proposed legislation, I genuinely want to thank Pauline McNeill for her approach to this Bill and I look forward to working with her and others to create a private rented sector and a wider housing sector which truly delivers for the people of Scotland.

John Blackwood, Scottish Association of Landlords