SNP's ruinous rent control policy fuelled fastest-rising rents in UK – and it’s about to get worse
It is never a good sign for a government to be undertaking policy U-turns. When the then Prime Minister Margaret Thatcher told the Conservative conference in October 1980 “the lady’s not for turning”, despite the pressure on her to change the direction of her economic policy, it was viewed as a courageous stance from someone in a position of authority. Conversely, governments which continually chop and change their direction are seen to be weak and rudderless.
And so it is with our current SNP administration at Holyrood, where we have U-turns being announced on a weekly basis. At the end of last week, climate action minister Alasdair Allan told parliament that the previously proposed ban on installing wood burning stoves in new homes would now be dropped, after a substantial backlash from rural communities.
Advertisement
Hide AdAdvertisement
Hide AdThis plan, introduced by Humza Yousaf’s government when there was a coalition between the SNP and the Greens, was designed to cut Scotland’s carbon emissions, but failed to take account of concerns across rural Scotland around the need for these sources of heat, particularly necessary for off-grid properties in periods of extreme weather. The ban had been attacked by the Deputy First Minister Kate Forbes whilst she was on the backbenches, so it is not perhaps surprising to see the change in direction now she is in government.
The U-turn on wood burning stoves is just the latest in a long line from the SNP administration. Holyrood last week was debating changes to the Climate Change Act, watering down the targets for reducing carbon emissions in Scotland. We have seen similar shifts across other policy areas, many in the environmental space such as the ditching of the proposed deposit return scheme. It is not hard to see a connection between the departure of the Greens from government, and the adoption of a new policy of realism from the SNP minority administration.
Too much meddling
All that said, there are still policy areas where further movement is desperately required. The new Housing Bill from the Scottish Government will implement significant changes to the private rental sector, which will be unwelcome and likely to damage further a part of the economy which has suffered from too much meddling in recent years, to the detriment of all involved.
It is welcome that the SNP will no longer be pursuing an outright rent cap, as had previously been introduced by the Scottish Greens’ co-leader Patrick Harvie whilst he was in ministerial office. But the now restricted plans for rent controls will still do more harm than good.
Advertisement
Hide AdAdvertisement
Hide AdRecent figures tell us that around 70 private landlords are leaving the property market every month, according to data from the Scottish Landlord Register. In reality, the actual figures are likely to be much more significant than this, due to delays in the register being updated.
A supply and demand problem
It all chimes with evidence from letting agencies who say that private sector landlords have been selling up, as a direct consequence of Scottish Government policy on rent controls. The temporary rent cap previously introduced meant that those landlords, more than three-quarters of whom only rent out a single property, no longer considered this to be a viable economic exercise, when they faced rising costs from mortgages, insurance, repairs and maintenance.
The consequence of the shrinkage of available properties means, unsurprisingly, that there is a mismatch between supply and demand for rental property. The entirely predictable consequence of this is that rents shoot upwards when properties become empty. The evidence is there for all to see. Scotland has seen the fastest rising rents in the UK, despite being the only nation to have introduced rent controls.
These increases have real-world consequences for tenants, as indeed does the shortage of available properties. It was only last year that Glasgow University was warning prospective students to consider deferring their courses because of the difficulties in obtaining affordable accommodation in the city. The rate of homelessness has soared, with the number of households in temporary accommodation now at record levels.
Advertisement
Hide AdAdvertisement
Hide AdHousing association concerns
We have also seen the loss of potential investment in the build-to-rent sector. Hundreds of millions of pounds worth of potential developments have not proceeded due to uncertainty around the Scottish Government’s policy direction, leaving investors to take their funds to spend elsewhere in the UK, and exacerbating the shortages in the private rented sector. And the issues felt by private landlords are reflected in very similar concerns raised by social landlords and housing associations.
The new Housing Bill contains plans for permanent rent control areas, meaning that the ability for landlords to increase rents will be restricted even where properties become empty. In many ways, this creates an even worse situation than the one that currently exists, where the previous rent cap only applied in ongoing tenancy situations.
‘SNP knows best’
It seems that the SNP in government have not been prepared to learn the lessons from the ruinous rent cap that previously existed. It had precisely the opposite effect to that intended; far from protecting tenants, it actually resulted in a faster growth in rent levels to historically high levels, growing much faster than other parts of the UK.
Despite all the warnings from those involved in this sector of the economy, once again SNP ministers think they know best. The opportunity for a complete rethink in this area of policy once the Greens were kicked out of government has been overlooked, and Scotland will suffer as a consequence.
Advertisement
Hide AdAdvertisement
Hide AdIt is one area where a more substantial U-turn would have been very welcome, but, for now, “Swinney’s not for turning” is an unfamiliar catchphrase which will end up costing us all dear.
Murdo Fraser is a Scottish Conservative MSP for Mid-Scotland and Fife
Comments
Want to join the conversation? Please or to comment on this article.