The key to reducing rents is increase the housing stock - David Alexander

The Scottish Government is set to bring the country’s passenger railway industry back into public ownership on 1 April.

No doubt there are some practical reasons for this move but one cannot help feeling it was partly motivated by the kind of political dogma that now characterises our country – “i.e. public sector good, private sector bad”.

Whether State ownership improves the lot of passengers we shall have to wait and see. But as someone whose younger self commuted daily to and from work on the Glasgow suburban network, I’d point out that those critical of today’s private railway operators might change their tune had they experienced regular train travel in the days of nationalised British Rail.

Reassuringly, there are no plans – at least not yet – to nationalise the privately-rented accommodation sector. But there could come a time when it has to operate under such a tight, government-led regulatory “umbrella”, that nationalisation takes effect in all but name.

The truth is that landlords and property investors are increasingly concerned that the Government’s consultation programme, “A New Deal for Tenants”, is simply paying lip service to the private rented sector (PRS) by inviting views and opinions but with the intention of implementing pre-determined ideological policies.

To emphasise this point, the consultation paper states: “It is acknowledged in this draft Strategy that the private rented sector (PRS) has further to travel than the social sector and therefore the weight of policy proposals where views are being sought, are for the private rented sector.”

In reality the level of complaints is greater in the social housing sector than the PRS; rent increases have been higher compared to the PRS; and long-term maintenance problems are greater after years of under investment.

The paper also states that since 2006/2007 the proportion of tenant income spent on housing in the PRS is 26 per cent compared to 24pc in social housing. In reality, rents for two-bedroom properties in the PRS over the last 11 years have risen at a rate comparable to inflation (25.1pc compared to 24.3pc over the same period). Interestingly, two-bedroom social rents have risen at double the rate of those in the PRS between 2013/14 to 2020/21 increasing by 24pc compared to 12pc in the private rented sector.

Median gross earnings have also increased broadly ahead of rents (26pc compared to 25pc since 2010) although, again, there has been an estimated increase of 36pc in the median monthly household income in the private rented sector from 2010 to 2020.

The Scottish Government says rents have been increasing at a higher rate in the PRS than wages (they haven’t); that rents have been increasing above inflation (they haven’t, with average rents and inflation running at around the same level and in 14 out of 18 areas in Scotland they have actually risen at a rate below inflation); and that people can’t afford this to continue without intervention (they can as median wages among PRS tenants have risen at 10pc more than their rents).

The PRS market in Scotland is already the most heavily regulated and controlled in the UK with no administrative fees; no section 21 evictions; a rent tribunal to mediate in conflicted cases; stronger security of tenure than in England and Wales; and tenants required to give just one month’s notice to end leases.

Rent controls, which the Government seems keen to introduce, will do nothing to tackle rising rents which is simply a matter of supply and demand, i.e. too many people wanting to live in certain areas with insufficient homes for them in which to live. The key to reducing rents is to increase housing stock whereas rent controls will create the exact opposite by reducing supply as investors flee the market.

Recent studies of rent controls in San Francisco, Berlin, and Stockholm have shown that younger tenants end up paying for older tenants; property shortages emerge; waiting lists grow ever-longer; and overcrowding increases as illegal sub-letting occurs.

If the consultation process is to be fair and equitable the Government must listen to the views of landlords and investors, and do so with greater seriousness than it has shown so far. However landlords and investors should not sit back and simply wait to be “asked”; they need to be proactive and take up whatever opportunity the process provides to put their views forward.

They need to do so to protect their own financial interests and that of their families – but also for the 700,000 Scots who currently rent their homes privately and for whom further legislation, especially rent controls, would turn out to be an unmitigated disaster.

David Alexander is managing director of DJ Alexander