More than one in seven Scots now rent a home in the private rented sector, due to the high cost of buying a property and challenges in accessing social housing.
The dramatic growth in the private rented sector (PRS) over the last 20 years means that renting privately is increasingly the norm and is no longer seen as a transitional tenure for students or mobile young professionals. Instead, it is housing more people, and for longer periods of their lives, including low-income groups, families with children and young people under 35.
In response to these changes in how people are living, the Scottish Government has introduced a package of reforms to the PRS – the most recent of which is the Private Housing (Tenancies) (Scotland) Act 2016.
Key aspects of this legislation include the introduction of open-ended tenancies and longer and simpler notice periods. No longer can tenants be asked to leave at the end of their tenancy for no reason. Landlords can now only gain possession of their property for specific legally-defined reasons – for example, if they want to sell it, or move back in themselves.
The Act also provides more predictable rent increases and mechanisms for tenants to challenge any increases they deem excessive, by appealing to the Rent Officer. Most controversially, the legislation also introduces the possibility of rent regulation within specific hot-spot areas. This Act builds on other legislative measures that prohibit letting agent fees in Scotland and require all private sector landlords and letting agents to be registered.
Our recent research, carried out for the UK Collaborative Centre for Housing Evidence (CaCHE), highlights how the 2016 Act has helped tackle concerns about the insecurity faced by private tenants, who could previously be asked by their landlord to leave when their tenancy came to a contractual break (typically at the six to 12-month mark).
We found that this inability to settle down and make a home can negatively impact on a tenant’s mental health. It is also disruptive to children’s schooling and threatens the important familial and friendship networks people rely on in the places where they live.
The reforms also speak to the affordability concerns expressed by tenants. Private renters are, in many cases, paying a higher proportion of their income on housing costs than homeowners and social renters. This is a particular issue for those on low and/or insecure incomes, as unpredictable earnings make it even harder to meet monthly housing costs.
There is much the rest of the UK can learn from the Scottish approach to modernising the PRS. However, a recent consultation on PRS reform in England did not go as far as the Scottish measures. The proposal only looked at introducing three-year tenancies, with no political will to provide protection for tenants when it comes to the cost of rents. There is currently limited regulation of letting agent fees in England, although the Tenant Fees Bill 2017-19, which is currently navigating its way through Parliament, seeks to change this.
It is vital this happens, for PRS tenants in England face costs running into thousands of pounds each time they move – due to security deposits and rent having to be paid in advance.
However, when they move is not always something in their control either. This uncertainty, and the financial stress of having to budget for such an eventuality, has a serious impact on renters’ mental health. The ending of a PRS tenancy is also one of the leading causes of homelessness.
Whilst regulation of the sector, and tenants’ rights, are much stronger in Scotland, there is no room for complacency. The rent regulation measures contained within the 2016 Act, apply only to in-tenancy increases within certain hot-spots, so market forces still prevail for new tenants negotiating a tenancy.
Despite tenant concerns about the affordability of renting, evidencing the need for a rent pressure zone is not an easy task for local authorities. A key issue is the lack of suitable localised rental data on the PRS. The 2016 Act would have more teeth if it was supported by a national PRS database, backed by the Government.
Finally, reform to the PRS shouldn’t be considered in isolation from affordable housing supply. For those on low and/or insecure incomes, social housing provides a more secure anchor than private renting. We therefore need more affordable housing and for the UK Government to follow Scotland’s lead in ending the Right to Buy.
Kim McKee is a senior lecturer in Social Policy & Housing at the University of Stirling.