As charity campaigns for security and affordability, industry warns against distorting the market with capping, writes Jeff Salway
SCOTLAND’S rental market is under renewed scrutiny as the election approaches amid a growing dispute over Scottish Government plans to reform tenancy agreements.
Further evidence that private renting has become a mainstream political issue came when Labour set out its plans for rent controls that would include longer term tenancies and an upper ceiling on annual rent increases.
Its move came just days after the launch of Shelter Scotland’s Make Renting Right campaign, which calls for reforms to the country’s private tenancy regime.
“With more people connected in some way to the private rented sector in Scotland, strong views about stability and fairness for tenants and the positive and negative effects of new regulation go to the heart of the current political debate,” said Ewan Foreman, managing director of Edinburgh letting agent 1Let.
The spotlight on the private rented market and the wider housing crisis has increased as both the number of people renting and the cost of doing so continue to climb.
Demand for private rented accommodation in Scotland has risen since the financial crisis as would-be buyers are forced to rent for longer and a crisis in social housing means more low income families are in private rented homes.
Rental costs and arrears levels have gone up as demand has increased. The average rent in Scotland jumped by 7.4 per cent in the year to March to £751 a month, according to Citylets. It said the cost of renting a two-bedroom home in Glasgow had risen by 9.2 per cent over that time, while two-bed rates in Edinburgh and Aberdeen went up 8.3 and 5.9 per cent respectively.
Rental increases have slowed in recent months, but Shelter Scotland has warned that tenants in Scotland need more stability. Around 312,000 families and individuals rent privately in Scotland, said the charity, including more than 80,000 households with children.
Its Make Renting Right campaign calls for new tenancy agreements to prevent families from being shoved “from pillar to post”.
Graeme Brown, director of Shelter Scotland, said: “Short-term tenancy agreements do not provide the stability and security that the more than 80,000 families with children living in the private rented sector need in order to live a settled life. Too often we hear of people being moved on, evicted or rents increased unreasonably, forcing people into the disruptive cycle of having to move house – every six months in some cases – preventing them from ever being able to put down strong roots and be part of a community.”
The Scottish Government published its second consultation on a “New Tenancy for the Private Sector” at the end of March, setting out proposals for new controls aimed at preventing renters from short-notice evictions and abuses of their rights. The reforms – for which consultation closes next Sunday – include plans to scrap the “no-fault” repossession clause, new laws on handling rent increases and also asks for views on the need for rent controls.
Almost one in six people polled by Survation last December came out in favour of rent controls, with one in four Scots saying they’d be more likely to vote for a party if it included such measures in its manifesto.
But the focus on rent controls and length of tenancy distracts from the real problems, argued John Blackwood, Scottish Association of Landlords.
“We need to move away from talking about the symptoms of the problem and tackle the real issue of the increasing shortage of housing and lack of investment in creating new homes for people to live in,” he said.
“Any rent capping would distort the market in different parts of the country and simultaneously discourage much needed investment in new housing which provides a sustainable solution to addressing a lack of supply in some areas.”
Others in the Scottish lettings industry claim that Holyrood’s proposals go too far and could have unintended consequences for tenants.
Dan Cookson, head of research at Lettingweb, said: “Tenants are broadly satisfied – our tenant survey in December highlighted that – but the industry has become defined by the bad experiences of the small minority. The challenge is affordability for those on lower incomes and the threat is that tenancy reforms as proposed will have enormous unintended consequences which will be of real damage to tenants, landlords and the economy.”
He argued that the Scottish rental market has “performed well” over the past 15 years. “Quality and choice have all improved and rents have increased at below inflation. The internet has played its part in that – being able to rent online means tenants know what is out there and the market is very competitive.”
It will take more than regulation to deliver the real changes needed to improve Scotland’s rental market, according to Foreman at 1Let.
“One size does not fit all. I would like to see more than one form of tenancy in Scotland and the proposed new landlord restrictions supported by landlord incentives aimed at encouraging investment into challenging sectors of the market,” he said.
“That is how we will start to deliver improvement for tenants in Scotland in real terms and in ways that they will actually notice.”