The Scottish government has proposed a potential five-year ‘rent increase ban’ on rent hikes for landlords, which is raising concerns within the industry. Industry experts warn that this could dissuade landlords from investing in Scottish rental properties, leading to a decrease in the available rental housing.
Policies for establishing long-term rent controls are included in the new Housing (Scotland) Bill, initiated by Green MSP Patrick Harvie and Housing Minister Paul McLennan. These new rules are being considered amidst rapidly increasing rental rates in Scotland, some of the highest in Europe.
Local authorities will have the option to request permission to set up rent control zones where rent increases could be prohibited for periods of up to five years. This period can then be reassessed.
The bill also includes provisions for tenants, such as the right to keep pets, decorate their homes, as well as stronger eviction protections.
Harvie believes that these regulations will benefit both tenants, who will gain from improved rental conditions and security, and responsible landlords who will be recognized and flourish due to these practices.
However, David Melhuish, the director of the Scottish Property Federation, expressed disappointment with the bill, citing a lack of clarity which could discourage investment in Build to Rent projects in Scotland.
He pointed out that the supply of new homes for purchase and rent is crucial to solving the housing crisis. He warns that if the bill is passed without modifications, it could have a negative impact similar to that of the 2022 emergency rent freeze, which led to a halt in investment for Scottish rental homes.
David Alexander, the chief executive of DJ Alexander, also criticized the proposed rent control areas. He doubts their effectiveness, noting that the rent cap introduced in 2022 resulted in a spike in demand and the fastest ever increase in rents, leading to housing emergencies in some areas. He contends that the policy may not work and will be disadvantageous to tenants, and it fails to consider that landlords and investors have the option to invest elsewhere.
Timothy Douglas from Propertymark also commented that these measures would only add to the burdens on landlords and local authorities without any clear benefits for tenants, especially during a time when resources are already strained.
