Charity campaigners in Scotland, as in England, are calling for more tenant security and affordability, but property industry leaders are warning against distorting the market with rent capping and overzealous rental law reform.
Scotland’s rental market is coming under scrutiny as the election approaches, as some property industry leaders voice their concerns over the Scottish Government’s plans to reform tenancy laws amid fears the proposed regulation may have unintended consequences.
The Scottish proposals mirror, but go beyond those Labour have set out in England as Labour’s plans are a form of rent control that would also include longer term tenancies and an upper ceiling on annual rent increases.
A Scottish Review Group produced a report for Ministers in May 2014 recommending “that the current tenancy for the Private Rented Sector, the Short Assured Tenancy and the Assured Tenancy, be replaced by a new private tenancy that covers all future PRS lets”, and ministers accepted this recommendation.
Shelter Scotland, as in England, has been calling for some time for reforms to the country’s private tenancy regime, and has recently launched its “Make Renting Right” campaign in Scotland.
Ewan Foreman, managing director of Edinburgh letting agent 1Let told the Scotsman newspaper:
“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.”
As a national housing crisis in general and the private rented market in particular have increased the number of people renting, and the cost of doing so, the issues have steadily climbed up the political agenda.
Demand for private rented accommodation in Scotland has increased considerably following the “credit crunch” as would-be first time buyers have been forced to rent for longer, and a crisis in social housing in Scotland means more low income families are in private rented homes.
Increasing demand for rentals in Scotland has led to rising rent levels and consequently the number of renters in arrears has also increased.
Shelter Scotland’s “Make Renting Right” campaign is calling for new tenancy agreements to prevent families from being shoved “from pillar to post”.
Graeme Brown, director of Shelter Scotland, has 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.”
In March the Scottish Government published its second consultation titled a “New Tenancy for the Private Sector” which sets out proposals for new rental controls aimed at preventing renters from short-notice evictions and abuses of their rights.
These reform proposals include plans to scrap the “no-fault” repossession clause (equivalent to the section 21 eviction process in England), new laws to control rent increases, and explores the possibility of the need for full blown rent controls.
Rent control it seems is popular with the general public with around 17 per cent in favour in a recent poll and 25 per cent saying they would be more likely to vote for a party if it included such measures in its manifesto.
Arguing strongly against these measures, John Blackwood, Scottish Association of Landlords told the Scotsman newspaper:
“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.
“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.”
Other leaders in the Scottish lettings industry have voiced their concerns and warn that the Scottish Parliament at Holyrood is in danger of bringing in laws that go too far and could have unintended consequences for tenants.
Dan Cookson, head of research at Lettingweb, told the Scotsman:
“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.
“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.”
Foreman at 1Let went on to say:
“It will take more than regulation to deliver the real changes needed to improve Scotland’s rental market.
“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.”
“That is how we will start to deliver improvement for tenants in Scotland in real terms and in ways that they will actually notice.”
— LandlordZONE (@LandlordZONE) May 5, 2015