Scotland’s new Housing Secretary has been warned not to meddle in the country’s PRS by pushing rent controls over housing growth.
Mairi McAllan has announced she is working on a plan to address Scotland’s housing emergency, but this must involve a substantial change in approach to the PRS, argues David Alexander, boss of lettings agency DJ Alexander.
He points to statistics that reveal how the Scottish government’s intervention in the PRS - through its Cost of Living (Tenant Protection) Scotland Act 2022 which introduced temporary rent controls - resulted in rents rising at a faster rate in the following two years than they had in the previous 12.
This highlights just how destructive the intervention was, says Alexander. “Tenants, who had been told that a rent cap would result in lower rents, have actually experienced increases almost equivalent to rises over the previous 12 years.
“This is unmistakable evidence that interfering in the operation of a market is fraught with problems and produces unintended consequences. Politicians intervene in markets at their peril.”
Alexander adds that another impact has been a freezing of property investment and falling housebuilding levels, with money which had been intended to be invested in Scotland being transferred to other parts of the UK where there is greater political and financial certainty.
McAllan has promised to act on stalled developments, but Alexander believes continued uncertainty over the Scottish government’s direction on the private rented sector is contributing to the problem.
“If Ms McAllan is to make an impact on the staggering levels of housing need in Scotland, then she must embrace the private rented sector. She should not interfere in the market with rent controls and should be encouraging greater investment through policies which encourage growth over the long-term by clearly supporting a benign approach to the PRS which has hitherto been missing.”
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