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Warning: New-look Scottish rent controls risk backfiring

David Alexander rent warning

A new adjudication process to replace Scotland’s Cost of Living Act will add further layers of bureaucracy without benefitting landlords or tenants, warns a leading letting agent.

The proposal seeks to introduce controls on the level of rent increases that can be levied from the end of March when the 3% rent cap ends. Instead, this must be based on either open market rent, a landlord’s proposed rent increase, or a new taper calculation that will specify a maximum ‘reasonable’ increase for that tenancy.  

If the difference between the current rent and the market rent is less than 6% then the proposed increase would be allowed if this was not higher than the market rent. Where the market rent is 20% above the proposed rent, an increase of 10% would be agreed and where it is 30% above, the increase would be fixed at 15%.

Detrimental

David Alexander, CEO of DJ Alexander Scotland (pictured), says intervening in the market has been detrimental to tenants, with average rents increasing above inflation in six areas of the country.

“The current proposal of giving a 6% increase is more than the historic annual increases have been,” he says. “Deciding the market value of the rent of every property would be almost impossible to do. The number of variables involved means that this would require an enormous team of people to work on it and even then, it would be doubtful if it worked.”

Simpler solution

Alexander believes a far simpler solution would be to encourage investment and growth in the PRS while simultaneously funding a substantial growth in the supply of social housing.

Propertymark has urged its members who feel frustrated to get in touch as it plans to continue campaigning against rent controls in Scotland. It says the government has not considered much of the group's evidence about the detrimental effects of the Act.  

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