Scotland is set to bring in emergency laws to freeze rents in a bid to help tenants cope with the worsening cost of living crisis.
Nicola Sturgeon, the first minister, announced the measure yesterday as she seeks to ease impact of the recent the surge in energy bills. The Scottish government also intends to introduce a moratorium on evictions until at least the end of March 2023.
“We will take immediate action to protect tenants in the private and social renting sectors,” Sturgeon said.
Sturgeon, who has long called for a freeze on the energy price cap, added: “The Scottish government does not have the power to stop your energy bills soaring, but we can and will take action to make sure that your rent does not rise.”
Living Rent, Scotland’s tenants’ union, described the planned rent freeze as a “huge win that would not have been possible without years of organising by members”.
The move was also welcomed by the Enough is Enough campaign, which called for the rent freeze to be extended across the UK.
But the decision was criticised by the Scottish Association of Landlords, which said the government was “attacking landlords for political reasons”.
David Alexander, CEO of DJ Alexander Scotland, said that the rent freeze represented a new low for the Scottish government and is designed to cover failures in Scottish housing policy under the SNP.
Alexander said: “The proposed announcement by the First minister of a rent freeze for tenants in the private rented sector tells you all you need to know about the Scottish Governments’ commitment to consultation and fairness. With the burden of the cost of the freeze being placed upon landlords the First Minister seeks to gain cheap political points whilst not addressing the fundamental failings of her own governments’ housing policy.”
“No government would tell supermarkets, pubs, or clothing manufacturers to freeze the cost of their goods, but it seems that Nicola Sturgeon and her colleagues believe the private rented sector is fair game. One parliamentary source is quoted in the media as saying if the cost of a freeze was met by landlords the policy would cost the Government nothing.”
He continued: “The result of this policy will be a shrinking of the private rented sector at a time when demand is at its highest. This has come at a time when local councils are seeking help from the private rented sector in housing the homeless as they have no capacity within social housing.”
“This policy underlines how inadequate the response of the Scottish government has been to delivering homes for the people of Scotland. There are currently 132,000 people on the social housing waiting list. There are only 1,000 more social housing homes available now compared with when the SNP came to power. Between 1979-1990 there were 63,795 new social housing dwellings completed. In the 12-year period from 2009-2020 there were 56,823 new social housing dwellings completed. This means that 12.3% more houses (6,972) were built for the social sector in Scotland by the Thatcher government compared to the current SNP administration.”
Alexander added: “This move marks a new low in the Scottish governments’ relations with the private rented sector and, given that this has been done without consultation, is a sign of desperation at a time when we need considered thought and action.”
Timothy Douglas, head of policy and campaigns at Propertymark, points out that landlords are also affected by the cost-of-living crisis.
He said: “It is not only tenants who are exposed to the effect of the cost-of-living pressures and as a key housing provider, private landlords will be asking what help they can expect to manage any additional costs they may have to bear as a result of today’s announcement.
“Furthermore, it’s unfair to suggest letting agents and their landlords will be routinely increasing rents at a time when many tenants are facing a further strain on their finances. All parties will need to continue to work together.
“We know the Scottish government is committed to a system of rent controls and is already considering a ban on winter evictions. What’s most alarming is that this feels like déjà vu with the potential for these new temporary protections to become permanent as has been the case with others introduced during the pandemic.”
Tom Mundy, COO at Goodlord, commented: “This rent freeze represents a potentially seismic new frontier in UK lettings policy. While we understand the need to support tenants, introducing rent control could mark the end of the private rental sector as we know it by stripping away the central incentive which encourages people to invest in buy-to-let properties.
“There’s a major risk that this freeze will push landlords out of the PRS market at a time when pressure on rental stocks is particularly acute. This will squeeze the whole lettings market and create bigger headaches for the Scottish Government later down the line. Long-term, it could serve to stymie all future investment in the space and fatally undermine the system.”
Simon Tillyer, CEO of Vouch, added: “This is a huge step from the Scottish government. It could be the first towards a fundamental re-write of what the UK lettings market looks like. At a time when too many landlords are already leaving the market and there are more tenants than there are homes available to rent, we should not be taking steps that will drive even more landlords away from the PRS. I wouldn’t be at all surprised if this is the final straw for landlords and sparks an exodus. This policy risks creating more problems than it solves.”
It’s only a short hop now to lifelong tenancies with no power by the landlord to regain the property.
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A freeze on rent prices without a freeze on the biggest rent cost (interest)? What planet are they living on? Yet when the Government considers a freeze on energy prices, they don’t ask the billionaire companies to meet the cost, the Gov offers to meet the difference!
Why not implement MIRAS (mortgage interest relief at source), at least partially or provide more deductibles so that landlords can offset expenses to make the difference? Anything!!
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I Co-wrote an article five years ago when the tenant fee ban came to pass in England and cited that in Scotland rents, as a direct result of the fee ban would increase significantly in Scotland and now five years post fee ban in England the situation is the same. I said back then that there would be an exodus of landlords due to increased cost and this is happening as we speak. Do the English or Scottish governments really think that bringing in rent controls will work as history has proved otherwise. Landlords are doing the maths and either exiting the industry or simply avoiding it due to legislative over egging and lack of margin. Sturgeon isn’t the sharpest tool and should refrain from medalling in issues that she simply has no understanding of. We really are led by donkeys. https://propertyindustryeye.com/the-truth-at-last-what-really-happened-in-scotland-after-letting-agent-fees-were-banned/
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The first step towards the communist state that many landlords have been predicting for the past few years.
Hopefully 1 of the landlord or letting agents bodies have a good legal team already in place to fight this unprecedented step by a government to take over private enterprises.
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Communist state LOL
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They doing it again. Look what happened in Covid calling for Rent Holiday & no evictions etc.We people that actually rent houses out, knew Landlords would be selling in their droves when they could after hearing stuff like this & tenants would then be worse off-And that’s what happened.Remaining Landlords now have mega demand & can charge what they like.These people in power who change sensibility make it better for that current tenant temporarily, but the next 100,000 looking for a house or move cannot do so, as no Landlord takes them or if they can, super expensive rents. It’s getting a case where only the well paid can afford to rent. All Govt & Council & Shelter & Generation Rent making.Shelter will applaud this & say it is working-As above for the current tenant. I’d say it works more for the Landlord & Letting Agent that slugs it out, as when the freeze or ban over, we all know rents shoot up massively as more demand comes. Letting Agents are loving the higher commission from higher rents. And why shouldn’t they. And us Landlords then end up taking it out of the innocent tenants by increasing the rents at every opportunity as we just don’t know when the next attack is coming. And we think we got a rent freeze coming again, we think Gees, best get some higher rent in now even though I was happy to leave at that existing rent to keep tenant happy. And before Generation rent shoot me down, I want rents to reduce so my tenants can have a choice to move, so I can sell my ruddy houses.
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This is not a solution!
Yet again it is a knee jerk reaction to the unexpected consequences of poorly thought out prior legislation. Except for the fact that they were warned by some very clever people that changing the tax regime and removing fees to tenants, etcetera would definitely increase the rent payable.
A significant number of landlords have left the PRS . The government have also sold off the majority of it’s housing stock. Housing Associations have barely scratched the surface of the loss of council owned properties.
The law of supply and demand mean that rent has only one way to go.
It’s not the fault of “greedy” landlords. It’s not the fault of “grasping” estate agents.
It is the fault of our pathetic excuse of a government. Not just this one but every one going back decades who have all congratulated themselves on the fact that our homes are our castles and the prices keep on going up.
Total insanity!
And don’t get me started on “Affordable Rent” or “Shared Ownership” both are an expensive trap that is linked to RPI. You wait until the calculations are done to increase rents!!! And of course Housing Associations borrow 100% of the money that they use to fund their developments. They are going to see significant rises in their costs. If they were barely profitable prior to the cost of living crisis, imagine what happens now. How are the government going to deal with dozens and dozens of Housing Associations going bust or needing to be put into Special Measures.
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A rent freeze to stop the cost of living? How about you don’t raise the price cap on energy prices?! Considering they make literally BILLIONS in profit…
How much profit they made in 2021:
– British Gas: £948m
– E.On: €910m
– SSE: £4.5bn
– Octopus Energy: £1.9bn
Should a rent freeze ever come into effect wave bye bye to the PRS… honestly, has nobody ever looked at the Rent Act 1977 as a case study for this stupidity?
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