Rent freeze extension ‘ignores damage to sector’
A rent freeze on private rented property is likely to be extended, prompting a renewed backlash from landlords and investors.
Tenants’ rights minister Patrick Harvie was today accused of “ignoring the serious damage” that the tenants’s rights legislation is doing.
Mr Harvie insisted the emergency rent freeze for private tenants, introduced via the legislation introduced in October to ease cost of living pressures, remains “necessary and proportionate”.
He told MSPs he will recommend they approve an extension to the freeze and a moratorium on evictions.
However, a ban on social rent increases will be lifted from April after the Scottish Government reached an agreement with landlords – such as councils and housing associations – to keep rises below inflationary levels of 11.1%.
The rent cap on the private sector expires on 31 March but Scottish ministers can seek parliamentary approval to extend the legislation for two six-month periods if necessary.
Mr Harvie said: “Clearly, there are still economic challenges facing private renters and there is not the opportunity to agree a collective voluntary approach in the private rented sector given the very different nature of the sectors.
“I would anticipate that it will remain necessary and proportionate to extend the rent cap provisions beyond March 31 in the private rented sector, while recognising the Act gives power to vary what the cap actually is.”
On social rent, he said: “In light of the voluntary agreements that have been reached across the social sector, I can confirm that we will now bring forward legislation to expire the social rented sector cap provisions from March 2023.”
But property professionals accused the minister of not listening to their concerns and adding to the problem rather than solving it.
David Melhuish, director of the Scottish Property Federation, said the extension of a rent freeze for private sector tenants will “deter much-needed investment”.
He said: “It is difficult to see how this can continue to be viewed as emergency legislation when the cap on some of those who are least able to pay in the social sector has, in effect, been removed.
‘We are disappointed that the Scottish Government continues to ignore the serious damage that this legislation is doing to the long-term supply of residential properties in Scotland.”
He said the uncertainty that the policy is creating “has clearly increased the risk associated by investors with Scottish Build-to-Rent projects.”
Mr Melhuish added that the minister’s decision is not supported by the government’s own Scottish Housing Market Review.
“It is little wonder there is pressure on existing private tenancies with 29% fewer properties available to let and reports of hundreds of applications for individual properties placed on the market,” he said.
‘Scotland needs evidence-based policy and ambition from its leaders to increase housing of all tenures. Only then can we hope to make a mark on the country’s housing crisis.’
Propertymark, which also represents the sector, met industry partners yesterday and is preparing formal proceedings as part of a Judicial Review.
Commenting on the ministerial statement, Timothy Douglas, head of policy and vampaigns, said: “Once again, the Scottish Government has failed to acknowledge what is happening in the private rented sector and the damage that legislation capping rents is causing.
“Alarmingly, the Minister also failed to acknowledge the impact of planned future legislation for the private rented sector that also includes energy efficiency targets that many landlords will struggle to afford.
“We have recently written to the Deputy First Minister expressing our dismay at the budget decision to raise taxes when purchasing buy-to-let property as there is clearly a lack of basic understanding on the economics of supply and demand.
“It seems nonsensical that on the one hand the Scottish Government is increasing costs for investing in the private rented sector and on the other hand accusing landlords of increasing rents.”