New rent rules and bill leave investors in limbo
Tenants Rights minister Patrick Harvie plans changes to rent controls that will keep the lid on increases but create more uncertainty for landlords and investors.
The minister has introduced new measures in anticipation of the October 2022 legislation expiring at the end of April. It introduced a 3% cap on rents, later raisedto 6%, and an eviction ban.
His new proposals are designed to allow landlords to return their rent prices to the open market value, while giving tenants greater rights of appeal through the adjudication process.
Among the proposed changes, landlords need to give tenants at least three months’ notice before the rent increase comes into effect and a landlord can only increase the rent once a year.
In a more complex set of rules, rent will be capped at the lowest of three values: the open market rent, the new rent proposed by a landlord, or a “permitted rent”.
The SNP says the changes will make Scotland a “fairer, more affordable place to live” by empowering those living in private tenancies.
The government will introduce a Housing Bill later this year, which is expected to establish a longer-term rent control system.
Commenting, SNP MSP for Glasgow Kelvin, Kaukab Stewart, said: “The Scottish Government is putting power into the hands of tenants, reducing rent increases and giving more certainty to those who are struggling.
“As we progress towards longer-term rent controls, it is vital that we empower those in privately rented accommodation and do everything we can to make housing affordable.”
Scottish Greens housing spokesperson, Ariane Burgess MSP, said: “No other part of the UK has come close to offering the protection to private tenants seen here in Scotland.
“The new rules will act as a bridge out of the emergency period and while the Scottish Government puts the finishing touches to its housing bill, which I expect soon.
“That bill will put in place long term rent controls and other new tenancy rights and cement Scotland’s leading role in the UK on radical renting reform.”
However, landlords and property agents say the rent controls, rather than empowering tenants, have seen property owners leave the market and investors pull out of deals, thereby reducing the available stock and forcing rents up.
John Boyle, director of research and strategy at Rettie & Co, said in a social media post: “Although containing increases within tenancies, they [rent controls] have likely contributed to double-digit rises in rents between tenancies and a drop off in available stock. Onus on the tenant now [is] to dispute a rent increase and an adjudication process will decide.
“This could lead to a lot of cases and delays in adjudication, but it may encourage more investors into the market while allowing tenants the ability to challenge unfair increases.
“At least that is the theory. As the government makes clear, a national system of RCs [rent controls] will be introduced in the new Housing Bill. Until investors see the scope of this, it is difficult to navigate this market with much certainty.”
Aditi Jehangir, secretary of Living Rent, said: “The government needs to take the situation seriously and come up with new, strong, emergency legislation rather than these unworkable proposals. The formula for calculating possible rent increases is incomprehensible.”