New tenants’ paper must represent views of entire private rented sector
As featured in Scottish Housing News.
Landlords and property investors are increasingly concerned that the current consultation is simply paying lip service to the sector by inviting views and opinions on the paper but with the intention of implementing pre-determined ideological policies on the private rented sector.
To evidence this point, a consultation paper states: “It is acknowledged in this draft Strategy that the private rented sector (PRS) has further to travel than the social sector and therefore the weight of policy proposals where views are being sought, are for the private rented sector.”
The level of complaints is greater in the social housing sector than the PRS; the rent increases have been higher compared to the PRS; and the long-term maintenance problems these homes face is greater after years of under investment.
The Scottish Government’s consultation paper also states that since 2006/2007 the proportion of income spent on housing in the PRS is 26% compared to 24% in social housing. Two-bedroom PRS rents over the last eleven years have risen at a rate comparable to inflation (25.1% compared to inflation of 24.3% over the same period). Interestingly, two-bedroom social rents have risen at double the rate of the PRS between 2013/14 to 2020/21 increasing by 24% compared to 12% in the private rented sector.
Median gross earnings have also increased broadly ahead of rents (26% since 2010 compared to 25% rise in rents) although again, there has been an estimated increase of 36% in the median monthly household income in the private rented sector from 2010 to 2020.
David Alexander, our Chief Executive Officer, said: “The Scottish Government state that rents have been increasing at a higher rate in the PRS than wages (they haven’t); that rents have been increasing above inflation (they haven’t with average rents and inflation running at around the same level and in 14 out of 18 areas in Scotland they have actually risen at a rate below inflation); and that people can’t afford for this to continue without intervention (they can as median wages among PRS tenants have risen at 10% more than their rental rises).
“The PRS in Scotland is already the most heavily regulated and controlled rental market in the UK with no administrative fees; no section 21 evictions; a rent tribunal to mediate in conflicted cases; the strongest security of tenure in the UK; and one month notice for tenants to withdraw from rental agreements. The PRS in Scotland is already a fairer deal for tenants than any other part of the UK.
“The consultation paper states that the Government wants rent controls to be introduced. Rent control does nothing to tackle the reason for rising rents which is simply too many people wanting to live in certain areas with insufficient homes for them to live in. The key to reducing rents is to increase housing stock. Unfortunately, the general outcome of rent controls is to create the exact opposite by reducing supply as investors leave the market.”
He continued: “Where is the evidence that rent controls work? From recent studies of rent controls in San Francisco, Berlin, and Stockholm the actual outcomes of rent controls are that younger tenants end up paying for older tenants; property shortages emerge; waiting lists grow to years; overcrowding increases as illegal sub-letting occurs; and demand outstrips supply as landlords and investors leave the market resulting in higher rents.
“Given that the Scottish Government has said that the changes they are seeking are primarily in the private rented sector will they listen to the views of landlords and property investors? I would encourage landlords and property investors to respond to the consultation to find out if the Government will listen or is the outcome already a foregone conclusion? How quickly could the Scottish Government replace the 340,000 properties in the private rented sector currently providing homes for over 700,000 Scots?
“Those who invest in the property market have options and they may decide to leave the market if the financial, regulatory, and legislative challenges continue. Rather than demonise the private rented sector the Scottish Government should be encouraging more individuals and companies to enter the market to meet the growing demand. Otherwise, there is the potential for enormous shortages in housing provision resulting in overcrowding and potential homelessness.”