Do rent controls limit in Scotland work?

Rent controls limit the amount a landlord can charge a tenant. This usually happens by freezing or capping rent increases over the course of a lease, but it can also apply to increases between tenancies.

Right now, these controls solely apply to social housing; there is no limit on the amount of rent charged to private tenants.

But worries about cost and record-breaking rent rises in many parts of the UK over the last couple of years have brought the issue to the public’s attention. Now, rent controls for the Private Rented Sector (PRS) are being discussed in a number of UK locations, marking a significant potential shift towards establishing more rent control areas by local authorities.

Recent rent caps and freezes in Scotland

During the post-pandemic cost-of-living crisis, the Scottish government implemented emergency legislation to help renters continue to afford their homes, introducing measures to a rent control area to alleviate pressures.

• At first, rentals were fixed from September 6, 2022 to March 31, 2023.
• The Act was extended for six months beginning April 1, 2023, when the rent increase cap was raised from 0% to 3% (6% in extraordinary cases), thereby impacting the current rent in private rental markets.
• The Act was extended for another six months, and it will expire on March 31st of this year.

Although current renters were protected against excessive rent hikes, the regulations did not apply to re-lets or new rentals, leading to concerns about evictions and housing stability.

And, with the high rate of inflation and landlords understanding that once a tenant moved in, they might not be allowed to raise the rent to reflect the true increase in the cost of living, Scotland noticed average rents climb dramatically during this time.

According to data provided by the Scottish Government, during the first year of the rent freeze, which ends in September 2023,

• An individual one-bedroom apartment’s average rent increased by 11.7%.
• For shared one-bedroom units, the average rent increased by 15.1%.
• Greater Glasgow saw a 22.3% average increase in two-bedroom residences.

This shows that the in-tenancy rent regulation, aimed at preventing an unreasonable increase in rent, simply results in a two-tier market. It also discourages renters from transferring, which reduces the quantity of available stock and increases new rents.

Now that the 3% cap on increases has been lifted, landlords of existing tenancies in Scotland will undoubtedly want to recoup some of their losses over the last 18 months by considerably hiking rents for new lets.

If tenants are concerned about the level of a proposed rent increase, the only option they have is to apply to a rent officer at Rent Service Scotland or the First-tier Tribunal (if applicable) for a rent adjudication.

Scotland is considering new long-term rent controls

The Housing (Scotland) Bill was introduced in Parliament on March 26th. Among other things, it recommends long-term rent controls, with local councils in charge of ensuring they are suitable for the needs of tenants and landlords in their area.

This is clearly meant to keep private sector housing affordable, but it is certainly to face strong opposition from landlords.

Even while there is currently a severe scarcity of rental properties throughout the majority of the nation, the government simply cannot afford to pass laws that would force more landlords to leave the business.

Example of Bristol’s rent controls -possible considerations for the Scottish government and tenants in Scotland

While there hasn’t been any current development on this, Bristol established a commission in July 2022 to examine potential improvements to the private rental sector in the city.

In the end report, it was recommended that yearly rent controls be set at 5%, with increases between leases limited to no more than 10% above the going rate in the market, a proposal that could significantly impact the private rental sector.

According to Ben Beadle, Chief Executive of the National Residential Lettings Association (NRLA), implementing these laws in Wales will simply “decimate the sector further” and be devastating for renters—many of whom are already having difficulty finding housing. He thinks that implementing pro-growth policies that would boost the availability of housing for all, particularly through the development of new housing, would be the greatest approach to regulate rents and lower expenses for tenants.

With the Scottish Government housing minister Paul McLennan declaring a housing emergency, new legislation to fix the housing system will need to be a work in practice where Scottish rent control measures or new housing bills will need to take in to account everything from housing supply and shortage of rental options, to cost of living crisis costs for tenants and private landlords, and provision for the social housing sector.

Western Lettings is here to assist you!

At Western Lettings, we can assist you discuss the existing rent on your property and how much you might be able to increase it for an upcoming rent review or re-let. To speak with one of our local lettings specialists, simply call us at 0141 357 0436 or you may visit our website for more information.