Housing (Scotland) Bill - use of powers: consultation analysis - final report

Overarching themes relating to rent controls

Chapter 1 of the consultation focused on possible exemptions from rent control provisions for Mid-Market Rent (MMR) and Build to Rent (BtR) properties (Questions 1-15). Chapter 2 asked a number of questions about the circumstances under which a landlord of a property in a rent control area could increase the rent by more than the level of the rent cap (Questions 16-25). It also asked about the processes that should go along with any modifications that might be introduced (Questions 26-31).

Analysis of respondents’ further comments across these questions has identified a number of recurring themes and frequently raised issues, which are summarised below.^[7]

General concerns about the use of a modified rent cap or exemptions

Many respondents, including those supporting the Living Rent campaign, raised concerns about the potential impact of any measures which allowed for rents to be increased above the level of any introduced rent cap in rent control areas.

There were calls, including from ‘Individual’ respondents, for there to be no possible modifications or exemptions and for the same arrangements to apply across all private rented tenancies.^[8] A ‘Professional or representative body’ respondent was amongst those concluding that there is a risk of undermining the whole purpose of rent control measures if too many homes are subject to flexibilities, an argument that was often associated with issues relating to clarity and simplicity, and also affordability.

There were many calls for any system of rent controls and caps to be clear and straightforward, and these were often associated with having a single, consistently applied approach across rent control areas. This issue tended to be raised by those who disagreed with landlords being allowed to raise the rent by more than the rent cap where significant improvements to the property are undertaken or where a landlord is letting a property to a tenant at a rent significantly below market rates (the focus of Questions 16 to 23).

The connection was frequently made with existing or prospective tenants having a better understanding of any permissible rent increases and, by extension, being better placed to exercise their rights if required.

Affordability was the other frequently raised issue, with references to private rented sector rents already being unaffordable for many. This was again connected to the original intent behind the legislation and the importance of retaining a clear focus on affordability rather than measures that could result in rents that are currently at the more affordable end of the market rising to the full market rate.

Other concerns, particularly from organisational respondents, related to any rent cap modification system being difficult to administer. It was noted that the consultation suggests two possible approaches: requiring individual landlords to apply to increase rent above the cap or allowing landlords to increase rents without applying for permission and relying on tenants to challenge the increase if they think it is not within the rules. Both options were seen as bringing risks.

Requiring individual landlords to apply to increase rent above the cap was seen as likely to lead to a large volume of applications; there was reference to it not being clear which organisation would be responsible for processing these applications or how this would be resourced.

Relying on tenants to challenge an increase raised concerns about whether tenants would be aware of their rights or have the time, skills and confidence to challenge their landlord. It was reported that the current system provides little practical support for tenants seeking to challenge their landlord and that protections against unlawful evictions are weak.

Suggestions relating to how any approach to modifications could be taken forward included that it should be based on: a clear, evidence-based rationale underpinning the decision to apply any modification; fairness, and whether introducing possible modifications or exempting certain properties or property types would create an advantage or disadvantage for some tenants or landlords; clarity, with clear parameters and definitions that can be easily communicated and robustly enforced; and impact on the wider housing sector, including around supply and quality.

General concerns about introducing rent controls

An alternative perspective was that the rent control provisions are ill conceived and should not be introduced. ‘Individuals’ and ‘Private landlords, letting agents or their representative bodies’ were amongst those noting their general opposition to the legislation. This was sometimes connected to a view that the market should dictate rent levels and that it is not reasonable to expect private sector businesses to operate at below market rate.

These respondents tended to go on to support the exemptions proposed and the introduction of possible modifications, taking the view that if rent controls areas are to be an option, then at the very least there should be circumstances under which the standard rent cap should not apply. Further points made included that to do otherwise could or will lead to private landlords exiting the sector and would also discourage further investment into the sector.

With specific refence to the possible exemptions for MMR or BtR properties, there were also ‘Private landlord, letting agent or their representative bodies’ and ‘Individual’ respondents who argued that granting an exemption for (predominantly) large professional landlords operating in one part of the private rented sector will create a two-tier system that unfairly disadvantages the (often) small private landlords whose properties would be subject to rent controls.