The Scottish governments’ announcement of a consultation on rent cap exemptions highlights just how confused their current policy is, according to DJ Alexander.
The Scottish letting and estate agency said that the idea that this consultation on exempting certain properties would clarify how rent caps would work is simply wrong.
Paul McLennan, Scottish minister for housing, said that: “There have been ongoing calls for further certainty on how rent controls will be implemented and how rents will be capped in areas where rent control applies. To respond to this, we are bringing forward this consultation to seek views on how the powers within the Housing Scotland Bill could be used to exempt certain types of properties from rent control and the circumstances where rents could be increased above the level of any introduced rent cap.”
Mclennan states that the Scottish government “is striking a balance between tenants and landlords” on rent controls with the aim of “focusing on local circumstances and seeking to stabilise rents for tenants in areas where they are rising too steeply, while an appropriate balance is in place to protect the property rights of landlords”.
The consultation considers that landlords could be allowed to increase rents above the rent cap if there have been improvements to their property or where rents have consistently been charged at a level below market rates.
However, the consultation could also produce a two-tier market as it proposes exempting build-to-rent (BTR) developers from rent controls. The consultation says BTR providers are typically long-term investors and provide a steady supply of homes.
David Alexander, the chief executive officer of DJ Alexander Scotland, commented: “This consultation, while welcome if it actually produces any real change, is simply tinkering at the edges of this policy when what is currently required is clarity and leadership.”
“Rather than providing a workable solution it is actually an admission that rent caps are a flawed policy that will only make the situation for renters worse. Consultation is, of course, an integral part of developing any coherent ideas or policy but this proposal would appear to create greater confusion and uncertainty and, crucially, result in further delays in actually doing anything meaningful to address the issues facing the private rented sector.”
Alexander continued: “Instead of further consultations and prevarication it would be helpful to have some concrete policies which would actually improve the PRS for landlords and tenants. The Irish Government is facing a similar housing emergency to Scotland and is considering a radical approach to encouraging growth in the private rented sector.”
“The new Taoiseach Micheal Martin has said that “We need to pivot more strongly to getting more private sector investment into the market” which will “entail politically very difficult decisions” including a review of the existing rent pressure zones in Ireland which is cited as a big stumbling block for investors. A report by the Organisation for Economic Co-operation and Development recently suggested landlords in Ireland should be able to “reset” rents between tenancies – whenever they get in a new tenant to a property – to stop the exodus of investors from the market and boost the supply of rental property.”
“What we need then are big ideas to create more change. More consultations – while sounding good – can end up simply creating another talking shop. To create real growth there needs to be investment. The Irish Government seems to be considering quite a powerful policy of financial incentivisation to deliver growth in the private rented sector (PRS) and this, along with a realistic re-evaluation of any policy on rent caps would certainly go some way to addressing the current issues for landlords and investors in Scotland.”
