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A flawed plan: ‘Rent controls are complex to introduce and deeply controversial’

The recent decision to abolish The Fair Rents (Scotland) Bill demonstrates the difficulty of introducing lettings regulation amid ongoing uncertainty, while highlighting the advantages of industry-led codes of practice over top-down regulation, according to PayProp.

The bill, designed to protect private renters in Scotland by introducing a rent cap, was terminated by the Local Government Committee at a private hearing on June 26 with no public statement given about the decision.

Some campaigners claim the committee appears to have acted against the instructions of Parliament, as politicians were not given an opportunity to debate 

Put forward by Scottish Labour MSP Pauline McNeill, the bill, dubbed the Mary Barbour Bill, to regulate rents in the private sector by capping rent increases for private residential tenancies at no more than the annual Consumer Prices Index plus 1%.

Private tenants would also have been given the right to apply for a ‘fair rent’ to be based on the condition and amenities of the property, determined by a rent officer or First-tier Tribunal no more than once in any 12-month period.

Additionally, landlords would have been required to disclose the rents they charge for each property when they registered or renewed their registration on the Scottish Landlord Register.

But Neil Cobbold, chief sales officer at PayProp, is not surprised to see the bill scrapped. 

He said: “Rent controls are complex to introduce and deeply controversial among landlords and property professionals. Therefore, now may not be the best time to consider such far-reaching regulation as the market continues to recover from the unprecedented shock of the last few months.” 

There was concern among some buy-to-let landlords in England and Wales that had The Fair Rents (Scotland) Bill been introduced it could have been later adopted south of the border.

But Cobbold believes that delays to new Scottish legislation could also be mirrored in England as the market continues to recover from the coronavirus pandemic – but that industry self-regulation may fill the gap.

He added: “Before any additional top-down regulation is introduced across any part of the UK, there would need to be significant research and analysis carried out, as well as a full consultation with all PRS stakeholders.

“The difficulty of bringing forward new property industry legislation makes the role of industry self-regulation that much more important.

“In contrast, initiatives like the ongoing Code of Practice Steering Group consultation, based on the recommendations of the RoPA report, give property professionals a chance to agree new industry rules that are sensitive to challenging market conditions.”

Cobbold says that while Covid-19 could affect the plans for many pieces of legislation, property professionals should take the opportunity to make their voices heard.

He continued: “The consultation period will remain open until 4 September, and I would encourage everyone involved in the property industry to give their feedback. 

“With so many from the sector already getting involved, we can reasonably expect the final document to reflect our needs and concerns while ensuring that we continue to do our best for landlords, tenants and homebuyers.”

  • Neil Moores

    There is only one way to regulate rents and that is for there to be enough housing to go round. If the taxpayer had to pay more money, allowing the government to provide more quality housing at lower rents and to the extent that more people could qualify to rent them then private properties would then also require lower rents in order to keep the demand from tenants.

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    There is a big ''IF'' here , the government would need to build one hell of a lot of houses, which is just not going to happen anytime soon, if at all, then there is the question of quality, new social housing generally starts off well, but it doesn't take long for the tenants to not just wreck the houses but the areas as well, just look around any council estate more than 10 yrs old, there are some people that you just cannot help and you are wasting your time even trying.

     
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    has are a con--overheads are massive

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    Being old and retired I remember the time taken by a single request to the Rent Officer at that time to reduce the rent on a flat from £110 per month to £25 per month. I spent about 3 days working on this and the rent officer eventually threw out the requested rent level and set it about £5 per month less than the rent being charged. He held a meeting in his office and I produced rent level information from his 'rent register' which went back some years. The new set rent could not then rise for 3 years even if a new tenant took occupation and the only allowable increase was by the amount that Council Tax (rates as it was then) went up by.

    For rent controls to be introduced now would be a retrograde step. At that time the rent levels had been controlled since the 1930's so there was a huge amount of information held by the rent officer on the private sector that may not be so easily available today.

    If rent controls are brought in now with similar restrictions to those previously prevailing then the private sector would reduce by a huge percentage in a very short space of time. The PRS grew from the removal of rent controls and the reverse would most surely happen.

    At this time the PRS covers the housing shortage and the rent defaulters at no cost to the public purse and government would not want that to change. Stop worrying about rent controls it will not happen again.

    Paul Barrett

    But it is already happening in Scotland.
    Rent stabilisation areas I think they call it.

    I suggest rent controls are indeed something that especially leveraged LL should be very worried about.
    It is just one of the reasons I can't wait to get out of the PRS!!

    Rent controls will destroy the housing market in the UK.
    Remember the values of over 4 million properties are supported by market rents not forgetting the mortgages!!

     
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    Paul

    No Scottish landlords with decent properties are at all worried about any prospect of rent controls. The only properties under threat are the slums which only the dreg tenants would consider and no self respecting landlord would buy. This is a non threat whilst there is a shortage of decent properties and a surfeit of demand from potentially acceptable tenants.

     
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    I can't understand what's all this about shortage of housing when there isn't any. There maybe a big long waiting list on Council which is normal when they don't want to pay market rents, they are not stupid why buy a cow when the milk is free & better still when housing is free draining the Countries finances and clobbering the tax payer but they are king with the LA. I suppose we all know what's going on so Gov' must know since they caused it with soft option Benefit System for women with children and supposedly no partner but the partner is there for sure. I see a women from over Seas in UK for few years now has child, gets £1600 pm, but the partner is there in full employment renting house £1550 pm (Used to rent flat but house better option) also have 2 rooms let netting £1100 pm this is no isolated case we have eyes & ears. Another one rents 3 doors from elderly father who lives on his own in Semi- with 2 story side ext' + back ext' just because if she lived at home she couldn't claim as much Benefit not another isolated case at all.
    Rent Controls what would be the purpose of this in L'don when most of my properties are already in arrears, there is such a thing as supply & demand but demand is not good, we are also required to do reference checks which is expensive / £24.50 through LL organisations or through Letting Agents £75.00 per person, then it comes back they can't pass the checks but we still takes them so whats the point do Regulators want to see them homeless, forget about surveys if you want feed back I have plenty. Research, Steering Groups and Recommendations can they not find a job and earn their living and get off our backs.

  • Paul Barrett

    @robertbrown

    Not that I fully understand how rent controls etc may be introduced but I come at this from my initial simplistic reaction to such rent controls.

    My market rent which is about £700 more than the LHA rate for my property would mean that anything less than market rent would bankrupt me.
    Any rent control meaning I would be restricted to less than I charge currently would bankrupt me.

    I have a very good offer which merits top market rents.

    Rent controls would render my business unviable much like S24 already is.

    With all the cost burdens along with the eviction ban etc adding rent controls into the mix would just be catastrophic for BTL LL which comprise 50% of the PRS.

    Those unencumbered or very lightly leveraged could possibly take an income reduction no matter how annoying rent controls would be to those LL.

    But leveraged LL are placed in a whole world of hurt.

    Based on what the Tories have done so far it would not surprise me at all if rent controls were introduced in England as a 'temporary measure' to assist tenants who through fault of their own find their roles redundant.
    This could be in place for at least 1 year.

    LL will not be considered in this.
    Govt expects them to swim and if not they sink.
    Govt doesn't care either way.

    I for one am very nervous about the prospect of rent controls.

    It is just another concern I have which motivates me to get out of the PRS as soon as I can.

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