Property experts in one part of the UK where rent freezes are a way of life say they make the housing crisis worse, not better.

The Scottish Property Federation has reacted with concern to the publication of emergency legislation to introduce a freeze on residential rents and a moratorium on evictions in Scotland. 

If passed – and the measures go before the Scottish Parliament tomorrow – the legislation could allow for Scottish ministers to maintain a rent freeze well beyond the original deadline of six months only.

The organisation says it is aware of hundreds of millions of pounds worth of investment that has been put on hold in recent weeks, particularly in Scotland’s emerging Build To Rent market. 

BTR homes are usually owned and managed by institutional investors, often pension funds, and are playing an increasingly significant role in the private rental sector. The SPF insists that investor concern from both inside and outside of Scotland is making it extremely difficult for new projects to compete for capital with the rest of the UK and further afield. 

Investors have cited risk in the Scottish regulatory environment as a key concern after the unusual step was taken to announce the rent freeze without any consultation. The detail of the measure – just unveiled to the Scottish Parliament ahead of the vote – makes clear the measure could be in force until the end of March 2024 subject to unspecified mechanisms for review and assessment. 

Highlighting the SPF’s concerns, director David Melhuish says: “Scotland faces a chronic undersupply of rental housing across both public, private and student accommodation sectors, and this emergency legislation will make this situation much worse. There is a pipeline of new rented private accommodation estimated to be £3.5 billion earmarked for Scotland. This could deliver thousands of new high-quality and energy efficient homes for renters. We fear this legislation will now undermine the likelihood of many of these complex and capital-intensive projects actually being delivered any time soon.

“Housing providers are not responsible for the cost-of-living crisis but have been singled out by the Scottish Government’s proposals that miss the critical need to attract new investment to the sector. The only way that pressure will be reduced on the rented sector in Scotland is by increasing the supply of new, well maintained and energy efficient homes for rent. New housing must become the policy priority, not blunt instruments singling out landlords, many of whom work hard to support their tenants. 

“We call on the Scottish Government to recognise the vital contribution that the rented sector makes to communities across Scotland and to support those that are looking to fund and develop new homes here. Support must now be offered to housing providers affected by any withdrawal of rent resulting from the proposed moratorium, they too are impacted by the upwards pressure on costs and rising interest rates.”