Yet another attempt to introduce rent controls will backfire – and will make matters worse for tenants.
That’s the view of a prominent lettings agency chief who cites official private sector rent statistics to show the potential damage of policies outlined in the Housing Scotland Bill.
David Alexander, head of DJ Alexander Ltd- the largest lettings agency in Scotland, and part of the Lomond group – says that far from easing the housing problem the Scotland Housing Bill will exacerbate the current issues and make problems for tenants worse in years to come.
The latest statistics show that in the 12 years from 2010 to 2022 average rents for a one bedroomed flat in Scotland rose by £138 which was a 31.2% increase over the entire period.
In the two years since rent controls were introduced rents for the same size of property have risen by £130 which represents an increase of 22.4%.
This means that the annual rate of increase in the twelve years to 2022 was 2.6% which was also the annual level of inflation for that period which means that rents did not rise above inflation.
There is a similar story for two and three-bedroom properties which increased by 32.8% and 34.4% respectively over the 12-year period but have increased by 27.1% and 25.4% over the last two years at a time when inflation was 10.9% for the two years.
In addition, the figures show us that for the entire 14-year period 11 out of the 18 areas making up all of Scotland had percentage rent rises for two-bedroom flat (making up the largest proportion of properties in the private rental sector) increases below the cumulative rate of inflation of 50%.
In a further four areas the increases were between 0.4% and 13.5% above inflation over 14 years. It is only Lothian and Greater Glasgow which are substantially above inflation by 54.4% and 31.8%, respectively.
David Alexander says: “While the Housing Scotland bill has just been debated at Holyrood the proposals it contains are at odds with the facts outlined in the latest annual statistics. These figures show that the introduction of rent controls from September 2022 has actually substantially increased the rate of growth of rents. Prior to this date the majority of Scotland experienced either falling rent rises in real terms or near inflation levels throughout the previous 12 years.
“Even after rent controls were introduced most parts of Scotland saw average prices rising around the inflation figure. It is only the hotspots of Edinburgh and Glasgow which have seen the largest increases. It is also important to note that these statistics refer only to properties which are new to the market and don’t reflect increases applied to existing tenants which are likely to be below these levels.
“But what is also clear is that for the 12 years to 2022 average rent rises were in line with or below the level of inflation. This tells us that rather than helping tenants by limiting rent rises this policy has actually resulted in rents rising faster and steeper than before the September 2022 legislation.
“What that legislation did was put the brakes on property investment in the private rented sector (PRS), it led to landlords leaving the market, and consequently has increased demand to unprecedented levels which remain to this day.
“The logic of this data is that we need to scrap plans for rent controls and rent caps, work with the PRS to grow the sector as a sustainable and valued element of the wider housing offering in Scotland, and let the market find its own level again. Intervention has done more to harm tenants’ pockets than anything else that could have happened. It is only by learning this lesson and reacting sensibly to it that the current levels of demand in the PRS will be resolved. Failure to do this will simply cause further rises in the future.”
