Rent freeze in Scotland raises concerns

Temporary ban on rent increases in Scotland is designed to help tenants, while safeguarding package is aimed at protecting ‘responsible’ landlords
20 October 2022 , By Steve Smethurst

Concerns are rife that freeze will force landlords out and reduce supply of rental properties

The Scottish Government is temporarily restricting landlords from increasing the amount of rent they can charge. It has also placed restrictions on evictions from residential tenancies.

The cap, prompted by the cost-of-living crisis, applies to in-tenancy rent increases. It has been set at 0% until at least 31 March 2023. The measures can then be extended over two further six-month periods. London Mayor Sadiq Khan is pressing for a similar freeze in the UK capital.

Enforcement of eviction actions are also prevented over the same period (unless in specified circumstances). Damages for unlawful evictions have been increased to a maximum of 36 months’ rent.

MSPs voted by 89 to 27 in favour of the Bill, which was the first in the UK led through a parliament by a Green minister, in this case tenants rights minister Patrick Harvie.

Harvie said it would provide critical temporary protection for people who rented their homes. He added that people who rent their home are more likely to live in poverty or be on low incomes than other people and many will be anxious about keeping up payments on their homes as their everyday expenses rise.

He added that good, responsible landlords have nothing to fear. “There’s a package of safeguards if they do face unforeseen costs. There are also grounds for eviction if they face particular hardship and have to move into the property or sell the property to alleviate their own hardship or avoid homelessness themselves.”

For private landlords, rising levels of interest rates have led to many private rental properties being sold off and landlords leaving the market.”

Callum Chomczuk, Scotland’s National Director of the Chartered Institute of Housing, said he recognised the intent behind the legislation.

It is understandable that the Scottish Government wants to do what it can to protect tenants from cost-of-living increases,” he said. However, we are concerned that the policy will have significant unintended consequences.

He added, For private landlords, rising levels of interest rates have led to many private rental properties being sold off and landlords leaving the market, reducing the supply of rented accommodation available. This ruling has the potential to exacerbate these trends.

The move also frustrated Sally Thomas, Chief Executive of the Scottish Federation of Housing Associations, who said that a rent freeze in the social housing sector was unnecessary and likely to be counterproductive.

She said that 60-70% of social housing tenants have their rents covered by welfare benefits paid by the government, meaning they will see little impact from a rent freeze. “But with rent being a vital source of income for our members, it would result in housing associations being forced to cut back on vital support services for tenants, the development of new homes, improvements to existing stock and the pursuit of net zero targets.”

In England, Khan is renewing calls for the government to give him the powers to freeze private rents in London for two years. In March 2022, New City Hall analysis, based on estate agent Savills forecasts, showed that freezing private rents for two years would save Londoners on average a total of £2,988 across both years, with £881 in the first year and £2107.60 in the second year.

 

Image credit: Shutterstock 

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