Author : Jon Curtis
Rent control is back north of the border. Following an agreement last week between the SNP and the Green Party, the Scottish Government has announced that one of its future housing policies will be to “implement an effective national system of rent controls”: a controversial approach to the rental sector that is always guaranteed to get landlords’ hackles rising.
Rent control existed in England and Wales until the late 1980s but was dropped because it was thought to have driven landlords out of the sector, reducing the number of homes available for rent. Rented homes accounted for just 10% of the housing stock in 1991 but this figure has doubled in the last 30 years as renting has gained in popularity again with investors and tenants.
Rising house prices and the exodus from urban areas during the pandemic means that demand for rented homes is now exceeding supply in many areas. Some parts of the country – notably those where landlords can make more money from short-term holiday lets – are facing a rental crisis. Fewer homes mean higher rents and so the calls for rent control are getting louder.
In Scotland, councils have been able to designate a Rent Pressure Zone or RPZ since 2016 but the policy hasn’t been widely adopted. With the Green Party now working closely with the SNP, it is likely to be pushing for adoption of its manifesto promise to “ensure that housing costs represent no more than 25 per cent of a household’s income, including a points-based system of rent controls”.
In London, Mayor Sadiq Khan has been calling for rent control in the capital for some time. It is common in major cities in the US and across Europe but could it work here? English landlords – and the Government – will now be watching closely to see what happens in Scotland as demand continues to outstrip supply and landlords are able to hike rental payments to desperate tenants. The big question that always hangs over rent control is whether it is simply counter-productive. Tenants may get cheaper housing in the short-term but landlords are likely to spend less on the quality of their lettable property if they can’t achieve market rents and may even sell up, reducing supply further.
Ultimately we need more, affordable homes both to rent and buy – or at the very least, regulation of the short-term lets which are contributing to the problem. While the Government wrestles with the question of rent control, it must also work harder to solve the problems that raise the issue in the first place.
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