Rented sector reform: landlord and tenant engagement questionnaire - analysis of email responses

Views on rent control

In terms of a particular policy area, respondents were most likely to comment on rent controls, with around 3 in 5 raising the issue. The considerable majority of those (around 9 in 10), including most of those who identified themselves as private landlords, noted their opposition to the introduction of rent controls. Among the more frequently expressed views:

• Respondents felt the introduction of rent controls was already leading to landlords exiting the sector, and that this trend will continue. Some of those making this point reported that they themselves are planning to divest themselves of private rental properties and cease operating as a private landlord.
• Respondents stated that since rent caps have been introduced, private rents in Scotland have risen faster than anywhere else in the UK; it was felt that the decision to pursue a policy of rent control fails to address the shortage of rental housing, and that this shortage is exacerbating rent inflation.

Other less frequently raised concerns included that there will be very little incentive to improve properties if the rent cannot be significantly increased. There was also reference to stifling investment in new, better quality, more efficient rental housing and in renovating and decarbonising existing rental housing.

In addition, it was argued that there has been no consultation on the type and nature of any controls, or any examination of the options available, and it was suggested that there is a dearth of information on how rent controls would work in practice. For example, it was observed that the questionnaire asks respondents to select a preference for local or national rent control, yet no information is provided as to the data on which Scottish Ministers or Local Authorities would be basing their decisions.

Issues raised about Mid Market Rent (MMR) properties included concerns related to capturing this tenure type within a PRS rent control framework given the funding mechanisms in place for these properties, the existing rent protection mechanisms, and the social good that these properties provide in the areas in which they have been built. There was also a suggestion that if MMR is not exempt from rent control measures, then a specific approach/ formula will need to be devised for these properties.

In terms of how any future rent control policy (were it to go ahead) should be framed, suggestions included that:

• Any new legislation should enable an initial re-setting of an appropriate rental baseline from which to control rent increases in the future.
• There needs to be some way of setting the rent on a new-to-market property; one option that exists in England, albeit it is rarely used, is to give the tenant the ability to challenge the initial rent, which the Private Rented Housing Tribunal can assess in comparison with similar properties nearby.
• There should be a national limit on in-tenancy rises and local control over between-tenancy rises.
• There could be an exception where a landlord has made significant improvements to a property between leases, or where a landlord and sitting tenant have agreed on making an improvement during a lease on the understanding that it will lead to a greater rental increase.

While the considerable majority of those commenting on rent controls clearly noted their opposition to the proposals, other email respondents expressed support for the general policy direction or made general observations. These observations included that we need a universal system, with the twin aims of improving quality and affordability, but that there should be local aspects in order to reflect local conditions and realities.

However, there were concerns about the amount of work that will fall to local authorities, for example in applying to become a rent control area and then implementing the approach and ensuring that tenants know a rent control area is in place. On a similar theme, it was suggested that additional local authority resources will be required where a decision is made to proceed with an assessment of their area and if there is a mandatory requirement to re-assess rent conditions on a regular basis.

Other points made included that:

• The Cost of Living (Tenant Protection) (Scotland) Act 2022 (CoLA) temporary rent cap measures allowed for unfortunate loopholes that have left a significant proportion of tenants facing rent increases higher than the cap set. This needs to be tightened.
• An accurate picture of rent inflation/deflation or affordability will be needed to implement any form of rent control effectively and to monitor the impact.

There was also a concern that the period between the end of the CoLA rent cap and the introduction of rent control could lead to a wave of evictions and rent increases. There were associated calls for the rent adjudication system to be reformed, including for rent increases to be measured in terms of inflation, or a set number linked to government inflation targets, rather than in relation to open market rent.