Fears temporary rent controls could have 'knock-on' effect for tenants

Earlier this week, the Scottish Government announced measures set to bridge the gap between the rent cap ending on March 31 and full-blown rent controls being introduced through the Housing Bill.

The plans essentially change the rent adjudication process for a year, giving MSPs time to pass the legislation in Holyrood, expected to contain full rent controls.

Tenants can challenge proposed rent increases from landlords with Rent Service Scotland (RSS) or the First-tier Tribunal, with a cap of 12%.

READ MORE: How Scotland's new rent controls system works as freeze comes to an end

However, there are several caveats, complicated equations and tenants' rights campaigners have described the new process as “really confusing”, suggesting it would put people off going through the process.

Following the announcement, the Scottish Association of Landlords (SAL) advised its members that the formula would only apply if tenants challenged any proposed increase.

Aditi Jehangir (below), secretary of Scotland's tenants union Living Rent, told the Sunday National: “I think the more people that are confused, the less likely it is people are going to go through the process of trying to contest a rent increase.

“Because it's tied to market rent - which is so unbelievably high at the moment - that doesn't really help.

“I think tying any sort of rent adjudication measures to [market prices] already feels a bit like a failure.

“I think people are gonna struggle to use it and understand it, and then it just leaves people more vulnerable to exploitation.”

Jehangir added that the union generally recommends against going through the current process of rent adjudication, as it can sometimes lead to higher prices than were initially contested.

We previously reported in 2022 that almost 80% of tenants who challenged their landlords over a rental price hike through RSS were forced to pay more.

Between 2018 and 2022, RSS handled 169 cases where tenants challenged a price hike. Only 34 (20.1%) were successful in keeping their monthly costs the same.

READ MORE: Scottish Tory MSP didn't declare £1m interests before rent cap attack

Following the rent freeze and subsequent cap, private rental prices in Scotland have still soared above inflation.

The monthly cost for one, two, three, and four-bedroom properties all jumped well above the 9% Consumer Price Index (CPI), with properties in Glasgow seeing huge increases of 22.3% (£191 per month).

Out of 18 areas in Scotland analysed, 11 saw prices raised above inflation, according to figures released by the Scottish Government.

With rents in Edinburgh and Glasgow at an average of more than £1000 a month, Jehangir questioned the sustainability of this, and the likely “knock-on effects”.

“That’s really expensive - especially for people with families, people with caring responsibilities - your money doesn't go as far as it used to,” she explained.

“If people are scared of rent increases, they’re probably less likely to chase up repairs and bad conditions, it just means people are effectively trapped in poor housing situations.”

How do landlords feel about the changes?

IT isn’t just tenants who are concerned by the proposed changes, landlords, who have campaigned against the freeze, cap and incoming rent controls, have also described the proposals as “overly complicated”.

John Blackwood, chief executive of the SAL, said: “While the Scottish Government has finally recognised the need and benefits of landlords investing in their properties, their actions and rhetoric to date have already significantly harmed the ability and desire for many to do so.”

Blackwood claimed the rent freeze has “exacerbated Scotland’s housing crisis” and forced many landlords to sell their properties.

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“We agree with tenant groups that what the Scottish Government has announced is overly complicated and will be confusing for both landlords and tenants to understand,” he added.

“We are keen to work with the Scottish Government, social housing and other providers, along with tenants groups, to develop a long-term plan which encourages investment across Scotland’s housing sector, increases supply, and provides people and families with the right kind of choice for a home that suits their needs and budget.”

What does this mean for rent controls?

THE first iteration of the Housing Bill has not yet been laid, so whether rent controls will be tied to market rents has not yet been confirmed.

Tenants' Rights Minister Patrick Harvie (below) insisted the Scottish Government is "committed to long-term rent controls" when the temporary measures were announced. 

Jehangir said that tenants' rights campaigners are concerned that bringing in measures without tackling how high rents have risen will not solve the problem, but still have “hope” they could be transformational.

Living Rent has called for rent controls to be affordable, tied to the quality of the property to incentivise repair and other factors such as the energy rating and factoring in tenant’s income.

“It's recommended that you shouldn't pay more than 30% of your income and I think even just analysing that across the country at the moment, everybody's paying over that,” she added.

“It just seems like these measures were brought in through the cost of living crisis and obviously, that can only go on for so long in terms of the legislation, but that cost of living crisis is not going away.”

The Scottish Government has been contacted for comment.