Talk radical, act minimal
Sheila Gilmore looks at the Scottish Government’s plans to allow councils to create rent pressure zones to protect private tenants, and finds that beyond the positive-sounding headlines they are very unlikely to actually help anyone.
Renters ‘Priced Out’ of Edinburgh read a recent newspaper headline. The city’s private rents are the third highest in the UK after London and Brighton. In autumn 2017 the average monthly rent in Edinburgh was £1048. The next highest in Scotland was £774 in Aberdeen. Between 2010 and 2017 rents in Edinburgh rose by 33.7% , at a time when CPI rose by 15.9%.
So it’s a relief to know that the SNP Scottish Government has this problem in their sights. In 2016 the Private Housing (Tenancies) (Scotland) Act introduced the possibility of ‘rent pressure zones’ to tackle the problem of high rents. Unfortunately when we look at this more closely we can see that this is another example of ‘sounds radical, does little’ which is so typical of this SNP government.
First of all, only people with the new private residential tenancies introduced on 1 December 2017 will get any protection under these zones. The Scottish Government thinks it will take at least two years for all tenants to be on these tenancies but in reality even then you will only get covered if you are an existing tenant whose landlord wants to put up your rent. Landlords will still be able to increase rents between tenants as much as they want.
Under the new style tenancy rents can only be increased once per year. So the earliest any tenant in Scotland could feel the protection of the ‘rent pressure zones’ is December 2018. But that is assuming that any council has managed to get a zone approved by then.
Despite the fact that the extent of the problem in Edinburgh is so well known, the Scottish Government has made it clear that it doesn’t intend to declare zones to cover a whole city. A zone will only cover ‘hot spots’ within a town or city. And before submitting an application the relevant council has to jump through a whole series of hoops:
- Decide where its hot spot or spots are to define a zone or zones. Given the overall high rents in Edinburgh a ‘not so hot spot’ in Edinburgh terms may still be a very high rent for those living there.
- Demonstrate that rents in the proposed zone for existing tenants have risen ‘excessively’. The emphasis is on the rise, not the underlying level. Evidence cannot be drawn from advertisements for properties to let as these are all new lets. The council will have to gather evidence of the kind of increases existing tenants are facing. For this purpose it can look at tenants with both old and new style tenancies, but those ‘old style’ tenants who have experienced a rent rise won’t actually benefit from a zone being declared. The Scottish Government guidance does not define ‘excessive’ but ‘at minimum’ it would have to be more than CPI+1% (which will be the probable level of any ‘cap’ on rent rises within a declared zone). Councils will have to find ways to gather all of this information.
- Gather evidence to show that the rises are causing ‘undue’ hardship to tenants within the zone. Presumably this could be done by showing that the rises are pushing up the share of income being taken up by rent. But this means that councils need to know about the income levels of tenants. For both this, and to find out about rent increases, a council is going to have to carry out significant research. The Scottish Government guidance suggests that a council might want to employ professional researchers to do this, presumably at council expense.
- Present evidence that the ‘rises’ are putting pressure on the council to subsidise housing. In Edinburgh pressure is already incredibly high – around 26,000 people have registered as applicants for council or housing association housing, and at any given time over 3000 applicants have ‘homeless priority ‘ for such housing, in a city where in many weeks only around 60 properties of all sizes and type become available. Mid market rent housing is attracting hundreds of applicants per tenancy. So what further evidence will be needed? Application numbers and homelessness applications going up even more? A mid market development getting even higher numbers than before? Does the council have to link such increases to the rent rises?
- Convince the Scottish Government that it has plans to take steps to relieve housing shortages so that private rents won’t be so pressured in the future. Such plans, of course, would be substantially dependent on government funding.
- Consult on these proposals with communities, tenants and landlords.
At the end of all of this process the SG could still turn down an application if, for instance, it decides that the research was not good enough, or if it has a different view on what constitutes ‘undue hardship’.
If a zone is granted, rent increases for existing new style tenants will be restricted to CPI+1% (or more at the Scottish Government’s discretion). But if you are moving into a new tenancy you may still find that your rent has gone up a lot compared to the rent of the outgoing tenant – and you have no protection against that.
So if you are a private tenant struggling with your rent, don’t expect change anytime soon. The measure is extremely complex in its operation and for all the reasons set out above is likely to have limited impact. Yet no doubt the next time an SNP party political broadcast asks ‘what has the SNP ever done for me?’, capping rent rises will probably appear on the list.
There are arguments that can be made for and against controlling rents. Some people fear supply could reduce if there is action taken on rents. If the SNP actually believe rents shouldn’t be controlled they should say so, not pretend they are in favour while doing their best to limit the impact.
Talk radical, act minimal – that’s the pattern over and over again with the SNP.