A recent article published in The Herald, written by John Blackwood, Chief Executive of Scottish Association of Landlords, called for a reset in relations between the government and the private rented sector. In the same month, Scottish Labour signaled that they were, in principle, supportive of rent controls.
The impasse between the PRS and those in power is taking on the facade of a rather messy divorce, both sides laying blame at the other’s door.
Meanwhile, Scotland’s housing crisis only deepens and the uncertainty this creates is felt most keenly by the family looking for a secure and affordable home.
It cannot be denied that the government needs a successful and thriving PRS, which now makes up around 15% of housing provision in Scotland. Recent spats have treated the sector more as a pantomime villain, than a valued partner that needs a seat at the table in housing discussions.
Regulation seems to be one of the major sticking points, having substantially increased in the last ten years in the PRS, albeit nowhere near the scale for the social housing sector.
Meanwhile housing overburden is becoming a worsening problem, where people are paying unsustainable proportions of their income on housing costs.
The issue of sustainability is key to unpicking this fallout. As mentioned above, Scotland needs a successful PRS, it is not a bit player or short-term solution for prospective tenants, as owning a home or procuring a home from a social landlord both become more difficult. Those looking for a home in the PRS are typically looking to stay longer in that property now than they previously would have done.
To achieve this, landlords must be able to provide quality and affordable homes for the long term to individuals. This inevitably requires a balance in the interest of landlords and the interest of tenants. The PRS would argue that it has been diminished in recent moves.
Germany Incentivising Landlords
Other countries manage this more successfully that the UK currently does – Germany for example has a much bigger and better PRS than the UK. Perhaps in resetting relationships, some lessons could be learned from these countries.
In a Churchill Fellowship project comparing the British and German PRS, Maureen Corcoran pointed to several areas that it merits reflecting on if both the government and the PRS want to commit to forging a new path together, one where concessions will be required on both sides.
The German system appears to place more value on the private landlord, incentivising long-term investment through a series of tax relief tools, and a different approach to capital gains tax for landlords.
That is not to suggest that landlords should be handed financial support without concurring responsibilities, but perhaps a mechanism to mitigate the costs of, for example, improving homes would be enough to stop a significant chunk of landlords from throwing in the towel and leaving the sector, further exacerbating the issue, as these homes end up for sale, a market that many cannot fund or access.
In Germany the concurring responsibilities takes the form of a system of rent regulation, which contains various approaches including rent indexes, rent caps, rent brakes and rent freezes, which have resulted in housing overburden in Germany remaining much lower than it currently is for private renters in the UK.
This also sits alongside a more powerful voice for tenants, which it could be argued was one of the central themes of the Housing Bill.
It would be foolish to suggest that therefore everyone is happy with the German system, it no doubt has its faults and issues, but perhaps when deadlock appears to be crystallising, it may offer some interesting off ramps for both sides in this debate so that we can all focus our energies on ending the housing crisis for Scotland.
The PRS may have to accept some form of increased regulation for such financial support, be that a form of rent regulation or housing quality standards, but there are ways that the Scottish Government could also start to recognise the contribution of the PRS to the stability of the overall housing sector, and a renewed understanding between the parties could begin to emerge.
