Building upon the Scottish Government’s 2021 New Deal for Tenants, which is an essential component of their Housing to 2040 strategy, the Housing (Scotland) Bill was introduced to the Scottish Parliament on 26 March 2024 and will likely take between 12 and 15 months to complete all stages of the legislative process.
The passage of the law may become more complicated due to the collapse of the Scottish Government’s formal co-operation agreement with the Scottish Green Party on 25 April 2024. Under the Bute House Agreement, Green co-leader Patrick Harvie MSP became Minister for Zero Carbon Buildings, Active Travel and Tenants’ Rights, and many hold largely responsible for pushing forward rent control legislation. He has now subsequently left his ministerial post.
Since the ending of the Bute House Agreement, Humza Yousaf has resigned as First Minister of Scotland, which may further delay and complicate the Housing Bill’s passage through the Scottish Parliament. However, fortunately, for legislators, the Local Government, Housing and Planning Committee who are the lead committee for the Bill opened their call for views on 19 April 2024. This consultation contains 15 questions relating to the Bill and closes on 17 May 2024. Should it become law, the legislation will place requirements on local councils to complete assessments of rents in their area at least once every five years and give powers to Scottish Ministers to introduce rent control areas and place limits on rent increases.
Currently, it is not clear whether the legislation and the Scottish Government will utilise the Scottish Landlord Register to help local councils with the collection of data in a consistent way. In addition, the Rent Increase Notice under a Private Residential Tenancy should be amended to include a reason as to the rent increase as this information isn’t currently collected and would help Ministers understand why they are proposed.
Furthermore, the legislation is fairly open on the ability for different local authorities to apply rent control in different ways, be it via a rent cap based on a fixed percentage or a formula that can be deployed to calculate the increase. It also isn’t clear that the legislation uniformly prescribes the geographical area that rent control measures could be applied to. Therefore, we could end up in a situation where one council is working off a cap for a few streets and another council is doing rent control on a ward basis using a formula. Propertymark is meeting Scottish Government officials in May, and these are some of the issues the Policy and Campaigns Team will be seeking clarity on.
Despite having housing in the title, the Bill doesn’t include anything that will increase the supply of homes across Scotland and is unlikely to resolve Scotland’s housing issues. Propertymark and its members have already highlighted that housing quality would be impacted by rent controls due to reductions in spending on remediation and improvements.
Funding cut for affordable and social housing
Furthermore, councils like Edinburgh, Glasgow, and Argyll and Bute have already announced housing emergencies, and the Scottish Government cut funding for affordable and social housing in the Scottish Budget which was approved by a majority of the Scottish Parliament in February.
Propertymark formulated its reply to the latest questionnaire on this matter in November 2023, and hosted two roundtables with members and Scottish Government officials where the overwhelming opposition to rent controls was apparent.
Additionally, Propertymark thinks that one solution to Scotland’s housing crisis is slashing the six per cent Additional Dwelling Supplement for buy-to-let homes under the Land and Buildings Transactions Tax as well as exempting certain property from rent control, such as build to rent, for ten years in order to encourage development to be built and investment plans to be reconfigured whilst the legislation beds in.
Other proposed measures from Propertymark include private landlords’ costs and taxes including changes to the mortgage interest relief and the Wear and Tear Allowance being formally reviewed by the Scottish Government, grants rather than loans being issued to help landlords improve the energy efficiency of property they rent, and a speeding up of plans to build more social houses.
Timothy Douglas, Head of Policy and Campaigns at Propertymark, said:
“The Scottish Government’s continued quest for rent control and restrictions on rent increases are laid bare in the Housing (Scotland) Bill.
“The measures will do nothing but add extra burden on landlords and local authorities with no additional reward for tenants at a time when resources and finances are under extreme pressure.
“Fundamentally, though, the long-term aim for the Scottish Government must be to re-balance supply and demand levels for private rented property. A review of all recent tax changes that impact private landlords is urgently needed and must form part of these reforms.”
