Rent Is Out Of Control

Craig DalzellWhen is a rent control not a rent control?Last week the Scottish Government concluded its consultation on proposals to introduce rent controls to the Scottish public and private rented sectors. The campaign to get this far has been a long and hard one with organisations like Living Rent at the forefront of it. We highlighted the problems facing especially the private rented sector back in 2017 but it was Living Rent’s policy paper for us in 2019 that provided a workable solution based on the kinds of rent controls that we already see in countries like the Netherlands.In short, this kind of control would set a maximum cap on the level of rent that can be charged on a particular property and this cap would take into account factors like the general affordability of the area but, perhaps more crucially, it would account for the state of repair of the property and whether or not the property meets sufficient standards like energy efficiency or carbon emissions. The purpose of this shouldn’t be to allow landlords to run down their homes – we don’t want this to be seen as a “discount” on your rent because the landlord can’t be bother to fix the draughty windows – but to be part of an inducement to fix those homes to a standard that we should all expect (and, yes, we should also have regulations beyond mere “market forces” in place to ensure that the homes meet those standards). Instead, this should be about allowing landlords who go above and beyond on basic provision to be able to charge a bit more.This isn’t the kind of rent control being proposed by the Scottish Government though. What they are instead proposing is something more akin to the rent control package presented by Pauline McNeil back in 2020 which the Scottish Government opposed and then used Covid as an excuse to try to dump the policy. That attempt was later reversed, but the delay meant that the Bill wasn’t passed before the 2021 elections and thus it failed and would have had to start again from scratch.Common Weal supported McNeil’s Bill (with the help of some of our local campaigners) as it was then the only prospect of getting any kind of rent controls on the table though we were also vocal about the shortcomings of it – shortcomings that McNeil herself acknowledged were in place because Members’ Bills are almost never able to benefit from the resources available to Government Bills to craft them and successfully bring them to Parliament – especially against the Government’s wishes.McNeil’s proposals weren’t for a rent cap but a control on the rise of rent with a suggestion that rent rises be capped by CPI inflation +1%. In our response to the consultation on the Bill we noted that this kind of cap would be insufficient as it wouldn’t bring rents down in areas where they were already too high and at the time, CPI+1% was already higher than the average rent rise in some areas of Scotland. While this Bill may have slowed the rate of rent increase in some areas, it may have induced a higher rent increase in others as there is a very real temptation that capped ceilings like this often become a target. Witness every year when rail operators are told that they may increase their ticket prices by a maximum of some level of inflation plus one or two per cent. They rarely increase their tickets by less than the maximum.But we did support the Bill as a step to getting the conversation going on the kind of controls we actually needed and we were extremely disappointed for it to fail as a result of delays and politicking rather than merely being voted down by a majority in Parliament.If we come forwards to now and the proposals currently on the table, we see that the Scottish Government has, in the end, adopted McNeil’s proposals (albeit without giving her the due credit in doing so). Their proposal is essentially the same though rather more vague as they say that rent increases should be capped not by a specific inflation-linked rate like CPI+1% but simply by any “fixed percentage or a formula”. If they did choose CPI+1% this year then this would imply a rent increase of 7.3% which is substantially higher than the current average rent increase in Scotland of 5.5% (though there could be lagging effects involved here such as the Scottish rent freeze and landlords may not yet have passed on the full impacts of inflation to their tenants).It’s clear though that current proposals face all of the same problems as the previous one did but there are more downsides as well. Once again, the Scottish Government is showing a complete lack of respect for local democratic autonomy. Rather than Local Authorities having the power to implement rent controls as and where they see fit, they would have to apply to Scottish Ministers for permission to do so – even if the rent control only applies to a small and specific local area. This gives Ministers not merely the power to adjudicate in disputes or act as a final arbiter, but would give them a pre-emptive veto over such plans. We’ve seen in the past week that the Scottish Government is willing to step on Local Authorities – and on Parliament itself – by making ad hoc announcements to fill space and headlines during party conference so I wouldn’t be surprised if this Ministerial veto is wheeled out whenever it becomes politically expedient to do so.Meanwhile, it’s tenants who are suffering rising rents to live in poor quality homes. A rent control is only a rent control if it actually controls rents. However, like the rent freeze before this proposal, these controls are only part of the answer. A Scotland that is serious about a “wellbeing economy” would be seriously thinking about housing as a human right to be met, not as an asset to be inflated and profited from. We wouldn’t be seeing announcements of Government borrowing to give as a bung to the private housing sector to build “affordable” homes, we’d see that funding being made available to Local Authorities to build social housing that they can rent out to pay back the loans. If they do it right, they can provide social homes in a quality and quantity and at a price that actively de-levers the private rented sector (why spend hundreds of pounds more per month for a mouldy, draughty flat owned by….someone you can’t even track down, when you could have a Council House built to PassivHaus quality for less?). Such social housing shouldn’t be the “housing of last resort” that Thatcher turned them into but should be the first and active choice for many looking for somewhere to live. That’s when I’ll know that housing will have a chance of not just pandering to private developers and landlords but puts All of Us First.