Cannot Afford the Rent, Cannot Afford to Wait

Leo Plumb - 30th June 2022

There was widespread hope ignited by the Scottish Greens when they signaled that strengthening the rights of tenants would be a key agenda as they entered power sharing deal with the SNP last year. Patrick Harvie who is the Scottish Government’s tenants’ rights minister wrote that rents in Scotland are ‘out of step’ with the rest of Europe. Next came the proposed legislation to introduce Rent Controls. This was tabled for 2025. In the broadest terms this policy would make housing affordable for tenants by limiting a landlord’s ability to increase rents in certain areas. Models for Rent Controls vary greatly. They can be used to moderate, cap, or reduce rents. Importantly it is how they are implemented that counts. Different systems of Rent Control are widely used across Europe, but not currently in the UK.

Harvie’s claim that we are ‘out of step’ sounds like we got caught behind the times of a more sophisticated European policy on housing. It is far more appropriate to assess current situation of Scottish rents as a system in total disarray. 

Rent Controls. Yes, we need them - urgently. 

Common Weal suggests this should be a first moderate step in what must be a much broader ambitious strategy for housing.  

As a first step, 2025 is pretty good right?

No, it is simply too far away.

Renters are experiencing a maelstrom of factors right now. Lower-income groups are more likely to live in the private rented sector. As the cost-of-living bites hard, these people are disproportionately affected and not equipped to manage. At the same time the very organised private landlord lobby have been communicating that a ‘rent controls’ policy is on the way and preparing against this. They have known this for decades with a simple look at the facts. Wages and living standards for pretty much all their tenants have been falling since the early 2000s (if not considerably before that). We are now reaching the tipping point.

Without knowing any of the detail of what would be involved in the proposed Rent Controls, most landlords have taken steps to increase rents at every opportunity to guard themselves against potential setbacks of lost income. There has been no government intervention even to advise landlords not to hike up rents in the meantime.

Many organisations including Common Weal and Living Rent, Scotland’s Tenants’ Union, warned against exactly this response by landlords. Signs emerged before the pandemic and again when approvals for UK mortgages (many of these buy-to-let) increased dramatically at various points since 2021, this looked like an opportunity for landlords to increase the base rent.

So, tenants are being hit by a double whammy of pressures. This imbalance between private renters and landlords is structured along many lines, but of course it is maintained through the money that is handed over in ‘rent’ itself. At the same time workers and families who rent made enormous sacrifices during the pandemic. They took a hit on wages, debt, furlough collapse or caring for families on reduced incomes. And yet, many landlords who rely on rental income were asked to make no overall sacrifices once debts were repaid of course.

I scarcely want to quote the facts on how much of Scottish wages are spent on rent. It is astonishing. Look up your own area. For the lowest bracket of earners in Scotland, over 50% of wages go on rent. So that’s workers in hospitality, supermarkets, hotels, retail, cleaning, and plenty other sectors. Depending on where you live, and how many bedrooms you have, it could be way, way higher.

The speed at which rents are increasing in Scotland is staggering. Over the ten-year period 2010-2021, rent rose around 41-42% for Greater Glasgow and the Lothian regions. Over those same years inflation rose 24.3%. So, we are talking about rent which is leagues above the rate of inflation and that cannot form part of the excuse.

Within the last 12 months the annual rental growth has multiplied faster in Scotland than in England or Wales and at the fastest pace since records started in 2012.

The rents are clearly too high, they need to be frozen now. We are truly ‘out of step’ so it might seem a bit of a shock that this week MSPs voted down a proposed amendment in Parliament to freeze rents. This action would have been an interim measure until rent controls could be implemented fully in several years’ time. 

The proposal came from Scottish Labour MSP Mercedes Villalba, supported by Scotland’s Tenants’ Union Living Rent. Both have been unequivocal that emergency measures are needed now as the rents spiral out of control. 

So why did a majority of MSPs vote it down? Including the Scottish Greens for whom an urgent action on this seemed like the theme-tune to their stage entrance? Well, I’m not tempted to get into the reasoning for this in detail. The crux of the matter is that the SNP and Greens state that it is better to not rush a Rent Controls bill. This is the thinking, just weeks before Scottish Parliament enters recess for the summer. They rejected a refiguring of a covid powers bill as would have been the case with Villalba's amendment. The SNP and Greens announce this will have renters’ interests at heart, Feel free to read the Green Party reasoning here. I would add that deliberation and delay to help prevent evictions down the line doesn’t seem to hold tight to me, especially given the mounting pressures to get renters out of their homes.

It matters not so much that the Greens are folding on pretty much exactly same policy which they themselves previously tabled. But the other short-term alternatives they propose are so unfit for the scale of the current crisis it makes you want to cry. Ariane Burgess, Scottish Green spokesperson on housing, has said that they cannot support Labour’s amendment this week, but they would encourage “existing uniquely Scottish powers” to be better utilised. These include signposting renters to advice and guidance on individual rights. I wonder who is paying 50% of their earnings on a privately rented flat and has not already researched their rights?

Living Rent clearly must find themselves in difficulty giving advice to members, in good faith when the legal mechanisms to report or demand action on rent changes are not working. That is why the union has mobilised its members asking them to “Report your Rent Hike”. An action taken in response to the fact that there is currently no comprehensive survey of rent level data carried out by the Scottish Government. Common Weal and Living Rent made just such a proposal back in 2015 when we called this a ‘Scottish Rental Affordability Index’. Collecting adequate data is essential to a successful Rent Controls policy. 

The second short-term solution being touted is to build on measures to tackle the cost-of-living crisis. Suggesting that tenants need new forms of money is misjudged. Yes, certainly a reform to welfare and benefits would give people something extra to live on. But topping up already meagre sums of money will simply transfer cash to landlords and neighbourhood rent increases will remain. Giving out more free bus passes is a grand idea but come on, we are talking about the insecurity of people’s homes here.

And therefore, rents will have to come down. Any emergency halt on rents should be seen as a step towards decreasing rents in many parts of Scotland.  This is in part why campaign groups have not called on a freeze until now. There were debates of whether to call for a freeze, a cap, a reduction or other forms of legal protection would be best, However, these have now been superseded by the buildup of this emergency situation.

Just like Living Rent, all groups who want to see change on this issue must keep their eyes simultaneously on short-term goals as well as the long-term ones. We cannot dismiss emergency legislation like the Labour proposal this week despite potential flaws, and we must fight to ensure we do not end up with a bad rent-controls policy which arrives too late. Let’s not forget, 1 in 5 MSPs are landlords themselves (yes that’s 4 times the national average) and therefore they may have an interest in watering down the bill. 

We encourage readers to get behind Common Weal proposals for Scottish private rentals sector. At its centre will be a points-based system of rent controls. This would see properties awarded points based on the size, quality (including energy efficiency and environmental standards) and location of the property, not simply just by market levels. These systems exist and work elsewhere. 

Imagine being able to live, knowing your rent is less than a quarter of what you earn? Imagine if your landlord was actively incentivised to maintain and improve the property you stay in? If they failed, for example by refusing to install safety-required new smoke alarms, you could report them to a monitoring board who would ensure that requirement is made. A tenant requests a change, for example double glazing, that would increase the rent chargeable, and a landlord and tenant can agree on the terms. 

What we have instead seen, is vague policy scheduled, which terrifies the private rented sector into adopting cruelly high rents as a future safeguard.

The type of uncertainty faced by renters is not the same experienced by property investors. Ultimately, the private rented sector will always be less secure for tenants than other forms of occupancy. It is the nature of a market where tenants are expected to move on yearly and not encouraged to form communities. The Scottish Government must therefore look at adjusting housing policy to be more disruptive to this “market”. And what I mean by disruptive is we need more social house building in Scotland. This is an absolute priority, high quality, warm social homes, which create the benchmark for a sustainable housing sector for Scotland.

In the immediate now, plenty of people cannot afford their rents. And we cannot wait any longer to ensure rents are reduced. Then there is no doubt we are going to need strong Rent Controls implemented down the line. If you are a member of any political party, I urge you to pick this fight internally and do what you can to convince your party to support any emergency protections that will bring rents down as soon as possible. Common Weal have an eye on the steps ahead for strong Scottish Housing in the future, but we need action now.