Edinburgh City Council is very excited about Rent Controls

Reply to the comment left by "Annie Landlord" at "13/07/2017 - 20:54":

I guess only time will tell how BTL lenders will react. One of the mandatory grounds for termination is if the lender wants to sell so that will give them some comfort. Although that may be out weighed by complete lack of security of income for the borrower. Interesting times ahead!

Regards,

Rod.

And now Aberdeen is considering it:

https://www.pressandjournal.co.uk/fp/news/aberdeen/1288309/rent-caps-could-be-introduced-in-aberdeen/?utm_source=facebook

And Aberdeen is a prime example of how supply and demand will manage rents. We've seen a 25 to 30% reduction in rents since the oil price crash decimated the local economy and demand for rental property fell through the floor yet the local council think rent controls might be required. You couldn't make it up!

Regards,

Rod.

I am based in Edinburgh and work in the Edinburgh lettings market and was completely unaware that the decision to implement rent controls has been taken. It is though not a major surprise as the legislation is in place to implement rent control, rents in Edinburgh are unaffordable and the PRS is now very much a political football with the SNP and Labour competing for power.

The issue for me is how rents in Edinburgh became unaffordable and what can be done to reduce them.

The first piece of evidence I would present is the Citylets inflation tracker for Cities https://www.citylets.co.uk/research/datahub/ unfortunately you will have to find the report on the link as I am unable to post a direct link but what you will see is that from 2007 to 2013 rents in Edinburgh rose below inflation. Since 2014 rents have sky rocketed.

As a decent human being I do not want rents to be unaffordable and tenants to experience usury. I never increase rents during a tenancy as I like good tenants and would hope that they have the opportunity to save money for a deposit for their own property whilst I also benefit from the capital growth. I do though charge the market rent when a property becomes vacant.

Shelter have been the main influence in driving policy in Scotland and they are in complete denial that the policies they have championed have led to a increase in rents http://blog.scotland.shelter.org.uk/2016/11/23/scotlands-experience-of-abolishing-letting-agent-fees/

The main policies that have led to the rent increases in Edinburgh from 2014 are:

Ban on letting agent fees (disagree with)
Legionnaires assessment (disagree with)
EICRs to be mandatory (Agree with)
Mains wired smoke detectors (disagree with)

Further policies that are still to be implemented and will increase rents

End of no fault route of ending tenancy/new tenancy regime in Scotland (disagree with)
S24 (disagree with)
Minimum EPC requirements (disagree with)

The truth is that rents in Edinburgh became unaffordable due to constant meddling by the Scottish Government.

An analogy would be dropping stones into a fish tank with new legislation representing stones and the water level representing rents. The water level is now overflowing out the top of the tank and will only come down if they take the stones back out. Unfortunately there is no political will for such common sense and any such policies would be seized upon by the opposition as helping landlords at the expense of tenants. Instead the Scottish Government will try and put a lid on the tank (rent control) and continue to drop stones into it (more legislation).

Back to reality, the likely effect of rent controls will be similar to Stockholm that has huge waiting lists and massive illegal subletting http://www.bbc.com/capital/story/20160517-this-is-one-city-where-youll-never-find-a-

To implement Shelter policy as is now happening in England will inevitably lead to rent increases, rent control and then the end game for the PRS is Stockholm.

I often read posts on Housepricecrash and they are so blinded by the greedy landlords/bailed out banks issue that they fail to realise that what would be best for the PRS is what we used to have a free market with basic safety checks and the reason that they can't buy a house is because New Labour destroyed pensions and didn't build enough houses (don't believe me read Adrian Mole and the Weapons of Mass Destruction it's all there).

I have sympathy for this generation as they are in a much worse situation than my generation but I could have told you back in 2000 that this was going to happen and now rather than turn the ship around they are encouraging the government to go full steam into the iceberg.

I posted but it got marked as spam.

On the basis of 'know your enemy' the following link takes you to the kind of article that the anti-landlord brigade will be paying attention to: '5 Lies Landlords Tell About Rent Controls'

http://novaramedia.com/2016/08/22/5-lies-landlords-tell-about-rent-controls/

However, it doesn't take long with a Google search around the experience of rent controls in places they have had them for a while (e.g. Berlin, New York, Paris) to find examples of the nastier side of rent controls and other unintended consequences, such as:
• wealthy tenants who have been paying minimal rent for years, impoverishing their landlords and reducing the availability of places to rent for 'ordinary' people
• landlords who select tenants on the basis of their willingness to offer backhanders or 'favours'
• reduced mobility for tenants
• escalating bureaucracy to police the controls
• and loss of taxation income from landlords!

Reply to the comment left by "Arnie Newington" at "15/07/2017 - 10:51":

Great post and love the stones in the fish tank analogy. I might want to nick that. I usually talk about a boiling over saucepan and shoving the lid on it, but I prefer your fish tank.

Reply to the comment left by "Dr Rosalind Beck" at "15/07/2017 - 22:10":

I am very happy for you to use my analogy.

Another one that I use is the old nursery rhyme about "There was an old women who swallowed a fly".

As The Scottish Government and Shelter are constantly trying to fix problems in the PRS that they have in fact created when the PRS was functioning better and cheaper without them.

Reply to the comment left by "Arnie Newington" at "16/07/2017 - 10:25":

Yes they are idiots.

This discussion prompted me to take a closer look at the new Scottish tenancy and the regulations around it as it may point to the way things will go in England. There is guidance on the Scottish Government's site:

https://beta.gov.scot/publications/private-residential-tenancies-landlords-guide/

It's staggering! The odds with this tenancy are really stacked against the landlord. Grounds for eviction 17 'Tenant is in rent arrears over three consecutive months' implies to me that any tenant planning to leave can, with impunity, stop paying the rent three months in advance - probably more, depending on how long it takes to get it to the tribunal. It also means that no one is going to want tenants on benefits as, if the system messes up, they can be there even longer.

The open-ended nature of the tenancy and the restricted ability to get rid of tenants is going to play havoc with the Edinburgh student market!