Rent controls fuel Scotland’s housing crisis

The latest official private sector rent statistics have revealed that rent controls introduced in Scotland in 2022 have not eased the housing crisis – but made it worse.

That’s according to David Alexander, the chief of DJ Alexander, a leading lettings and estate agency.

He argues that the policies outlined in the Housing (Scotland) Bill will make the current housing situation much worse for tenants in the private rented sector (PRS).

Before the introduction of rent controls, average rents for one-bedroom flats increased by 31.2% over 12 years – in line with the annual inflation rate of 2.6%.

However, in the two years since the controls were implemented, rents for the same property type have surged by 22.4%.

‘Increased the rate of growth of rents’

Mr Alexander said: “While the Housing (Scotland) Bill has just been debated at Holyrood, the proposals it contains are at odds with the facts outlined in the latest annual statistics.

“These figures show that the introduction of rent controls from September 2022 has actually substantially increased the rate of growth of rents.

“Prior to this date the majority of Scotland experienced either falling rent rises in real terms or near inflation levels throughout the previous 12 years.”

He added: “Even after rent controls were introduced, most parts of Scotland saw average prices rising around the inflation figure.

“It is only the hotspots of Edinburgh and Glasgow which have seen the largest increases.”

Rents have risen

The data shows that rent for two- and three-bedroom properties which increased by 32.8% and 34.4% respectively over the 12-year period, have risen by 27.1% and 25.4% since rent controls – when inflation was 10.9%.

Also, over 14 years, 11 out of the 18 areas which make up all of Scotland had percentage rent rises for two-bedroom flat that were above the cumulative rate of inflation of 50%.

And in four areas, the increases were between 0.4% and 13.5% above inflation over 14 years.

Only Lothian and Greater Glasgow were above inflation by 54.4% and 31.8%, respectively.

Policy led to rents rising faster

Mr Alexander said: “But what is also clear is that for the 12 years to 2022 average rent rises were in line with or below the level of inflation.

“This tells us that rather than helping tenants by limiting rent rises this policy has actually resulted in rents rising faster and steeper than before the September 2022 legislation.”

He adds: “What that legislation did was put the brakes on property investment in the private rented sector, it led to landlords leaving the market and consequently has increased demand to unprecedented levels which remain to this day.

“The logic of this data is that we need to scrap plans for rent controls and rent caps, work with the PRS to grow the sector as a sustainable and valued element of the wider housing offering in Scotland, and let the market find its own level again.”

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