The Generation Rent activist group has told politicians that proposals for rent caps and rent control zones should go further.
The caps and zones are at the heart of the Housing (Scotland) Bill now going through the Scottish Parliament. The legislation will require local authorities to study rent levels at least once every five years and will grant powers to Scottish Ministers to implement rent controls and issue limits on rent increases.
The legislation is at Stage 2 in the Scottish Parliament: after Stage 3 and Royal Assent, it becomes law.
As part of the scrutiny process, Generation Rent deputy chief executive Dan Wilson Craw has told the Scottish Parliament’s Local Government, Housing and Planning Committee, that most restrictions on rents apply only within rent control zones – areas where local authorities find that excessive rent inflation has been taking place and which have been designated by the Scottish Government after at least eight weeks of consultation.
Craw says: “Tenants outside these zones will only be able to use the existing Rent Officer and Tribunal system to challenge in-tenancy rent rises – leaving them vulnerable to rents set by the market that could rise more rapidly than wages.”
In detail, he told Scottish parliamentarians that the Scottish Government proposes limiting rent rises to the rate of Consumer Price Index inflation plus 1%, to a maximum of 6%. Instead, Craw says Generation Rent would prefer the lower of two measures – wage growth or CPI – “to make sure that the typical renter is able to afford a rent rise.”
He accuses the Scottish Government of preferring its measure which is “generous to landlords”, leaving tenants vulnerable to unaffordable rent rises and being forced to move away from their workplaces and communities.
In a statement after he gave evidence to the committee, Craw says: “HMRC figures suggest that maintenance – one common type of expense that would be affected by inflation – is worth a small proportion of landlords’ rental income. A large chunk of a rent increase in line with CPI+1% is therefore pure profit, particularly for the 58% of landlords who don’t declare mortgage interest on their tax returns.”
Generation Rent also suggests that rent control zones are a risky option compared with what it calls “a national rent cap.”
The risks that is perceives are that councils may be slow at identifying control areas, and that setting a rent control when CPI is high “could allow landlords to raise rents at unaffordable rates for several years after the initial spike has subsided.”
The activist group concludes that it would be preferable for rents on every tenancy to be collected through the existing landlord registration system in Scotland. It says this would not only help the authorities make decisions about rent control zones, but would also help tenants check that their landlord was abiding by the cap and issuing rent rise notices lawfully.
This article is taken from Landlord Today