Rent controls limit the amount of rent a tenant can be charged by a landlord. This is generally achieved by putting a freeze or cap on rent increases within the term of a tenancy, but it can also apply to increases between tenancies.
Currently, these controls only exist in the social housing sector – there’s no limit on the amount private tenants can be charged in rent.
However, affordability concerns and record-breaking rent rises in much of the UK over the last couple of years has brought the matter into the spotlight and rent controls for the Private Rented Sector (PRS) are now being discussed in several parts of the UK.
Recent rent freezes and caps in Scotland
During the cost-of-living crisis that followed the pandemic, the Scottish Government passed emergency legislation to help ensure tenants could continue to afford their homes:
- Initially, rents were frozen from 6th September 2022 until 31st March 2023
- The legislation was extended for 6 months from 1st April 2023, when the cap for rent increases went up from 0% to 3% (6% in special circumstances)
- A final 6-month extension was granted, with the legislation expiring on 31st March this year.
But although existing tenants were protected against costly rent increases, the measures didn’t apply to re-lets and new lets.
And with the high rate of inflation and landlords knowing that once a tenant was in their property, they wouldn’t necessarily be able to subsequently put the rent up to reflect the real increase in the cost of living, Scotland saw average rents rise significantly during this period.
Figures from the Scottish Government show that in the year to September 2023 – that’s the first year of the rent freeze:
- The average rent for a non-shared one-bed flat rose by 11.7%
- Average rents for shared one-bed homes rose by 15.1%
- Two-bedroom homes in Greater Glasgow shot up by an average of 22.3%.
This is evidence that in-tenancy rent control simply creates a two-tier market. It also tends to put tenants off moving, which only limits the supply of available stock and puts upward pressure on new rents.
Now that the 3% cap on increases has been removed, landlords of existing tenancies in Scotland will doubtless be looking to recoup some of their losses over the past 18 months by significantly raising rents for new lets.
The only protection tenants now have is the ability to apply to a rent officer at Rent Service Scotland or the First-tier Tribunal (if applicable) for a rent adjudication, if they are concerned about the level of a proposed rent increase.
New long-term rent controls being proposed in Scotland
On 26th March, the Housing (Scotland) Bill was introduced to Parliament. Amongst other things, it proposes the introduction of long-term rent controls, with local councils responsible for ensuring they’re tailored to the needs of tenants and landlords in their own area.
This is obviously intended to keep private sector housing affordable, but it’s likely to meet serious objection from landlords.
And while there’s still a significant shortage of rental stock in most of the country, the Government really can’t afford to introduce legislation that could encourage more landlords to quit the sector.
Rent controls explored for Bristol
Although there hasn’t been any recent progress on this, in July 2022 a commission was launched in Bristol to look at how the PRS in the city could be improved.
The final report suggested that if a rent control policy were to be pursued, annual rent caps could be set at 5% per year, with increases between tenancies of not more than 10% above the current market average.
Ben Beadle, Chief Executive of the National Residential Lettings Association (NRLA), has stated that introducing these measures in Wales would only serve to “decimate the sector further” and he believes it would be a disaster for tenants, many of whom are already struggling to find accommodation. He believes that the best way to control rents and reduce costs for renters is to introduce pro-growth measures that would increase housing supply across the board.
Propertymark’s Timothy Douglas agrees:
If you’d like to discuss the current rent on your property and how much of an increase you might be able to make for an upcoming rent review or re-let, we’re here to help. Just contact your local branch and one of our local lettings experts will be happy to have a chat.
The Your Move Content Marketing Team
