Labour plans for Scottish private rented sector will increase rents and restrain investment

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Well-meaning amendments likely to have “unintended consequences”, says Letscotland.

Labour’s Shadow Cabinet Secretary for Infrastructure, Investment and Cities Strategy, James Kelly MSP, has tabled amendments to the Housing Bill for consideration by Holyrood’s Infrastructure and Capital Investment Committee.

Mr Kelly proposes the introduction of restrictions on rent rises, and changes to tenure on private rented housing. The proposals are similar to those proposed by Labour Leader Ed Miliband MP last month.

Letscotland, which is part of Lettingweb and represents around 420 letting agents all over Scotland, believes that the proposals will have damaging unintended consequences, leading to unnecessary rent rises and reducing net investment at a time where supply is already too low.

Commenting, Letscotland’s Chairman Malcolm Warrack said:

“We can see that these proposals are well-meaning, but we see some serious unintended consequences as a result of a lack of research on the underlying industry statistics.

“The private rented housing sector has doubled in size in the last ten years, and we need tens of thousands more homes for rent over the next ten years to respond to growing demand from tenants. We have concerns that these plans will create uncertainty for investors and cause planned investment to slow, at the very time when it needs to accelerate.

“Furthermore, we believe that the proposals would make rents increase faster than they otherwise would, as landlords ‘future-proof’ against the restrictions. Rents have been rising at less than the rate of inflation for the past eight years – the market is working and this interference could have damaging unintended consequences for tenants.”

Dan Cookson, Head of Research at Lettingstats, which is also part of Lettingweb, added:

“The challenge for our industry is meeting the rising demand for quality housing stock. So far, the private rented sector has met that challenge, but these amendments will undermine those efforts.

“The greatest threat to affordable rents is a continuation of a shortage of supply in rental stock – these proposals will make new investment less likely, and increase the chances that some housing stock will be removed from the private rental market.”

Three pieces of research are being cited by Letscotland as evidence against the need for proposals of this kind:

  1. Research from the Office of National Statistics has shown that average rises in rents across the private rented sector have been below the average inflation rate for the past eight years. http://www.ons.gov.uk/ons/rel/hpi/index-of-private-housing-rental-prices/january-to-march-2014-results/index.html
  2. The Scottish Government’s own research, Review of the Private Rented Sector in 2009, found that the short assured tenancy, which is the most popular tenancy arrangement in Scotland, was popular with tenants and landlords.
  3. The Homes for Scotland report estimated Scotland will need at least 7,500 dwellings a year to be added to the rented sector. http://www.homesforscotland.com/media/file/BRS%20Report_v6.pdf?Site=1

ENDS

NOTES TO EDITORS

  1. LetScotland, part of Lettingweb, is Scotland’s largest letting agent representative body. Further details at www.letscotland.org
  2. The full list of amendments tabled for the committee is available at http://www.scottish.parliament.uk/S4_Bills/Housing%20(Scotland)%20Bill/Daily_list_combined_9_May.pdf
  3. For more information contact Message Matters

    Peter Duncan on 07740 469969 peter@messagematters.co.uk
    Andy Maciver on 07855 261244 andy@messagematters.co.uk
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