Scotland’s housing crisis has reached alarming levels, with homelessness on the rise, a quarter of a million Scots waiting for social housing, and soaring rents. Unfortunately, rather than alleviating the situation, the SNP Government and its Green partners seem determined to exacerbate it by targeting private landlords, effectively forcing them out of the market.
Over the years, house prices in Scotland have tripled since 2000, rendering homeownership unattainable for many. But now, even the rental market is showing signs of strain. Long-term rents are increasing by over 10 percent annually, averaging £1,100 per month and reaching £1,400 in cities like Edinburgh. This is occurring despite the Scottish government’s attempt to cap private sector rents at 3 percent last year. New rental properties are exempt from this cap, and landlords are adjusting rents at changeover to account for inflation and rising interest rates.
History has shown that government attempts to control rents often backfire, reducing supply and increasing inequality, as academic studies have indicated. However, the Scottish government appears to have ignored these lessons. In a recent announcement, Humza Yousaf, in his program for government, vowed to introduce long-term rent controls, further intensifying the government’s assault on private landlords. Such controls would effectively allow the government to suspend the rental market and dictate rents across Scotland.
This policy, championed by the Green tenants’ rights minister, Patrick Harvie, is likely to drive more landlords out of the market. Landlords are already exiting in large numbers due to ongoing regulatory changes and restrictions. Estimates suggest that the supply of houses available for long-term rent has halved. This shortage has led to fierce competition for new rental properties and localized spikes in rental costs. Moreover, large-scale “Build to Let” projects are being abandoned. A £200 million plan to construct 1,500 rental homes in Glasgow has been shelved by developers directly due to the Scottish government’s rent controls.
Landlords are now taking legal action against the government. The Scottish Association of Landlords has submitted a Petition to the Court of Session in Edinburgh, seeking a Judicial Review of the existing rent controls. They argue that these controls amount to unlawful discrimination because they do not apply to the social housing sector. Housing Associations can increase rents to account for rising costs, so why can’t private landlords?
Despite the evident shortcomings of rent controls, there seems to be little public sympathy for private landlords. Humza Yousaf, too, continues to cater to public sentiment, even though his civil servants are likely aware of the pitfalls of such controls. While these controls may temporarily limit rent increases, they often result in higher housing costs in the long run due to reduced supply, as observed in many cities that have implemented them.
It’s important to remember that not all landlords are villains. In fact, they play a crucial role in maintaining Scotland’s dwindling housing supply. Approximately 200,000 small landlords in Scotland own one or two flats each. Their departure from the market is likely to lead to further rent increases, declining tenancies, and the continued proliferation of Airbnb listings, cluttering city centres with unsightly security key boxes.
In the face of Scotland’s housing crisis, it is imperative that the government seeks solutions that address the root causes without inadvertently making matters worse for both tenants and landlords.