Prominent property expert David Alexander, the CEO of DJ Alexander Ltd, the largest lettings agency in Scotland, has voiced strong opposition to new rent control proposals put forward by politicians. Alexander contends that the proposed changes, outlined in the Scottish Government’s consultation on the Cost of Living (Tenant Protection) (Scotland) Act 2022, are not only unnecessary but also economically burdensome for both tenants and landlords.
The proposed amendments aim to replace temporary controls with permanent restrictions on rent increases, slated to take effect at the end of March this year. However, Alexander argues that the intricacies of these proposals render them impractical and costly to implement.
Under the new framework, rents would be determined by the lowest of three comparators: open market rent, a landlord’s proposed new rent, and a ‘reasonable’ increase calculated through a new taper system. The tapering mechanism stipulates that if the difference between the tenant’s current rent and the market rent is less than six percent, the proposed increase would be permitted, provided it does not exceed the market rent.
In cases where the market rent exceeds the proposed rent by 20 percent, a ten percent increase would be approved, escalating to a maximum of 15 percent for a 30 percent difference. Alexander expresses reservations about the viability and fairness of such a system, emphasizing the complexity of determining the market value of rent for every property.
Acknowledging the government’s intention to prevent a ‘cliff edge’ situation when the existing legislation expires, Alexander argues that market interventions over the past eighteen months have failed to benefit tenants and, in fact, have been detrimental to their interests. Citing recent government data, he notes that rent increases in two-bedroom properties above inflation occurred in only four out of 18 areas from 2010 to 2022, with Glasgow and Edinburgh experiencing the highest rises.
Over the past year, average rents have surged across all property sizes, ranging from 11.7 percent for one-bedroom units to 14.3 percent for two-bedroom properties. Alexander contends that the proposed six percent increase is higher than historic annual averages, making it challenging to monitor and implement.
Furthermore, he highlights the regional variations in the property market, asserting that different streets and cities have distinct market values. Alexander criticizes the proposed system for introducing unnecessary bureaucracy, suggesting that the existing first-tier housing tribunal adequately addresses rent increase fairness.
Concluding his critique, Alexander argues for a simpler solution: allowing the market to normalize without external rent controls. He advocates for long-term solutions such as encouraging investment and growth in the private rented sector (PRS) while simultaneously boosting the supply of social housing. According to Alexander, such measures would lead to increased stability in the housing market, providing a more sustainable approach to curbing rising rent prices.