Scottish developers and unions battle over exemptions to private rent controls

David Melhuish, director of the Scottish Property Federation, which represents developers, told Inside Housing: “Potential exemptions for BTR, MMR and for properties significantly under-valued or having undergone major renovation improvements are especially encouraging.

“It’s essential that these amendments are agreed to help restore investor confidence in Scotland, which has been dented by a prolonged period of uncertainty over rent controls and how they will work.

“While BTR and MMR sectors in Scotland are still in their infancy compared to England, they hold significant potential in bringing forward sustainable, large-scale, professionally managed accommodation.

“Amid Scotland’s ongoing housing crisis, encouraging investment in these models can accelerate the delivery of new homes, owing to their comparatively swift build-out timelines. It is therefore imperative that this sector is supported by a stable and enabling policy environment.”

On the other hand, tenants’ unions, including Living Rent, sent an open letter calling on the Scottish government to resist lobbying for the “disastrous” exemptions from landlords.

Aditi Jehangir, chair of Living Rent, told Inside Housing: “For years tenants in the private rented sector have faced soaring rents, a severe shortage of affordable homes, and widespread disrepair. Over 80% of Scots agree – Scotland needs to introduce rent controls to ensure more people have access to safe, secure affordable homes.

“Rent controls done right will ensure that landlords are not able to increase rent between tenancies or hike up rents. The government can also combat disrepair in the private sector by expanding Leighton’s law to include the private sector thereby introducing strict penalties for all landlords who fail to complete repairs in set timeframes.

“But to do this, this government needs to stop listening to landlords and start listening to the people at the sharp end of the crisis: tenants. If the government introduces the exemptions set out in this consultation on mid-market, build-to-rent or regarding quality, they will not only leave thousands of tenants without protections, but they will create a two-tier system of tenants while undermining rent controls for everyone.

“Mid-market tenants are some of the most vulnerable tenants. If these exemptions go through, they will be the only tenants who are unable to challenge a rent increase.”

Scottish housing associations have said that mid-market rent should be exempt from the rent cap, arguing that this tenure already offers homes at a discount to market rent.

Meanwhile, Scottish developers have called for BTR developments to be exempt from the rent controls to avoid deterring international investors looking to invest in the Scottish housing market. A report by Savills for the British Property Federation revealed this week that the number of BTR homes under construction nationwide has fallen 11% year on year – with Scotland experiencing the largest decrease in homes under construction, at 15%.

Another report from the Royal Institution of Chartered Surveyors revealed that the private rental sector has been shrinking, particularly in Scotland, where estate agents reported a net balance of -100% of new landlord instructions over the past three months.