Scottish Government branded ‘cowardly’ over rent control exemptions

The Scottish Government has been branded “cowardly” over the decision to exempt certain properties from rent controls.

It emerged this week housing secretary Mairi McAllan had decided to exempt mid-market rent (MMR) and build-to-rent (BtR) properties from the rent controls in the Housing (Scotland) Bill.

The legislation would allow councils to designate rent control areas, capping cost increases at inflation plus one percentage point.

But in a letter to the Local Government, Housing and Planning Committee, McAllan said exemptions would apply, later telling the PA news agency she feared the caps could stifle necessary housebuilding in Scotland.

An open letter released by tenants’ union Living Rent has now urged the Housing Secretary to reconsider, claiming the exemptions, if passed, would be “bent to the greed of landlords”.

The letter – in the name of the union’s national campaigns chairwoman Ruth Gilbert – said: “As you very well know, exempting MMR and BtR housing will create a two-tier system of rent controls that’s both unworkable and leaves thousands of tenants across Scotland with no recourse to challenge unfair rent hikes.

“Build-to-rent homes are some of the most extortionate private sector rents across our cities.

“A continued reliance on this kind of housing will drive people from their communities and permanently alter the fabric of our cities.

“Gifting international hedge-funds exemptions from policy designed to control their profits – at the expense of our communities – is not a legacy of which any housing minister should wish to leave.

“Instead, your legacy will be turning our cities into playparks for investors, with Glasgow centre becoming a soulless field of housing that exploits tenants.”

The letter also pointed to the consultation on the Housing Bill, which received responses from more than 4,600 people and organisations, 94% of whom said mid-market rent should not be exempt, with 97% saying the same of build-to-rent homes.

While more than 4,000 responses were from an organised campaign by Living Rent, 70% of standard responses – which includes individuals and companies not part of the campaign – opposed the exemption for build-to-rent properties, while 52% were in favour of an exemption for mid-market rent.

In a statement, Gilbert added: “If this is how the Scottish Government ‘balance’ stakeholder input, the entire consultation on rent controls can only be viewed as a farce, never mind the waste of public money, resources, and energy given to satisfy private investors.

“Exempting build-to-rent from rent controls is unbelievably cowardly, based entirely on false evidence and goes against nearly all of the responses to the Government’s consultation.”

She said build-to-rent homes will not solve the housing crisis, adding that building more of them “will do nothing for tenants unable to pay their rent, the thousands stuck in temporary accommodation, or those left waiting on social housing waiting lists”.

Gilbert said: “Build-to-rent developments is a booming industry where investors are cashing in year in, year out.

“The rent controls outlined in the Housing Bill already allow for landlords to make above-inflation profits year-on-year.

“This Government needs to stop listening to developers’ crocodile tears and get serious about tackling the housing emergency.

“It needs to introduce robust rent controls, ensure that there are no exemptions, and commit to an extensive programme of social housing, so that all tenants have access to a safe, secure, affordable home.”

Speaking to PA, McAllan said her decision was based on the need for housing.

“We need more houses,” she said. “The reason I took that decision is because it was based entirely on investment and investment leading to new stock.

“It was a clear recommendation of the Housing Investment Task Force that, if you want investment in mid-market rent, which comes under the bracket of an affordable home, then you have to allow the conditions to be right.

“So we have more availability, this will drive affordability, making it easier for people to have choice – we know that’s how it works in a market.”

Asked if there is a risk the market could be squeezed with more renters seeking rent controlled properties rather than those which have been exempted, McAllan said: “I am expanding the market so that in years to come Scotland would have a much greater supply of housing stock, a mixture, because we need a mixture – social, mid-market rent, build-to-rent, that is going to increase availability, obviously, and increase affordability, which is one of the main objections.”