Scottish Labour signals support for rent controls

Scottish Labour is in favour of rent controls but will not give its backing to the Scottish Government’s Housing Bill, a member of the party’s front bench team has said.

A temporary rent cap was introduced by the Scottish Parliament in 2022 as a means of helping private tenants navigate the cost-of-living crisis. It was initially put in place until 2023 but was extended until March this year, with rent increases capped at three per cent per year.

Despite the intention being to protect tenants, the Scottish Property Federation said earlier this year that the cap had led to £700m of investment in the private rental sector being either lost or paused, which in turn has led to a reduction in supply. The knock-on impact of that is higher rents.

The measure has also led to large jumps in rents between tenancies, with Zoopla property researcher Izabella Lubowiecka saying in February that landlords “are now going higher at the start of a tenancy to cover their costs and the limited increases during the contract”. It has led to Scotland having the highest level of annual rental inflation in the UK at 11.1 per cent.

The Housing Bill, which was introduced in March, includes proposals for rent controls as part of a New Deal for Tenants, something that formed a key part of the now-defunct Bute House Agreement between the Scottish Government and the Scottish Green Party.

Speaking at a business leaders' summit hosted by the law firm Lindsays, Labour shadow economy secretary Daniel Johnson said his party is in favour of “some form of rent regulation” but that the proposals outlined in the Housing Bill are “unsupportable”.

“Something that’s much more consistent and allows developers to get a return while protecting tenants can be arrived at but the Housing Bill as it stands at the moment is making the situation worse, not better,” he said.

“The Housing Bill in its current form is unsupportable. We have a supply problem and the government is trying to fix that with demand measures, but unless they fix the supply issue everything else will get worse.”

Last year Argyll and Bute, City of Edinburgh and Glasgow City councils declared housing emergencies, in part due to a lack of housing supply. The Scottish Government declared a national housing emergency in May.

Proposals in the bill include long-term rent controls for private tenancies, new rights to keep pets and decorate rented homes, and stronger protections against eviction. Ministers also want to introduce rent control zones that would require local authorities to assess rents levels and increases in their area thrn report them to the government, which would phave the power to introduce controls.

Speaking at the summit, Scottish Association of Landlords chief executive John Blackwood said the sector is in favour of regulation but is concerned about what he termed the “anti-landlord rhetoric” that has been coming from the government.

“I’m concerned about the lack of growth in investment in the sector and the fact that people [landlords] are leaving,” he said.

“There’s a lack of understanding of that from government and other political parties, but how do you encourage investment in housing when you have rent controls?

“We are all for regulation and have supported that for landlord registrations […]. People are out there saying ‘I want to invest in property – I want to do it well and I want to be a good landlord’. That’s a big part of what we stand for.

“Where we find barriers is the anti-landlord rhetoric from the government, and from the SNP and the Greens in particular.”

Earlier this year a report commissioned by UK Labour’s Lisa Nandy during her tenure as shadow housing secretary recommended implementing private rent caps if the party went on to win the general election.

Written by Stephen Cowan, leader of Hammersmith and Fulham council and chair of the Private Rented Sector Commission, the report recommended tying caps to the lower of local wage growth or CPI inflation.

In response, the party said rent controls would not become official party policy “as we remain mindful of the risk they could pose to the availability of rental properties and the harmful impacts any reduction in supply would have on renters”.

Despite this, Scottish Labour released a manifesto ahead of the general election in which it hinted that it might be in favour of rent controls north of the border.

“Tenants should be protected from unaffordable rents and unscrupulous landlords, but rent regulations must be practical, workable, and reflect the intent of legislators,” the manifesto said.

“Scottish Labour also supports proposals to drive up standards in the rented sector in Scotland, improving the rights of tenants to make their house a proper home.”