A loophole in Scotland’s temporary rent controls has seen private landlords raise rents for new tenancies more than anywhere else in the UK, data reveals.
In an effort to tackle the housing crisis, the Scottish government this spring introduced a temporary rent cap limiting annual rises to 3% in most cases. But it allowed landlords to go higher if they were drawing up a new tenancy agreement.
Rental figures from Zoopla, the property website, suggest that Scotland’s landlords have used the clause to maximise the rent for new tenancies, which rose 12.7% in the year to July, faster than the next hottest markets of London and the north-west of England.
Asking rents in Edinburgh and Glasgow rose at a rate of 15.5% and 13.7% per year – the highest of any UK city.
For Scottish renters who are not starting a new tenancy, rent controls have kept rises in housing costs well below inflation, and the Scottish government last week announced that it would follow the trial with long-term rent controls.
Living Rent, a tenants union in Scotland, said the cap had “provided very needed protections”.
But there have also been reports of landlords telling tenants they will either sell the property or move into it themselves if a rent increase is not agreed to, in effect forcing occupiers to accept a rent rise above 3%.
“For those who have had to end a joint tenancy due to a flatmate moving out or for those who have needed to relocate, it’s been the wild west of open market rent,” said Aditi Jehangir, the secretary of Living Rent.
“The average tenant already spends at least a third of their income on rent. Tenants should not be forced to choose between remaining in the communities they love or being able to afford to live.”
Scotland’s approach comes after calls from campaigners for rent controls in other parts of the UK. Acorn, the community union that often campaigns for tenants, wants rents pegged at 30% of median local income. The London mayor, Sadiq Khan, has called for the government to allow a two-year rent freeze in the capital where unchecked average private rents could rise to £2,700 a month in the next year. Labour, however, appeared to rule out the idea earlier this year when Lisa Nandy, then shadow housing secretary, warned that they could increase homelessness. But since she was replaced by Angela Rayner last week, landlords believe the idea could re-emerge and claim strict rules would trigger an exodus.
The Zoopla figures also showed that the affordability of private renting across the UK had hit a new low after 18 months of double-digit rent inflation.
The UK’s 5 million private renters on average now need to set aside 28.4% of their gross earnings – the most in more than a decade. A householder on an average wage is now left with less than half of their salary for other expenses, after tax.
“Faced with higher rents and a scarcity of supply, renters are being forced to consider renting smaller homes, moving to cheaper areas, or sharing property with other renters to reduce costs,” Zoopla warned.
Average monthly rents in Aberdeen of £656 are less than half of those in Cambridge (£1,478) and Bristol (£1,315). Belfast has seen some of the smallest increases, amounting to 4.7% a year on an average monthly bill of £759.
