The Scottish government’s proposed rent control formula is generous to landlords but would leave tenants vulnerable to unaffordable rent rises, says Generation Rent.
The Scottish government has proposed limiting rent rises to the rate of Consumer Price Index (CPI) inflation plus 1%, to a maximum of 6%.
Giving evidence to the Scottish Parliament’s local government, housing and planning committee, Generation Rent’s deputy chief executive, Dan Wilson Craw, (main image) told MSPs that the group had advocated for the lower of wage growth or CPI to make sure the typical renter could afford a rent rise.
“A large chunk of a rent increase in line with CPI+1 is therefore pure profit, particularly for the 58% of landlords who don’t declare mortgage interest on their tax returns,” he said.
Wilson Craw added that there was also a chance that a generous CPI+1 cap could allow landlords to raise rents at unaffordable rates for several years after the initial spike had subsided.
“The process of setting up rent control zones, rather than having a national rent cap, means it’s not clear how long it will take for councils and the Scottish government to identify areas that are facing excessive rent inflation and then decide to bring in controls – although a consultation would need to take place over eight weeks,” he said.
“If rents rise rapidly for several months before a rent control zone is designated, then these rises will get locked in.”
Generation Rent has also called for information about rents on every tenancy to be collected through Scotland’s existing landlord registration system. “This would not only help the authorities make decisions about rent control zones but would also help tenants check that their landlord was abiding by the cap and issuing rent rise notices lawfully.”
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