An Evaluation of Rent Regulation Measures within Scotland's Private Rented Sector

Abstract

Throughout Europe there is widespread concern about private rents, both from tenants and governments, especially in Europe’s larger cities and their 'hot spot' neighbourhoods. This report examines how the Scottish Government has responded to this issue as part of the development of the new Private Residential Tenancy which came into effect in December 2017, thus setting this analysis within a broader review of European 'rent regulation' measures. The term 'rent regulation' is commonly applied across Europe to refer to measures which seek to limit 'in-tenancy' rent increases, whilst leaving the rents for new tenancies free to find their place within the market. In looking to balance the interests of tenants and landlords, the Scottish Government rejected rent control across the rental market, favouring instead measures to ensure that 'in-tenancy' rent increases are not excessive and do not exceed market rates. The Act which emerged in 2015 set out a new open-ended tenancy to replace the short-assured tenancy along with its typical fixed terms of six months. This led to concerns that unscrupulous landlords might use excessive rent rises as a means to repossess their property. The Act therefore sought to protect tenants from excessive rent increases in two ways: firstly, by allowing tenants who believe their proposed rent increase is out of step with the market to seek a formal review by the Rent Officer, and secondly through area-wide inflation-linked restrictions on rent increases through Rent Pressure Zones. High and rapidly rising rents in Aberdeen, at the time of the Bill's passage, helped to garner political support for Rent Pressure Zones. Whilst Aberdeen’s rents have now fallen back in the wake of the sharp decline in oil related activity, rents in both Edinburgh and Glasgow continue to cause concerns. The Rent Pressure Zone measures emerged relatively late in the policy-making process and therefore were not considered in much detail when the Bill was debated in Parliament. This may have contributed to the challenges now faced by local authorities seeking to utilise this measure. After scoping out and discussing these challenges, the report offers some suggestions as to how these might be best overcome.