Holmes Mackillop says proposed rent controls for private rental sector will reduce supply, increase demand and raise rents

In response to the Scottish Government’s decision to push ahead with rent controls despite pleas from the private rental sector, Holmes Mackillop director Karen Condie has said the proposals will reduce housing supply, increase demand and raise rents.

Minister for Housing, Paul McLennan, MSP, has outlined proposals to introduce a rent cap linked to the Consumer Price Index as part of the Housing (Scotland) Bill.

“You may think supply and demand is basic economics, but it’s a concept that eludes our Scottish Government,” said Ms Condie.

“Despite higher rent increases than the rest of the UK, the Scottish Government will just not give up on rent controls for the private sector. With private landlords unable to recover increasing costs, such as their mortgage payments, they are effectively forced to leave the sector. That reduces supply, increases demand and results in rents going up and up.”

Ms Condie notes that on the one hand our universities are incentivised to admit more students from deprived areas but argues that unless students can also fund their exorbitant rents, returning home after first year in halls, no matter where home is, or dropping out because of the financial pressure of student rents – going on average in Edinburgh from £600/month last year to over £800/month this year – is the harsh reality.

“Having eventually acknowledged the housing crisis, we would expect the Scottish Government to take steps that are proven to result in more affordable housing not less,” she said.

“Studies going back decades, from New York in the 1980’s to Berlin more recently, have repeatedly shown rent controls have the unintended consequences of reduced supply and increased cost.

“With the lack of council housing, there is a dependence on the private sector to provide rental accommodation and an expectation private landlords will provide the affordable housing that is desperately needed.

“This can only happen with the Scottish Government’s support of this business sector and recognition that it is a business.”

Holmes Mackillop is a member of the Scottish Association of Landlords (SAL). 

ENDS

For further information please contact on Karen Condie on tel 0141 226 4942