The Housing Scotland Bill is unworkable in its current form - David Alexander

The Housing Scotland Bill has recently been dealt what surely must be a terminal blow. The bill, which is continuing to make its way through the Scottish Parliament, has a proposal to introduce rent controls in specific areas for periods of up to five years.

The level of control can be set at 0 per cent, which would mean rents would not rise for half a decade – the assumption being that landlords and property investors would simply stay put while they lost money for a long period of time.

A paper has just been published by the Institute for Economic Affairs (IEA) which examined almost 200 studies covering a period of 60 years into the impact of rent controls. Their conclusion is that they have never worked in any country where they were introduced and have always made things worse.

David J Alexander is CEO of DJ Alexander Scotland Ltd (Picture: Laurence Winram)

The IEA paper found that rent controls increase prices, reduce the number of properties available and decrease the quality of housing. Investment in housing falls, resulting in greater demand and higher rents for tenants.

Lower returns on investments can also discourage landlords from carrying out repairs, as well as reducing the quality of housing available, the IEA report found.

The IEA paper states: “The finding that rent controls reduce the supply and quality of rental housing, reduce housing construction, reduce mobility among private tenants, and lead to a misallocation of the existing rental housing stock, is as close to a consensus as economic research can realistically get.”

The conclusion was that rather than resolving housing problems, rent controls actually exacerbate the situation.

​Rent controls increase prices and reduce availability, the IEA’s report found (Picture: Alistair Linford)

This report appeared in the same week that Scottish council leaders have warned that the additional costs involved in monitoring rents in their areas which is proposed in the Housing Scotland Bill would be unaffordable. Edinburgh City Council has stated that it would cost them over £5.5m to assess the rents of properties in the private rented sector, which it is unable to afford. The bill states that councils will have to collate data to assess whether an area should have rent controls imposed but no additional funding has been allocated by the government for this task.

These two reports are further proof that the Scotland Housing Bill, in its current form, is simply unworkable. Both the IEA report and the concern of council leaders highlights that this bill will not improve the lives of tenants but will actually make them worse.

The number of homes in the private rented sector fell by 60,000 in Scotland in the year following the introduction of rent controls in 2021. It has subsequently risen by just under 10,000 in the intervening period but is still 50,000 lower directly due to the policy of introducing rent controls. Instead of making the situation worse it would be much more sensible to introduce measures which will return the stock levels to their previous peak. This would go some way to meeting demand and stabilising rent prices.

I would hope that the IEA report and the concern by council leaders will encourage some sensible reflection by the Scottish Government on amending or even scrapping the Scotland Housing Bill. In its current form it is unworkable, unaffordable, and will only make Scotland’s current housing emergency worse.

David J Alexander is CEO of DJ Alexander Scotland Ltd