We can’t fail another generation of renters

More so than ever, private renters need certainty and protection. No action in Scotland would be an unforgivable failure to use devolved powers.

LAST week Mike Dailly gave evidence to the Parliament’s local government committee on the Fair Rents (Scotland) Bill alongside Pauline McNeill MSP and the minister for local government and housing, Kevin Stewart MSP. Below is the full committee session:

While the minister signalled his support for the good intent of the Bill, he went on to argue how we couldn’t really do anything for fear of this or that. It was too complicated to collect real time data on the level of rents landlords collect across Scotland. It might be too hard for local authorities to process extra information.

Without this data no Scottish council can apply for a rent pressure zone (RPZ) under the 2016 Private Housing (Tenancies) (Scotland) Act. The RPZ would cap rent increases at inflation plus 1%. No local authority has ever been able to produce the rent data for an RPZ so it’s a zombie provision as relevant as the dodo.

Landlords can increase rents once per annum under the 2016 Act but giving tenants the right to seek a lower rent for poor quality homes was a step too far for the minister. The fact this would help drive up housing standards and provide fairness for tenants didn’t seem to matter.

We had to be timid and not upset the profit generation of private landlords. We couldn’t have a statutory cap on rent rises as the minister was worried about unintended consequences.

This was despite the fact the Bill’s cap had a default setting at the same level as RPZ, with the ability to be more flexible. Pauline McNeill suggested the Bill could easily be amended to enable different rent increase caps by local authority area with a special provision for landlords who’d never raised their rents for some years.

Incredibly, it was all too risky for the minister to change the status quo. What a sad poverty of ambition.
My message to the local government committee was if we do nothing the unintended consequence will be failing another generation of renters in Scotland.

Mike Dailly, Govan Law Centre, solicitor advocate says: I’m genuinely perplexed there’s no willingness to act by the Scottish Government; no drive to eradicate such a blatant injustice and unfairness.

In the last decade, the number of children living in severe poverty in the private rented sector (PRS) has doubled to 50,000. We can’t do nothing, not least for the sake of those 50,000 children and the thousands who will join them from the 340,000 households in Scotland’s PRS.

Rent affordability continues to get worse year on year. The poorest 10% of people in our society who live in the PRS spend 57% of their income on housing costs.

Unlike in the social rented sector, if you’re in receipt of social security (whether legacy housing benefit or universal credit) your rent will seldom be covered in full in the PRS.

Part of Mike Dailly’s contribution to Scottish Parliament Local Govt Committee

The local housing allowance was introduced in 2008 and was set at the 50th percentile (average) of markets rent. It’s now set at the 30th percentile and has been frozen and isn’t linked to local market rents.

For many people this means having to find £100 a month to make up the shortfall in rent when you’re living on universal credit. The number of Scots claiming universal credit has doubled during the pandemic.

If you’re under 35, you will fare even worse with a reduced shared room rate.

For the year to Sept 2020, Lothian had the highest average monthly rents for 2-bedroom properties across Scotland at £969. Other areas with high rents include Greater Glasgow at £794 and East Dunbartonshire at £704.

In the same period, East Dunbartonshire saw an increase in average 2-bedroom private rent levels of 4%.

This compares to consumer price index inflation of 0.5% last year; with the Fair Rents Bill, this rise would have been capped at less than half that.

Some recent rent increases have been astonishing. In 2018/19 the average rent for 4-bedroom properties in West Dunbartonshire increased by 16.2% and for Renfrewshire and Inverclyde by 14.1%.

The PRS is a dysfunctional market that’s trebled in size over the last twenty years. The sector’s growth has exploited a lack of social housing. We all need somewhere to live, and the market has overheated in too many parts of Scotland because there’s no choice or alternative for those with modest or low incomes.

Almost 12,000 households are in temporary homeless accommodation waiting to access a permanent council or housing association home; demand far outstrips supply.

When a market lacks genuine competition, we usually have a statutory intervention to ensure fairness. For example, Ofgem has a price cap for gas and electricity; while payday and short-term loans are subject to the Financial Conduct Authority’s price cap.

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