Can new rent controls shift the balance back to tenants?

David Marshall on a controversial change

This December the Scottish Government is due to announce a change to the way the private rented sector works.

The short assured tenancy will be replaced by the private residential tenancy (PRT).

The change is aimed at offering protection to tenants, especially those who stay in a property for a long time.

Perhaps the most eye-catching aspect of the change is that the PRT will bring in an element of “rent controls”, limiting the extent to which landlords in some areas – rent pressure zones (RPZS), where rents are considered to be rising too quickly – can increase rents for a sitting tenant.

Under the PRT scheme, landlords won’t be able to raise rents more than once a year for a sitting tenant.

The landlord will also need to give the tenant three months’ notice of any increase and the tenant will be given an opportunity to negotiate and, if agreement isn’t reached, appeal the increase.

The subject of rent controls tends to bring out strong opinions.

You may be told that they will make housing more affordable and create a panacea of sorts for tenants, or you might hear that they will bring chaos in the housing market.

Based on the proposals as they stand, the reality is that neither scenario will come to pass.

Neil Mcinnes, of Umega Lettings in Edinburgh, explains: “Crucially, RPZS will not affect advertised rents for properties on the market which will still be subject to market forces.

“In areas where RPZS are introduced, if a sitting tenant does not agree to a rent increase from their landlord, then it could be restricted to a limited increase once a year.

“The limit is looking like it will be one per cent above the consumer prices index.

“In my experience, it’s unlikely for sitting tenants to experience rent increases above this level on a regular annual basis so the majority of landlords will be unaffected by RPZS.

“The statistics relating to rising rents across Scotland are taken from properties on the market, so represent changes in the asking (advertised) rents for properties.

“No data is available on what rent increases are for sitting tenants in the private rented sector so it will be difficult to know that difference RPZS will make to tenants and landlords.

“Average tenancy lengths are increasing and more tenants are making their home in the private rented sector.

“RPZS provide tenants with security via the transparent way rent increases will be calculated, which is helpful to both tenants and landlords over the long term.”

Rents tend to rise more quickly when properties come back onto the open market so the changes are likely to be of limited effect in terms of stemming rental inflation.

Most landlords know that there is real value to having a good, reliable tenant who will look after the property and pay their rent on time.

Because of that, they will be reluctant to increase rents sharply as they will run the risk of losing a good tenant.

Nonetheless, the changes should offer greater assurance for tenants who intend to stay in the same place for a prolonged period.

And that will certainly be good news for the city’s renters.