SNP warned rent freeze will make crisis worse
A BAN on rent rises will lead to a shortage of available properties and higher costs for tenants, an economic think tank has warned.
Officials from the Fraser of Allander Institute said yesterday they expect the SNP’s rent freeze to exacerbate problems in the rental market.
They said evidence from similar approaches in Europe indicates it will cause a slump in available properties, which will mean landlords impose higher rents for those that are put on the market.
It comes as students in Glasgow face a growing housing crisis, with some having been warned not to enrol unless they have secured accommodation.
The University of Glasgow has even asked some students to ‘pause studies’ because of a lack of available rental properties.
Speaking to MSPs on the Scottish parliament’s Covid recovery committee, Mairi Spowage, director of the Fraser of Allander Institute, said: ‘The issues that there may be, based on the evidence of these sorts of interventions in the property market, are that this may reduce the supply of private rental properties, which is just going to exacerbate the problem for renters and also make it a much more rigid market, where people are anxious about moving.
‘The problem here is the supply of housing but the private rental sector is an important part of provision of housing for those who aren’t able or interested in becoming homeowners – and the danger with this sort of intervention in the market is it simply reduces the supply further, which will ultimately push up prices for renters.’
When Nicola Sturgeon announced she was imposing a rent freeze earlier this month, she said she would bring forward emergency legislation to make it legally enforceable.
She said the legislation would be drafted in a way that means it had immediate effect from the date of her announcement, September 6.
In Germany, concerns were raised about the impact of rent control measures introduced by the regional state government in Berlin. While evidence shows the move reduced average rents in the city, it also made its housing shortage even worse as landlords looked to sell and tenants held on to properties for longer.
Scottish Conservative Covid recovery spokesman Murdo Fraser said: ‘When the director of the highly respected Fraser of Allander Institute warns that the Scottish Government’s plans for a rent freeze will probably make matters worse it should ring alarm bells.
‘Instead of taking appropriate, effective steps to help with the cost of living crisis, the SNP/Green administration picked an eye-catching – and for them, cost-free – gimmick that, it turns out, is very likely to make things even more difficult for Scots who are already struggling.’
Students starting at Glasgow University have been told not to enrol if they do not have accommodation secured. Education bosses said a ‘significant contraction in the private rental market’ meant they could not guarantee accommodation.
A spokesman confirmed they had asked some students to ‘pause studies’ because of a lack of housing.
Education Minister Jamie Hepburn said: ‘I am aware of the challenges some students going to the University of Glasgow have encountered.’
‘Eye-catching gimmick’