Private rented sector crucial to solving Scotland’s housing crisis

Private rented sector (PRS) crucial to solving Scotland’s housing crisis

John Blackwood

12 July 2018

“Abolish private landlords.” “Build more houses.” “No more student accommodation blocks.” “Rent restrictions.”  All of these have been touted as “The Solution” to Scotland’s housing crisis.

Let me start by agreeing that there is a housing crisis in many parts of Scotland and that all housing providers must take responsibility and play their part in finding a solution that works for all.

Secondly, let me be equally clear, we can only solve this crisis with landlords and letting agents being part of a comprehensive, long-term strategy.

What needs to be done in the PRS?

Firstly, the PRS in Scotland is subject to regulations which set out high standards and seek to deliver quality, safe homes in a transparent manner.  For example, the private sector is already held to higher standards of fire safety than the social rented and owner-occupied sectors. The sector also has greater transparency over deposits than ever before, through the independent, mandatory tenancy deposit schemes, and further rules have also recently come into force.

New legislation which came into effect in December 2017 requires that all new tenancy agreements follow a strict wording and structure to make them easier to understand, already leading to improved relationships between landlords and tenants.  For example, landlords can no longer simply end a tenancy without cause and tenants also enjoy a clearer route of appeal or complaint through a new First-tier Tribunal judicial system.

From 1 October 2018 all letting agents must be listed on a Scottish Government register. Tenants and landlords should already be checking if their letting agent is on that list and if not, asking why not and when they intend to register.

However, these new rules and regulations are only effective if those working within the sector and their customers are educated, and if the rules are effectively enforced.  SAL provides information to landlords all over the country and will soon be partnering homelessness charity Shelter Scotland’ s public exhibitions to inform the widest possible audience of the new rules.

What everyone needs now from government is effective enforcement.  Regulation was welcomed by, and indeed some aspects were pressed for by SAL, to drive those offering sub-standard service for a knock-down price out of the market. Those who will not comply need to go and we need to see this happening right now.  Here at SAL we will investigate any evidence presented to us should anyone believe that one of our members does not comply and we will take appropriate action if that is found to be the case.

The problem arises when criminals, who are highly unlikely to be part of a quality organisation, break the rules. When this happens the public needs assistance from government to access an effective route for complaints to be logged, investigated and action taken, otherwise additional legislation can never be effective.

We also need to ensure that landlords can afford to invest in their properties. Despite the perception amongst some, being a responsible landlord incurs high costs including training, safety checks, maintenance, improvements such as energy efficiency and other legislative requirements. It can be a low-margin business. Recent changes to taxation have hugely driven up costs for responsible landlords. These costs can impact on tenants via increased rents.

SAL would like to see government undertake a detailed study of costs in the sector, in a similar way that it undertakes business impact assessments for specific pieces of proposed legislation to ensure that the costs on the relevant sector are fair and proportionate, both now and in the future.

Finally, SAL wants to see action taken to incentivise landlords to move from providing holiday lets in cities such as Edinburgh back in to the long-term rental market. Whilst we need landlords to offer short-term lets to boost the local economy, we also need landlords housing people who live and work in the city but struggle to find a home.

So, to summarise, we need:

• landlords and letting agents to meet the new stringent regulations
• education of tenants about how to spot and report those not complying with the rules
• government to ensure rules are rigorously enforced and seen to be so
• to ensure that costs in the PRS do not stifle landlord investment in new and existing homes
• encouragement for landlords to provide long-term lets, particularly in cities.

If we can move towards achieving those goals and shift the public debate away from silver bullets and towards joined-up, practical solutions then I believe the PRS can be a major part of solving Scotland’s housing crisis.

**This article first appeared in The Scotsman on Thursday 12 July.