Rent freeze emergency legislation will deepen housing crisis
The Scottish Property Federation has reacted with concern to the publication of emergency legislation to introduce a freeze on residential rents and a moratorium on evictions in Scotland. If passed, the legislation could allow for Scottish Ministers to maintain a rent freeze well beyond the First Minister’s initial announcement of six months.
The organisation is aware of hundreds of millions of pounds worth of investment that has been put on hold in recent weeks, particularly in Scotland’s emerging build-to-rent market. Build-to-rent homes are usually owned and managed by institutional investors, often pension funds, and are playing an increasingly significant role in creating high quality, well-maintained and energy efficient rental properties across the UK.
Investor concern from both inside and outside of Scotland is making it extremely difficult for new projects to compete for capital with the rest of the UK and further afield. Investors have cited risk in the Scottish regulatory environment as a key concern after the unusual step was taken to announce the rent freeze without any consultation. The detail of the Bill is unlikely to allay these concerns, as it is now clear the measures could be in force until 31 March 2024 subject to unspecified mechanisms for review and assessment.
Highlighting the SPF’s concerns, SPF Director David Melhuish said:
‘Scotland faces a chronic undersupply of rental housing across both public, private and student accommodation sectors, and this emergency legislation will make this situation much worse. There is a pipeline of new rented private accommodation estimated to be £3.5bn earmarked for Scotland. This could deliver thousands of new high-quality and energy efficient homes for renters. We fear this legislation will now undermine the likelihood of many of these complex and capital-intensive projects actually being delivered any time soon.’
‘Housing providers are not responsible for the cost-of-living crisis but have been singled out by the Scottish Government’s proposals that miss the critical need to attract new investment to the sector. The only way that pressure will be reduced on the rented sector in Scotland is by increasing the supply of new, well maintained and energy efficient homes for rent. New housing must become the policy priority, not blunt instruments singling out landlords, many of whom work hard to support their tenants.
‘We call on the Scottish Government to recognise the vital contribution that the rented sector makes to communities across Scotland and to support those that are looking to fund and develop new homes here. Support must now be offered to housing providers affected by any withdrawal of rent resulting from the proposed moratorium, they too are impacted by the upwards pressure on costs and rising interest rates.’
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