Should Scottish property industry be worried about latest rent freeze?

Housing associations are ‘extremely worried’ about the prospect of tenants not paying their rent after First Minister Nicola Sturgeon’s announcement on Tuesday. 

The new policy is part of Ms Sturgeon’s attempt to protect Scots from the cost-of-living crisis, but landlords argue it will have the opposite effect.  

Social housing rents are fixed until 1st April, bringing into question how worthwhile the policy is, but Housing Secretary Shona Robinson has said the Scottish government will work with the social rented sector to discuss what happens after March next year.  

‘We are talking with social landlords about whether a cap can be introduced and what level that cap should be at. We thought it was fair that this applies to both sectors,’ she says. 

However, John Blackwood, Chief Executive of the Scottish Association of Landlords has said: ‘I have been inundated by landlords saying they will be removing their vacant properties form the rental market, and I don’t blame them.  

‘Who on earth is going to let a property in the knowledge that they will be unable to meet their own financial and maintenance obligations if their tenants don’t pay the rent of their outgoings increase?’ 

Not only are Landlords worrying about their financial state, but Sally Thomas, Chief Executive of The Scottish Federation of Housing Associations said if this freeze goes ahead, the country is risking housing associations being unable to build new social homes that it needs. 

She says it is more than likely that it won’t achieve the target of 110,000 new affordable homes by 2032.  

David Bookbinder, director at the Glasgow and West of Scotland Forum of Housing Associations has also warned that the rent freeze will see social landlords run out of money within four years. 

‘Housing association rents aren’t scheduled to rise before April 2023, and so the initial freeze has no direct impact, but the prospect of the freeze being extended beyond the end of March is alarming’, he says. 

However Callum Chomczuk, the National Director of the Chartered Institute of Housing has welcomed the news. He notes that the current cost-of-living crisis risks increasing poverty, so this new plan will help provide some relief for the most vulnerable.  

In England, campaigns such as Generation Rent are also supporting Ms Sturgeon’s news and are calling for English governments to follow.  

Baroness Alicia Kennedy, Director of Generation Rent, has called for a rent freeze across England and measures to stop no fault evictions as the cost-of-living crisis spirals.  

She says: ‘Private renters are at risk of unaffordable rent rise – 9% have been asked to pay more than £100 extra per month in the past year. 

‘Without a rent freeze and measures to stop no fault evictions, people will face devastating decisions overpaying rent or staying warm this winter, and many of them will lose their home.’    

Photo by Aaron Sousa