The size of the private rented sector has roughly doubled in the past 10 years. In cities like Edinburgh, in particular, renting privately has become hugely popular and shows no signs of abating.
It is for that reason that the elements of the Housing Bill relating to regulation of the lettings industry are to be welcomed. The vast majority of letting agents are decent, hard-working small businesses which take their professional duties very seriously. We are part of the solution, not part of the problem, and it is in all our interests that bad practice is rooted out.
We want everyone to adhere to the same high standards of practice – to make this happen the industry needs the clarity and transparency which well-drafted, thoughtful regulation can provide.
However there are proposed amendments to the Bill from the Labour party which are far less welcome, and Letscotland has been campaigning hard to ensure that they are defeated. Labour are hoping to introduce rent control and caps on increases, and to scrap the current standard tenancy agreement in favour of a longer lease.
In theory, one can see how this sounds superficially attractive. It sounds like a move to protect tenants against unscrupulous landlords. As the industry which sits in between tenants and landlords, we know that looks, in this case, are deceptive.
These amendments would, in fact, be highly damaging to tenants. Private rents have risen at below the level of inflation for the last five years or so, in most local authority areas – a far slower rate of growth than social rents.
When it comes to leases, the most common form – the short assured tenancy – is also the most popular with tenants and landlords alike. The tenant has significant control. More than 90 per cent of lease breaks are initiated by the tenant – not the landlord. Rent controls and any tenure reform which involves abolishing the short assured tenancy will create significant uncertainty and discourage investment. This will inevitably lead to a reduction in the supply of rental homes, which will push up the price of renting.
Labour’s amendments, in other words, could cause precisely the problem they are trying to solve. Or, put differently, they are trying to solve a problem which does not exist.
These changes would have damaging unintended consequences. The biggest risk to the stability of rent prices is the lack of supply of homes for rent. If politicians really want to help tenants by keeping rent prices in check, they should turn their attention to creating an attractive environment for investment in building homes for let.
Malcolm Warrack is Chairman of Letscotland