Proposed Housing Bill rent controls are a barrier to building - John McLellan

I would say this wouldn’t I, but Edinburgh council tax payers might be grateful the current Labour administration needs Conservative votes to pass its budget, which should provide some restraint when it comes to decision time in February.

There is no point simply saying the answer is more public investment in housing when neither the UK nor Scottish Governments have money to invest

But if weekend reports are borne out, it won’t be a licence for uncontrolled spending because the Scottish Government aims to save money by reducing council block grants, so the greater the council tax revenues, the less cash will come from St Andrew’s House.

In Edinburgh’s case, it can’t be a matter of just jacking up the rates to plug an expected £100m black hole, but householders face the prospect of soaring bills but no likelihood of any benefit from improved services.

For the 50 per cent of working people paying more income tax than the rest of the UK, and pensioners losing their winter fuel allowance, 2025 isn’t going to be much fun.

The scale of the council’s problem is illustrated by a report to today’s Policy & Sustainability committee outlining this year’s progress with the council’s five-year business plan, which includes commitments like delivering net zero and ensuring no more than one in ten people live in relative poverty, both by 2030.

Both call for significant investment which, from statements coming from both Westminster and Holyrood, will simply not be available.

As the report acknowledges, the two are inextricably linked because homelessness and the lack of affordable housing is the main driver of poverty, but the improving and expanding the built environment and decarbonising the large number of older properties in deprived areas like Lochend is hugely expensive.

Achieving net zero “must be done at the same time as balancing the investment needed to tackle the ongoing housing emergency, where demand continues to significantly outstrip supply,” it correctly says.

However, the council is hamstrung by the Scottish Government in two ways, directly through a low cash allocation, but indirectly through the admittedly well-intentioned but misguided rent controls promised by the Housing (Scotland) Bill.

A new paper from the Institute of Economic Affairs which examined 206 reports on the effects of rent controls found that while there were benefits for existing tenants in properties with capped rent rises, they cut the supply of rented hones, reduced construction and build quality, but also reduced mobility and therefore workforce flexibility.

In other words, a policy designed to alleviate poverty by limiting rent increases will instead exacerbate it by suppressing supply. There is no point simply saying the answer is more public investment in housing when neither the UK nor Scottish Governments have money to invest, and threatening to squeeze margins means private investors just go elsewhere.

The More Homes More Quickly group, which represents the Scottish Association of Landlords and the Association for Rental Living among others, claims the Housing Bill will delay market clarity for three years, so the situation will only deteriorate.

Maybe along with ditching ex-First Minster Hunza Yusaf’s council tax freeze gimmick, the SNP will also accept the Housing Bill is the single biggest barrier to mass housing construction. If they are serious about tackling poverty, they must kill the Bill without further delay.