Scotland's rent cap was well-meaning but made housing shortage problem worse – John McLellan
Anyone looking for a case study on the impact of unintended consequences of well-meaning intervention in the housing market should take a stroll down Calton Road where a build-to-rent scheme was all set to fill the last remaining gap site. Pensions giant Legal & General bought the whole New Waverley site in 2017, and the plan for the final piece of the Old Town jigsaw was a development of homes for rent. But the day the Scottish Government introduced rent controls, the deal was off.
No prizes for guessing what’s likely to go in its place, and a public consultation is now underway on plans by Vita group to use most of the site for student flats, with a planning application expected to be lodged in July. It’s an ideal site for students, within walking distance of much of Edinburgh University’s facilities and handy for trains, but complaints that the city has too much of such accommodation at a time of housing shortages will be both expected and understandable.
There will be some affordable housing in the proposal, but it will be predominantly student accommodation which tourists can use in summer, because that represents a steadier long-term investment than capped rents. Of course, housing campaigners might argue this makes the case for government intervention, but for a government to appropriate property on the basis of not liking a developer’s proposals would have extreme repercussions for the commercial property market. In which case, the Green Party, which drove the rent cap, will probably think it’s a good idea.