The unintended consequences of freezing rents - Sue Webber

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As events at this week’s Conservative conference have demonstrated, plans announced in haste have a nasty habit of unravelling, and into that category must come the SNP’s scheme to freeze rents for social and private tenants.

It goes without saying that both the UK and Scottish Governments should be doing what they can to help households get through the global cost-of-living crisis, but the obvious principle should be that unintended consequences need to be managed too.

By the time you read this the SNP’s rent freeze plan could already have gone through the Scottish Parliament having only been tabled late on Monday. Normal process was suspended because it was regarded as an emergency bill, with minimal opportunity for any meaningful scrutiny or amendments to make sure there is no damage to sectors which remain crucial to tackling the dire shortage of affordable homes.

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Sue Webber is a Scottish Conservative MSP for the LothiansSue Webber is a Scottish Conservative MSP for the Lothians
Sue Webber is a Scottish Conservative MSP for the Lothians

Most housing associations review their rents on April 1, so the plan to freeze rents until March 31 wouldn’t affect them, but the SNP has resisted guaranteeing there will be no extension and the associations now have a problem because it effectively takes away their independence to set rents to meet their costs.

It’s not as if housing associations are the Scottish Government’s sworn enemies, far from it, yet the SNP was in such a hurry to make this announcement that there was no consultation with them, sending managers into a tailspin when the plan was revealed, and creating conditions for confrontation when co-operation would be much more fruitful.

And even if the Sottish Government only caps rents after March 31, it still represents the introduction of state-dictated rent controls, which could destroy the ability of associations and private landlords to raise money for investment.

It’s also counter to the Scottish Government’s climate change goals because the loss of income a rent freeze entails will eat up the budgets most associations have set aside for energy efficiencies to cut fuel use in older properties.

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One association contacted me to point out that an inability to recover losses could mean a £6.3m fall in income, when they have £5m budgeted for decarbonisation. No rent rises could mean no carbon reduction.

In the private rental sector, it gives reason for landlords to sell up, reducing the amount of badly-needed stock, and the experience of Ireland shows rent controls simply don’t work. In Dublin, a city with many similarities to Edinburgh, the market has all but collapsed.

What on the face of it looks like a bid to help people could in fact make them homeless, especially at a time when finding an affordable mortgage has become harder than ever.

Compare this approach with the new policy announced by Scottish Conservative leader Douglas Ross this week, in which people renting would be given a pot of cash worth a quarter of their rent to build up a deposit to buy a house.

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That would give people a better chance of getting a foot on the property ladder and free up capacity in the rental market, a much more positive approach than central diktat.

The SNP likes to think it is always on the side of ordinary people, but how rising repair bills for fewer, less efficient homes to rent helps no-one.

Sue Webber is a Scottish Conservative MSP for the Lothians

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