The Scottish Government’s proposed rent control measures have sparked a mix of cautious optimism and concern among landlords and property experts. Timothy Douglas, Head of Policy and Campaigns at Propertymark, addressed the Scottish Parliament’s Local Government, Housing and Planning Committee on 28 January 2025, stating that while the government has “struck a balance” on rent controls, the policy remains untested and requires further refinement to support landlords effectively.
The Housing (Scotland) Bill, introduced on 26 March 2024, aims to empower local authorities to assess rent levels every five years and grant Scottish Ministers the authority to implement rent controls, including limits on rent increases. Currently at Stage 2 of the legislative process, the Bill is expected to progress to Stage 3 and eventually receive Royal Assent, becoming law.
Rent caps tied to inflation: a step towards clarity
During the evidence session, it was confirmed that rent caps would be linked to inflation, specifically the Consumer Price Index (CPI) plus 1%, with a maximum cap of 6%. Paul McLennan, Scotland’s Housing Minister, had previously announced this measure on 31 October 2024, describing it as a way to balance affordability for tenants with fairness for landlords.
Douglas acknowledged that this approach provides “clarity and allows for a more consistent approach,” enabling landlords to “plan for the future with a greater degree of certainty.” The CPI, which reflects changes in the cost of living, is already used in welfare payments and social housing, making it a familiar metric for policymakers.
However, Douglas emphasised that the policy still falls short in addressing the broader challenges faced by landlords. He highlighted the “widespread frustration and bewilderment” among Propertymark members, who are grappling with a shortage of rental homes, a housing emergency, frozen Local Housing Allowance rates, and punitive taxes.
Concerns over investment and regional affordability
One of the key concerns raised by Douglas is the potential impact of rent controls on property investment. He argued that restrictions on setting rents between tenancies could deter landlords from investing in older properties that require significant upgrades to meet quality standards. “The gap between tenancy agreements is normally when a landlord will incur potentially significant capital expenditure,” he explained.
Douglas also called for a pilot programme to test the rent control measures before rolling out a “one-size-fits-all” policy. He stressed that regional affordability levels vary significantly across Scotland, and a blanket approach could exacerbate existing disparities.
Calls for tax reviews and statutory reporting
In addition to rent controls, Douglas urged the Scottish Government to review the cumulative impact of taxes and regulations on private landlords. He pointed out that the Additional Dwelling Supplement, recently raised to 8%, means the average landlord in Scotland could pay over £15,000 in taxes. “There is a lack of understanding from the Scottish Government about the impact these costs are having on landlords,” he said.
Douglas also called for an annual parliamentary update on the private rented sector, noting that the current Bill lacks a statutory timetable for Ministers to report back on rent assessments and recommendations from local authorities. “This brings further uncertainty and inconsistency in the proposals,” he added.
A balanced approach, but more work needed
While the proposed rent controls offer some clarity, Douglas emphasised the need for further amendments to ensure fairness for landlords. “Rent increases capped at CPI+1% up to a maximum of 6% within a rent control area does provide clarity,” he said. “However, further amendments are needed to remove the application of rent controls between tenancies, commit to a review of all taxes and costs impacting private landlords, and ensure consistent reporting by Scottish Ministers.”
As the Housing (Scotland) Bill progresses, landlords and property investors will be watching closely to see whether the Scottish Government can strike the right balance between tenant affordability and landlord sustainability. For now, the message from Propertymark is clear: while progress has been made, there is still much work to be done to create a fair and functional rental market in Scotland.