Rents rocket in Scotland after rent cap backfires - and new rent controls are unveiled

Scotland's rental market is experiencing the UK's steepest rent increases, despite a rent cap being in place but the Scottish government has now unveiled plans for MORE rent controls.

The rent cap was first implemented by Nicola Sturgeon, the former First Minister, and evictions were also restricted.

Now Scottish tenants are dealing with the UK’s highest annual rent growth at 11.6%, with Edinburgh and Glasgow seeing more significant price hikes than London, Zoopla reports.

The news comes as another Scottish council declares a housing emergency because they don't have enough homes for people to rent.

Rents are rocketing in Scotland

Zoopla's research reveals that while rent prices are stabilising in most parts of the UK, they are rocketing in Scotland.

That's despite landlords nationwide offering tenants smaller rent increases, currently at a two-year low of 7.8%, down from 11% a year ago.

In September 2022, Holyrood decided to freeze rent rises for tenants in response to the cost-of-living crisis, which Ms Sturgeon called a 'humanitarian emergency'.

'Push rents as much as they can' thanks to the SNP

Richard Donnell, the executive director of Zoopla, said that landlords and agents north of the border have been incentivised to 'push rents as much as they can' thanks to the SNP's regulations.

He told the Daily Telegraph: "Landlords operating in Scotland have got this challenge that when a property becomes vacant the landlord thinks 'obviously I must get as much rent as I can because the amount I can increase is limited during the tenancy'.

"Landlords and agents in Scotland are trying to push rents as much as they can [but] this can only go so far.”

Landlords in Scotland saw rent rises being frozen initially but in January last year, the increases were capped at 3% for 'in-tenancy' renters but new tenancies weren’t capped.

The rising rents in Scotland contrasts with London, which is usually where big rent rises are seen.

In the capital, price growth has slowed rapidly over the last year with rents up by just 5.1%, Zoopla says, down from 15.3% a year ago.

London is still the most expensive place to rent

London is still the most expensive city to rent at £2,121 on average. The average British household now pays £1,223.

The average rent in Glasgow is £951, while tenants in Edinburgh pay on average £1,263.

Both are among the few cities in the country where prices continue to rise by double digits, at 10.9% and 11.5% respectively.

And now Fife Council has announced a housing emergency - following Argyll and Bute, Edinburgh and Glasgow - pointing to the 'extraordinary strain' on its homelessness and housing services.

New legislation in the Housing (Scotland) Bill

However, there's no respite for landlords in Scotland who are facing new legislation in the Housing (Scotland) Bill which contains a 'New Deal for Tenants'.

These proposals spell out long term rent controls for private tenancies and allow tenants to keep pets and decorate their homes.

There are also stronger protections against eviction.

Tenants' rights minister, Patrick Harvie, said: "A fairer, well-regulated rented sector is good for both tenants and landlords.

"Tenants benefit from improved conditions and security, while good responsible landlords will thrive when their good practice is recognised by regulation."

He adds: "Scotland has led the way across the UK in improving the experience of people who rent their homes and this reform has been at the same time as significant growth in the size of the private rented sector.”

'Proposals will do nothing to help either tenants or landlords'

However, the chief executive of the Scottish Association of Landlords, John Blackwood, said: "Despite the hype and promises from the Scottish Government, it seems these proposals will do nothing to help either tenants or landlords in the private rented sector.

"The rent control proposals, as has been seen in places like Ireland which has similar measures, will see reduced investment and more landlords leaving the sector, leading to higher costs for tenants."

He added: "The effects of Scottish government policies in the PRS are already being felt, with rising costs reducing supply and placing more pressure on council and housing association properties that they are struggling to cope with.”

'Scottish government is proposing more rent controls on landlords'

The managing director of Accommodation for Students, Simon Thompson, said: "It's hard to believe that the Scottish government is proposing more rent controls when the cap has already pushed rents up.

"Plus, there's no evidence that rent controls have worked anywhere in the world.

"All that has happened in Scotland, is that landlords have sold up and left, reducing the supply of homes to rent which is pushing up rents and demand."

He added: "Four Scottish councils have already announced housing emergencies so I expect there will be more to come over the coming months.”