Rent caps should be linked to inflation under the SNP plan

Campaigners have raised concerns about linking checks to inflation

Getty Images A row of tenement houses — Campaigners have raised concerns about linking checks to inflation

Rent increases in Scotland could be linked to inflation under new proposals from the Scottish Government.

An amendment to the Housing Act would limit the increase to 1% compared to the consumer price index, a measure of inflation, to a maximum of 6%.

The rules would only apply to properties in rent control areas, and consultations would begin next spring.

Housing Minister Paul McLennan said the announcement provides certainty for tenants and encourages investment.

The Scottish Greens – who were in government when the bill was introduced and played a key role in its creation – have criticized the size of the proposed caps.

The Housing Bill was introduced earlier this year and the legislation allows ministers to create rent control zones on the recommendation of local councils.

McLennan said: “Setting the cap in this way, using CPI as a basis, allows a reflection of the costs landlords incur in offering a property for rent, while offering tenants protection in terms of limiting greater rent increases.”

Paul McLennan says the proposals will provide certainty for tenants and landlords

PA Media A man in a blue suit and gray hair walks down a corridor in the Scottish Parliament — Paul McLennan says the proposals will provide certainty for tenants and landlords

Limits will apply between and during the leases, in selected zones, but McLennan said there will be exceptions to allow certain properties to bypass the restrictions.

A consultation will examine how exemptions should be applied, but the minister indicated in Holyrood that mid-range rental properties were such an option.

Green MSP Maggie Chapman said her party did not believe the proposals would “address the significant unaffordability of rents in many areas across the country”.

She added: “It does not give tenants in the private rental sector the stability they were promised.”

Chapman further asked the minister how ceilings linked to the inflation rate make rent more affordable.

McLennan replied: ‘It is important that any design of rent controls takes the longer-term picture into account, as rental growth can be either above or below inflation.

“We believe that allowing some margin against inflation, such as 1% as mentioned, would give investors some assurance that in the long run, periods of below-inflation growth can be offset by periods of rental prices can rise above inflation. “

The “battle” over rent controls

Holyrood’s local government committee is currently considering the bill. The first phase of the three-step parliamentary process to translate it into law is expected to be completed by the end of November.

Campaign group Living Rent welcomed claims that the caps will apply between leases, but also pointed out their scale.

Campaign chair Ruth Gilbert said: “Setting an above-inflation cap – even as low as 1% – will lead to above-inflation rent increases for tenants, and seriously weakens the rent controls we so desperately need.

“We will continue to fight for rent controls that bring down spiraling rents, not just limit future increases.”

But Propertymark, a trade body for property professionals, said limiting rent increases between leases “removes any incentive for landlords to invest or upgrade properties”, adding that “further changes” are still needed in the bill to “increase confidence to rental agents and their landlords”.