Rent caps to be tied to inflation under SNP plan

Rent increases in Scotland could be tied to inflation under fresh proposals put forward by the Scottish government.

An amendment to the government's Housing Bill would see increases restricted to 1% over the Consumer Price Index, a measure of inflation, up to a maximum 6%.

The rules would only apply to properties in rent control areas, with a consultation due to begin in spring next year.

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 lodged and played a key role in its creation - have criticised the size of the proposed caps.

The Scottish Conservatives said the Housing Secretary "must see sense and finally ditch the SNP’s botched rent controls scheme".

The Housing Bill was lodged earlier this year, and the legislation allows ministers to create rent control zones following a recommendation from local councils.

McLennan said: "Setting out the cap in this way, with CPI as its basis, allows for a reflection of the costs of landlords to offering a property for rent, while offering protections to tenants in terms of limiting more significant rent increases."

Caps will be in place between as well as throughout tenancies, in the selected zones, but McLennan said there will be exemptions to allow certain properties to avoid the restrictions.

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

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

She added: "It does not give tenants in the private rented sector the stability they have been promised."

Chapman went on to ask the minister how caps pegged to the rate of inflation make rent more affordable.

McLennan replied: "It's important that any design of rent controls considers the longer-term picture, since rent growth can be above as well as below inflation.

"We consider that allowing some margin over inflation, such as 1% as has been mentioned, would give investors some assurance that over the long run, any periods when growth is below inflation may be balanced out with periods where rents may grow above inflation."

Scottish Tory housing spokesperson Megan Gallacher said: “The SNP government remains wedded to meddling in the housing market despite all the damage that rent controls have caused."

Holyrood's local government committee is currently considering the bill, with stage one of the three-step parliamentary process to pass it into legislation expected to be completed by the end of November.

Scottish tenants' union Living Rent welcomed the assertions the caps will apply in between tenancies, but also hit out at their size.

Its campaign chairwoman Ruth Gilbert said: "Setting a cap at above inflation - even by just 1% - will bake in above-inflation rent increases for tenants, and severely weakens the rent controls we so desperately need.

"We will continue to fight for rent controls that bring out-of-control rents down, not just limit future increases."

But Propertymark, a trade body for property professionals, said limiting rent increases between tenancies "removes any incentive for landlords to invest or upgrade properties", adding that "further changes" are still required to the bill to "give more confidence to letting agents and their landlords".