2007 - 2021

What Can Scotland Learn from European Rent Controls?

In the last few years, Spain and the Netherlands have introduced nationwide rent control measures, as have Paris and Berlin. As winter starts and evictions continue, we begin a new series looking at our housing crisis. Maria Elena Carpintero Torres-Quevedo explores some of the policy solutions from around Europe.

The fact that rent in Scotland is too high is not news to tenants. Over the last decade, rents have risen faster than wages, and the number of people living in poverty in the private rental sector has tripled. A new report from the Scottish Government shows that Edinburgh and Glasgow, for example, have seen rent increases of 45.9% and 40.9% respectively for two bed properties since 2010.

This is not due to a scarcity of housing – there are more empty bedrooms in the UK currently than at any time since the Great Plague. As things stand, the housing market is conspicuously failing at distributing housing– despite high supply and high demand, people can’t rent houses at prices they can afford. Tenants are getting trapped in the private rented sector unable to save for a mortgage, and the problem is just getting worse.

Rent controls are an effective and necessary measure to curtail and reverse this trend. While the Scottish Government introduced Rent Pressure Zones (RPZs) three years ago, they have failed.  These have done nothing to ease the burden – indeed no council has been able to implement them yet. They are no substitute for adequate rent controls. This fight is not new to Scotland; Living Rent, Scotland’s tenants’ union, have been campaigning for them since their founding in 2016. Not only are rent controls extremely popular – according to one poll they garner 75% support across Scotland, and 85% amongst SNP voters – they are also effective!

The fact that they work is evidenced by their success in many European countries, including Germany, Catalonia, and Austria. Not all rent controls are the same or equally effective, but looking at these examples can show us what rent control best practices might look like in Scotland.

One common measure in many of the countries that have successfully implemented rent controls is a points-based system. An indicative example of this is in the Netherlands, where rental homes accrue points according to the size and standard of the property. The result of this is that rentals are kept in much better condition than in countries without rent controls, contrary to the popular belief that rent controls lead to inadequate housing standards. Crucially, the latest Scottish Housing Conditions Survey showed that 57% of all private rented dwellings in Scotland have some disrepair to critical elements. A points-based system could be a catalyst for the change in housing standards that we so badly need.

Hand in hand with a point system is a rent affordability index. These establish the maximum possible a landlord can charge for a property in a given area. Catalonia recently introduced such a measure, in no small part due to the work of their tenants’ union, Sindicat de Llogateres i Llogaters. Their rent index sets an upper rent limit, with the added caveat that, if the property has been rented out in the last five years, rent can’t be higher than the previous lease. The rent index is established based on the average rent of similar rentals in the area. Germany, home to more tenants than any other European country, has a similar rent index system, where the maximum price of a property is set based on demand in the area and the quality of the property itself. There is a further rule in place since 2015 that prohibits landlords from charging rent above 10% of the local average. Similar measures in Scotland would ensure that rants remained affordable for residents across the country.

Rent controls are even more extreme in Berlin, where the state government recently introduced a five-year rent freeze, to be followed by a maximum rent increase of 1.3% a year. Tenants can also have their rent lowered should it exceed the cap set by the rent index. There are exemptions to this– new constructions, including social housing, are not subject to the rent freeze. This exemption is in place to ensure that supply doesn’t fall– another common concern of opponents of rent controls.

Investment in social housing is a critical component of successful rent controls for precisely this reason. Two test cases that show this are Austria and Sweden. Vienna, for example, has social housing of famously high quality and invests in building and maintaining social housing alongside implementing rent controls. As a result, residents have access to good, affordable accommodation. Compare this to Sweden, where waiting lists for rent-controlled housing span over a decade. The fact that rent controls are only in place for a restricted number of properties means these are in short supply and high demand. Renters frequently sublet rent-controlled apartments for profit, and the supply is concentrated among certain portions of the population, with young people and immigrants less likely to find accommodation in popular areas, and segregation along class and racial lines becoming further entrenched. Housing with lower rents in Sweden is also more likely to be in a state of disrepair. What these examples show is that for rent controls to work, they have to apply across the private rental sector, and they have to be accompanied by good quality social housing.

Scotland should be doing more than following the best examples from Europe – it should seek to lead the way by implementing a radical system of rent controls and social housing like the one outlined by Living Rent’s Tenants’ Manifesto. It should combine the best measures from across the continent with recommendations from local housing advocates. These should include:

  •  A point-based system that sets maximum rent based on the standard of the property
  • A Rent Affordability Index that ensures rents are affordable for locals of any given area
  • Rent control measures attached to properties rather than leases, such that changes in tenancy don’t lead to rent increases.
  • An immediate rent freeze in the most rent burdened areas
  • Significant and ongoing investment in social housing
  • An independent Scottish Living Rent Commission to regulate the sector

Implementing such policies would not only stop Scotland from sliding further into catastrophic wealth inequality, it would be a pivotal step towards building a country that ensures social justice and the wellbeing of those who call it home.

Comments (20)

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  1. Ewan G Kennedy says:

    Actually, Scotland could learn a great deal from … Scotland! I worked in the system of rent control for eighteen years and it seemed to do its job rather well, before John Major neutered it at the request of Lord Goold, one of the Mactaggart family, perhaps the biggest private landlords in the country.

  2. Tom Ultuous says:

    Thank you for that information Maria. I agree with everything you say. The SNP correctly stopped Thatcher’s right-to-buy bribe scheme but I haven’t heard much on the housing front from them since.

  3. Anndrais mac Chaluim says:

    I like the idea of tenants’ unions. Unionisation would give tenants much much economic clout vis-à-vis public and private landlords. It could facilitate the use of rent-strikes to drive down price and drive up quality, for example.

    But I like even more the idea of tenants’ unions that assume the ownership of the housing their members live in. The mutual model of social housing is much more democratic and community empowering than the old municipal model of government ownership. Housing co-ops are the way ahead.

    1. Daniel Lamont says:

      There is a lot to be said for Co-operative or Co-ownership models of flat ownership . There are some good examples in Toronto which I know from first hand experience work very well.

      One problem in Edinburgh is that spacious one or two bedroomed flats have been subdivided to create several tiny bedrooms in order to maximise profits. This, on the one hand, takes a flat which might have housed a family out of circulation and, on the other, condemns, usually, young people to cramped and crabbed accommodation. We need to restore the Parker-Morris housing standards. As Danny Dorlng points out in today’s ‘Observer’, there is a high correlation between high Covid infection rates and poor, crowded living accommodation which it is hard to ventilate properly. There are, of course, many excellent landlords but there are also a fair number of slumlords. There is a distinction between a fair return and exploitation which often amounts to sheer greed .

  4. SCOOT says:

    I see the Bath Separatist is having a go at you today. ;o)
    https://wingsoverscotland.com/the-morning-papers/

    1. He does seem rather desperate.

      No doubt he generates huge amounts of money and considerable web traffic (mostly of people who all agree with each other and him).

      The reality is that Alex Jones gets a lot of traffic and Jeffrey Archer sold a lot of books, it doesn’t make their contribution to the world any less toxic or shit.

      1. Anndrais mac Chaluim says:

        This is true… although Jeffrey Archer can tell a rattling good tale. Bella’s content, whether one agrees with it or not, is of consistently better quality than Wings’.

        1. SCOOT says:

          Actually he was doing a terrific job for the cause of independence. His forensic analysis of many of the major issues was excellent but his ego and his obsessions have now got in the way. The guy clearly has problems. He cannot tolerate criticism of any type. I disagreed with something he posted on Twitter and he immediately blocked me.

  5. Cygnet says:

    The private rent sector is out of control and urgently needs kneecapped, not holding my breath for a political class of landlords to act against their own interest. Tenant unionism presents one way forward.

  6. Blair says:

    It is essential that people are able to rent something that is fit for purpose at a fair price, perhaps Scotland should have its rented property licensed annually with MOT type inspections and appropriate Land Lord insurance in place.

  7. Paul Barrett says:

    Thus journalist us a complete and utter idiot.

    As a LL there is no way I would remain one if her ideas were introduced.

    Rents are a product of the market.
    A rent cap doesn’t recognise additional costs that have to be covered.
    Like all the stupid anti-LL legislation.

    Such raised costs gave to be paid for by tenants.
    No way will a LL allow profits to be eaten away by increased costs and not increase rents to pay for them.

    It would get to the stage that the private capital invested by a LL is not making a real term return dye to cost burdens not able to be paid for by increasing rents due to rent controls.

    Anyone who believes rent controls will improve the lot of tenants is an idiot.

    Already the bonkers PRT has caused rents to increase by over 40%.

    Attempt to control rents and watch private rental supply dwindle.

    Just like has happened in Ireland who are now desperately trying to undo all their ridiculous anti-LL regulations like S24 and rent caps.

    If tenants can’t afford to rent in certain areas then the answer no matter how unpalatable us to MOVE to cheaper areas.

    If that is inconvenient………………. …TOUGH! !

    I can assure this very naive journalist that LL will not remain invested in providing private rental housing if they cannot make decent profits.
    To achieve this they need to be able to cover all costs and to generate a taxable profit.

    Rent controls prevent this so there is little point in being a LL.

    AST LL will divert to FHL or SA.
    Those requiring a PRT will find far fewer LL prepared to let on that basis.

    As has been quoted by a Swedish economist

    ‘Rent controls are the surest way of destroyinformation a city beyond BOMBING it.’

    Other rental market’s cannot be compared to the UK one.
    There are different circumstances from the UK.

    1. Thanks Paul for presenting such a positive view of land lords. You’ve completely dispensed with the widely held view that you are a bunch of ruthless profiteering bastards.

    2. Euan Ramsay says:

      Maybe if we didn’t have private landlords competing with first time buyers it would help people get a foot on the housing ladder?

      Maybe if government guaranteed loans to first time buyers ( within prudent limits) it would be better than providing the sort of subsidy that just drives up property prices?

    3. Neil Gray says:

      The sooner we get rent controls and you piss off the better. You remind me of all those loser, snowflake Trump supporters saying they will leave for Mexico/Canada. None of them will of course. But good riddance to them and condolences to Mexico/Canada if they do.

      Anyway, if the market get tougher for landlords aren’t you lot supposed to thrive? Isn’t competition the alpha and omega of capitalism? Think of it this way, it will do you good to lose all your current privileges and subsidies and have to provide a decent standard at a decent rate. Weed out the weakest as it were.

  8. Euan Ramsay says:

    A couple of points

    1. Should rents be set at a level which discourages property price inflation?
    2. What about having a “decent homes standard” for the private as well as public sector?

    Otherwise great analysis

  9. Euan Ramsay says:

    Maybe if government recognised the problem of a low growth economy and the problem of low interest rates

    1.low interest rates have disproportionately impact on pension schemes, result employers closing schemes and people becoming landlords as a way of providing retirement income

    2. Low interest rates mean cheaper mortgages? Myth low interest rates lead to property price inflation so any reduction in interest rates is offset by having to pay more to acquire a property. Also makes it much more difficult for first time buyers (without parental or other support) as it increases the deposit requirement

  10. Frank says:

    Anti-lanlordism sometimes comes across as the politics of envy, e.g. the comment about them being ‘profiteering bastards’. You can of course make a profit without being a bastard and many landlords are simply providing a service people need. Most people, especially younger people that I have spoken too, also don’t want to live in Council housing which is controlled by the state. Articles like this forget that their are good landlords and that a significant number of people own an extra house as a pension investment.

    1. I’d love to meet all these young people who hate the idea of affordable housing because its “controlled by the state”. LOLs. You made that up.

      My comment about them being ‘profiteering bastards’ was in direct response to someone who was – very clearly (and comically) a ‘profiteering bastard’.

      When we’re talking about affordable decent housing, I’m not sure what the relevance is of your claim that “a significant number of people own an extra house as a pension investment.”

      1. Josef Ó Luain says:

        Nicely said, Mike.

  11. Neil Gray says:

    Thanks, solid article. The only negative comments below come from people who have simply ignored the evidence you have provided and rebutted it with pure free market ideology and its ridiculous myth that the market alone will provide a solution to the housing question. Friedrich Hayek’s writing on rent control is the main tired old source of this recycled myth. This conveniently ignores two self-evident facts: (1) the contemporary private housing market receives significantly more public subsidy than public/social housing – they are the real subsidy junkies!; (2) The primary reason that public housing and greater regulation of the housing market was developed in the first place in the early 20th century (thank you Glasgow rent strikers!) was that the mass slums of the 19th century proved without doubt that the market could not and would not solve the housing question. Rent decontrol in the 1970s, and the decimation of public housing since 1980, especially through the right to buy and housing stock transfer, is only proving that self-evident truth again.

    One more thing. Living Rent becoming a Tenants’ Union in 2016 is one of the most significant events in recent political history. There are local branches springing up everywhere. Especially in Glasgow and Edinburgh. Join one. Form one elsewhere. The union is always looking for new members and is growing rapidly.

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