Has private sector regulation improved things for renters in Scotland?
January is a reflective period for many, and it’s no different in the Crisis offices. Discussions around forthcoming positive legislative changes, like the banning of letting agent fees in England and in Scotland new powers over Universal Credit and the new tenancy regime, are intertwined with reflections on the impact of previous changes.
One of my colleagues asked if the increased regulation of the Private Renting Sector (PRS) in Scotland has resulted in the positive impact we had hoped for. This blog is the long answer to that question.
The last ten years have seen a raft of measures introduced to regulate the PRS in Scotland. Last year’s Private Housing (Tenancies) (Scotland) Act 2016 was preceded by the Housing (Scotland) Act 2006, the Private Rented Housing (Scotland) Act 2011 and the Housing (Scotland) Act 2014. These Acts brought in a number of changes from the Repairing Standard and landlord registration to the clarification on the charging of letting agent fees and the introduction of the Tenant Information Pack.
At the time each new piece of legislation was consulted on, proponents claimed that it would improve standards and security for tenants, whilst critics argued that it would result in negative changes such as rent increases and detracting landlords from entering the sector.
To see what actually happened we need to look at three things:
- Are landlords less likely to enter the PRS due to regulation?
- Did landlords increase rent due to banning of registration fees, electrical safety requirements etc?
- Has ten years of legislation on the PRS made it a more secure housing option?
Are landlords less likely to enter the PRS due to regulation?
As the chart shows, there is no indication that the regulated market in Scotland has restricted PRS growth, as it has broadly mirrored the growth in England over the last decade. The sector has in fact grown by 80% in comparison to a 55% growth in England.
Did landlords increase rent due to banning of registration fees, electrical safety requirements etc?
So if regulation didn’t have any impact on PRS growth in Scotland did it push up rents, and in particular did banning letting agent fees increase rents?
Again the answer is no, rents have not increased in Scotland any faster than the rest of the UK, and in fact their growth has slowed in the past year. The law clarifying the banning of letting agent fees in Scotland came into force on 30th November 2012, and the figures from the Office of National Statistics clearly shows that rents increased at roughly the same level in both the fee free Scotland and the fee charging England in the 2 years following the clarification of the law. This is backed up by a report from Shelter and Scottish Government figures.
Has ten years of legislation on the PRS made it a more secure housing option?
The legislation wasn’t introduced with the aim of not making things worse. The aim was also to improve the PRS, to make it a more secure and sustainable option for people.
This is the most difficult question to answer but a blunt measure is to look at the number of Homelessness Applications coming from the PRS. The easiest way to show this is to measure the number of Homelessness Applications made per 1000 PRS households compared to the numbers of Applications for all household types.
This data shows that although applications from the PRS are higher than average they have dropped significantly in the last few years, from a 7 point gap in 2007/08 to only 2 points in 2015/16.
So the statistics show us three things:
- The PRS is continuing to grow in Scotland
- Increased regulation has not meant increased rent
- Scots are less likely to become homeless from the PRS than at any time in the last ten years
As we celebrate Burns’ Night on 25th January, I am reminded of the bard’s assertion that ‘facts are chiels that winna ding’. So in answer to my colleague’s question on whether increased regulation of the Private Renting Sector in Scotland resulted in the positive impact we had hoped for, the answer is yes. There are still issues with compliance in some areas, however, the PRS as a route out of homelessness is a more secure and suitable option than ever before.