I still haven’t found what I’m looking for
In this blog, Professor Douglas Roberston shares his thoughts on the key findings and impact of the on-going evaluation of Scotland’s private rented sector, the changes brought about by the Private Housing (Tenancies) (Scotland) Act 2016 and reflects on rent trends and what impact this has. The blog originally appeared on the RentBetter website (6/1/2020).
Another key finding from our on-going evaluation of Scotland’s private rented sector was that rents do not generally rise over the tenancy period. The Rent Better research, funded by the Nationwide Foundation, evaluates the impact of the recent changes brought about by the Private Housing (Tenancies) (Scotland) Act 2016. While the new Private Residential Tenancy (PRT) allows for annual rent rises, that is still not ‘custom and practice‘. Again, this reinforces the peculiar nature of private renting as a business, which is often explained by the high degree of diversity that exists across this housing tenure.
What that finding also tells us about the availability of published PRS rental data is perhaps something of a moot point, given they reflect only advertised prices, for new tenancies, not what existing tenants are actually paying. We still do not have comprehensive knowledge about the actual rents charged since these are not collected through any official system.
Another important finding was in relation to the rent levels people are paying, as a proportion of net household income, as self-reported by tenants. We found from the tenants survey that over half of tenants were spending 30 percent of their net income on rent, just over a fifth paid between 40 percent and 50 percent while a small but significant proportion (8 percent) paid above 50 percent of their income on rent.
However, when asked if their rent was ‘difficult to pay’, most tenants disagreed. Surprisingly only one household in ten agreed their rent was proving difficult to pay. Again, those on low-fixed income, the elderly, those on Universal Credit, disabled people, minorities and single parents found rent levels most challenging. There was also a clear spatial dimension to this, with Edinburgh as a high-pressure rental market creating greater financial pressures, whereas for those renting in Ayrshire, given its low rent status, less so. So, despite their evidently being a serious affordability issue emerging (based on self-reported rents), many tenants are failing to recognise that fact. This evidence clearly raises some challenging issues for those involved in tackling poverty, given that housing costs are clearly tipping some households into poverty. Further, the Scottish Government’s stated policy ambition was to ensure private rented housing was affordable and supported vulnerable tenants.
Housing allowances is one means of addressing these issues. Yet, the prevalence of landlords letting to tenants claiming benefits was found to be largely dependent on the type of market: in high pressure places access proved more difficult, whereas in low demand areas landlords were far more pragmatic. More worryingly landlords showed a limited awareness of the current benefits system, and especially direct payment arrangements.
There was a clear finding in relation to the Rent Pressure Zones, which had a stated policy objective of limiting excessive rent increases. These provisions have never been applied, in large part, because of their evidential data requirements. The legislative mechanisms for adjudicating ‘unfair’ rent rises, by asking a Rent Officer to set a ‘market rent’ also had little impact. Both provisions were designed to provide more predictable rents and protection for tenants against excessive rent increases. So landlord concerns about rent restrictions have proved somewhat misplaced. At the same time interesting policy questions again emerge about rents, and just exactly what is meant by the term ‘affordable’. Clearly, what is a reasonable rent means markedly different things to different people.
To access the full set of research reports on the impacts of recent legislative reform on Scotland private rented section use the link: https://rentbetter.indigohousegroup.com/findings/
Views expressed by the author may not represent the views of CaCHE.
Date: December 11, 2020 8:00 am
Author(s): Douglas Robertson
Categorised in: Markets