Monitoring the Private Rented Sector in Scotland after Tenancy Reform: A partnership between SPICE, CaCHE and UBDC
The private rented sector (PRS) is the most dynamic part of the housing system. It has benefited from the decline in home ownership and social renting since 2000, fuelled by mortgage restrictions on buyers, insufficient social housing and the expansion of buy to let. The sector is controversial but poorly understood. While there are undoubtedly problems in parts of private renting today, at least as important a problem is the failure to understand how the sector functions. It is in practice a series of loosely connected segments or submarkets (see below) catering for different groups provided for by a range of suppliers – mainly small-scale individual buy to let landlords, but also build to rent corporate landlords and housing associations. Parts of the sector work well; other segments in specific places, less so.
Fig. 1: The PRS is a series of loosely connected segments or submarkets
Our work with the Urban Big Data Centre (UBDC) aims, overall, to assess the data requirements for, and to conduct preliminary monitoring analysis of, the PRS in the UK (including Northern Ireland). We are also pleased to announce that we have received a Scottish Parliament Academic Fellowship and will, therefore, be working in partnership with the Scottish Parliament Information Centre (SPICe) to determine the Scottish requirements of PRS monitoring, providing an overall policy briefing on change and reform, and a template for initial and ongoing assessment of tenancy reform in the Scottish PRS.
In Scotland, the PRS has more than doubled in size to 14% (330,000 households) over the period 2001 to 2014. Recent policy change in Scotland has included: mandatory security deposit schemes, landlord registration and the Private Housing (Tenancies) (Scotland) Act 2016 (the latter reducing grounds for ending the tenancy, creating a more open-ended tenancy, and local rent pressure zones which could in time limit rent increases). At the same time, the Scottish Government followed the UK Government by adding 3% to all Land Building Transaction Tax rates for purchase of new properties by landlords. UK tax changes reducing mortgage interest tax relief and retaining higher rates of capital gains tax have also been applied to private landlords. Finally, Scotland is piloting a partial revenue guarantee to encourage investment in build to rent (the Rental Income Guarantee Scheme).
The Scottish PRS legislation was enacted in December 2017. It is important that we can use sensible evidence with which to assess the impact of these reforms. As indicated above, the sector is complex and data below the aggregate level is fragmented, partial and often not in the public domain. Much of what we know about the PRS comes from sources like the census or the Scottish Household Survey (SHS) but the detailed picture provided by the census is only available every 10 years and SHS data are not available for small areas. They also look at the sector through the lens of the renter; relatively little is known about private renting from the perspective of the landlord.
In addition to census and SHS data, UBDC has Zoopla data going back to 2012, and have validated the data against several data sets. While these data provide only a partial picture they do represent change and trends within the sector. We can also use aggregated data provided by City Lets to verify the Zoopla analysis. We have recently received landlord registration data from Aberdeen and Edinburgh which allow us to carry out detailed case study analysis. With specialist expertise working with SPICe, we are in an excellent position to contribute to a greater understanding of the PRS, both in Scotland and the rest of the UK.
Understanding how the contemporary housing system fits together is a critical necessary condition for assembling and using evidence to make better housing policy. We believe this partnership – between CaCHE, UBDC and SPICe – can make an important difference in addressing the shortcomings in contemporary housing policy debate on private renting.
Our findings will be presented in Holyrood and at the first CaCHE Scottish housing policy conference, supported by Policy Scotland, which is due to take place in June. In the meantime, get in touch if you would like to learn more about this area of work or engage with the project team.
This is only one of multiple projects and research plans concerned with the private rented sector in CaCHE. We are already conducting a project (led by Dr Kim McKee, University of St Andrews) on those generation rent households in private renting but often wanting to be in other tenures. We also hope to undertake research looking at the sharp end of landlord-tenant relations, including dispute resolution practice across the different UK jurisdictions.
Professor Ken Gibb is the Director for the UK Collaborative Centre for Housing Evidence, and Dr Gareth James is Knowledge Exchange Associate for the UK Collaborative Centre’s Scotland KE Hub.
Authors: Dr Gareth James and Professor Kenneth Gibb
Date: March 7, 2018 12:24 pm
Categorised in: Markets