Decision to end rent controls is a victory for common sense

This will be a comfort for landlords and investors of much greater certainty than they have experienced for several years. It is also confirmation of what many of us have been saying for years, which is that rent controls simply do not work.

The Scottish Government’s own data shows this clearly. The latest statistics on rent levels in the private rented sector (PRS) show that rents have been rising at a far faster and higher rate than before controls were introduced in September 2022.

In the 12 years from 2010 to 2022 average rents for a one-bedroomed flat rose by £138, which was a 31.2 per cent increase over the period. In the two years since rent controls were introduced rents for the same size of property have risen by £130, which represents an increase of 22.4 per cent.

This means that the annual rate of increase in the 12 years to 2022 was 2.6 per cent, which matched the annual level of inflation for that period, while the two years since are substantially higher.

There is a similar story for two and three-bedroom properties which increased by 32.8 per cent and 34.4 per cent respectively over the 12-year period but have increased by 27.1 per cent and 25.4 per cent over the last two years at a time when inflation was 10.9 per cent for the two years.

While Mr McLennan is keeping his options open for some level of rent controls in the future through the Housing Scotland Bill it is clear that they have, at last, realised that their policies have hampered investment and created enormous demand, resulting in rapidly rising rents.

With no restrictions on rent levels being introduced until 2027 it will be interesting to see what happens to the market when left to its own devices.

Returning to the statistics you find that for all property sizes in the 14-year period from 2010 to 2024 12 out of the 18 areas of Scotland had percentage rent rises below the cumulative rate of inflation of 50 per cent. In a further four areas the increases were between 0.4 per cent and 13.5 per cent above inflation over 14 years. It is only Lothian and Greater Glasgow which rose markedly above inflation by 54.4 per cent and 31.8 per cent respectively.

The property market, like all markets, is enormously sensitive to uncertainty. Everyone wants there to be clarity, to be fair, and for there to be an open market which, left to operate without interference, has shown itself to produce modest annual increases at or around inflation with the exception of some notable hotspots.

This announcement is a very positive development and is a clear sign that the Scottish Government is listening to the private rented sector and going some way to encourage growth to ensure landlords and investors can be more certain of the viability of their investment and tenants can be comforted at the prospect of a substantial increase in the number of homes to rent in the future.