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The problem with rent adjudication

In two weeks, on 1 April, the Scottish Government will end the 3% rent cap which supported tenants through the worst cost of living in a generation. They will replace it with an arcane system (‘rent adjudication’) which fails to address many of the problems of the previous system and promises little stability or protection.


In this blog, we examine this new system and the pitfalls we fear it will encounter and discuss what we believe should be the overall approach of the Scottish Government to seriously tackle the problems faced by tenants in Scotland.

So as a quick reminder, the context for tenants in the UK is abysmal. Soaring rents, poor quality and regular legal or pressure evictions are what we face day in and day out. The situation Is arguably a bit better in Scotland than in England: we don’t have Section 21 (‘no fault evictions’) and we have had the rent cap, which has protected tenants which haven’t moved between tenancies from exterminate rent rises (the cap was riddled with loopholes, you can see more here). But just like the rest of the UK, we have been facing above inflation rent rises for the last ten years (and the last 2 years have been record ones!), mostly in major cities but not only. We also have one of the poorest quality housing stocks in Europe and almost 35% of the population is in fuel poverty.

This context is important because like everyone likes to point out, housing is a complex system, with interlocking impacts and roles. Bringing in new legislation without looking at it with a systems view can lead to harmful consequences: for instance bringing in rent controls but leaving loopholes such as purpose built student accommodation means developers will only build the later, when that’s not the housing we need.

So a bit more on the measures. From 1 April, landlords will be able to issue rent increases to their tenants. These will need to consider the local circumstances of ‘market rent’ and depending on this will have a graded approach, with a maximum of a 12% rent increase allowed. However, if a tenant doesn’t contest a proposed rent increase above 12% there are no penalties for the landlord.

First problem. The system is based on an ideological belief that landlords and tenants are on an even playing field. This couldn’t be further from reality. In reality, tenants will not contest a lack of repairs or a rent increase for fear of eviction. We saw this during the rent cap, when tenants agreed to above cap increases under threat of eviction. We are seeing this now where tenants that complain about broken ceilings or lack of running water are being served eviction notices. Simply put, a tenant needs a home and poor housing (whether because of insecurity, poor quality or high rents) has a huge impact on their physical and mental health. For landlords this is just a question of income and more of less profit. When the system provides no additional protections against eviction, tenants will consider twice whether to contest a rent increase for fear of eviction.

Second problem. This system relies on tenants knowing their rights and landlords respecting the law. Contesting a rent increase is a relatively unknown legal process, which most tenants have never used or heard of. Just for the fact that most people don’t know about it and that the system is obscure and hard to explain, most people will not access their right. And with landlords facing no penalties for chancing a rent increase outwith the system, why wouldn’t they do it?

Third and last problem. This system still focuses on rent increases within tenancies and makes no mention of quality or tenants’ individual circumstances. When most rent increases happen between tenancies (when tenants move out and a new person moves in) and with little link to housing quality, this system risks incentivising landlords to push up rents between tenancies, without these hikes ever leading to tenants at least having better quality housing.

These three pitfalls will set up tenants to face unaffordable and insecure housing until rent controls properly come in and might even backfire against the government’s intention to give greater protections to tenants. Instead, a holistic approach from the government should focus on how to effectively control rents through rigorous legislation that relies on simple data collection (all landlords should declare how much they charge in rent), covers rent increases in and between tenancies, links rents to quality standards (this is especially important given the importance of Co2 emission linked to housing) and has an effective system to penalise landlords which abuse the system. In addition, the introduction of rent controls should be linked with greater protection for tenants against evictions, greater compensation and rules regarding lack of repairs or living in unsuitable housing and reforms that make rented housing homes (access to justice, ability to redecorate, to have pets…). This is the key leadership and vision that we need to inform the new housing bill, that is set to be introduced before the summer recess.

The government has a chance to do things properly and effectively now. Or it can continue down the path of small patches and a middle road approach that heads to landlords’ pressures and cries. The last ten years have shown exactly how this dilution of the vision serves nothing and prolongs the situation, to the point where everyone in Scotland is recognising the deep housing emergencies that we face. Let’s hope that the Scottish Government finally hears this and gets their act together. And as we know hope is nice but not enough, we’re getting organised in the meantime.

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