A lack of confidence: why Scottish tenants need rent controls too.

On Monday 21st of June, opposition parties in Sweden’s Riksdag met in central Stockholm and agreed to back a notion of no-confidence in Social Democrat Prime Minister Stefan Löfven. The vote forces Löfven to decide between calling a snap election or resigning from his post. The historic vote was not triggered by any personal scandal with the Social Democrat Party or Löfven himself, but due to the fragile coalition government’s refusal to withdraw legislation that would remove rent controls on new housing. 


https://www.independent.ie/business/world/berlinrent-freeze-tenants-left-out-in-the-coldafter-ruling-by-germancourt-40322207.html (Getty Images) 

Sweden’s housing systemestablished in the post-war years of thriving Scandi social democracyhas used rent controls as a central pillar to ensure its citizens can enjoy affordable housing in the private rental sector. Swedish rental rates are set through negotiation between landlords and the Tenants Associationa 300,000 member strong tenants’ union who represent the roughly 3 million tenants living across the country. The process of negotiation effectively limits the extent to which rents are set through the free market, where private landlords and agents are able to set rents at any price they choose. 

Sweden is not alone in using rent controls to limit the rise of excessive rental prices. The state senate in Berlin (although only briefly before being ruled unconstitutional) introduced rent controls in 2020 to the city where tenants make up around 75% of the population. Similarly, The Hague introduced a form of rental controls in 2019 that protects the rent of certain properties from rising excessively when inhabited by a tenant earning a lower income.

In Scotland, local and national governments have been shy to introduce controls on rental prices and responses aiming to protect tenants have so far been based on two recent policies. The first is the ‘Private Residential Tenancy’ which removes fixed-term lease agreements and prohibits landlords from asking tenants to leave a property simply because a lease term has expired. The second has been the introduction of ‘Rent Pressure Zones’ which give local councils the ability to apply to Scottish Government ministers for rent controls in areas where rents are rising too much, where rent rises are causing problems for the tenants, or where pressure on housing availability becomes too great. To date, no Rent Pressure Zones have been implemented in Scotland and the current SNP government remains committed to the policy, despite the Scottish Greens and Scottish Labour committing to new forms of rent controls in their respective 2021 election manifestos. 

  

Images: Claire Ellis. 

This suggests that in the eyes of local and national governments in Scotland, tenants are not experiencing issues with excessive or rising rental prices. The lived experience of tenants renting across Scotland would undoubtedly disagree with this. Analysis from Living Rent and Common Weal in 2019 showed that rental prices had increased by almost 10% in the previous 12 months, with many areas seeing an even larger increase. This is all the more unjust when we consider the median increase in weekly pay only increased by 1.6% in real terms between 20182019, and a further 1.6% between 20192020. Moreover, when we account for the disproportionately disruptive effect of the pandemic on lower earners in service sectors, any statistical rise in median income likely masks the true impact of the last year on the earnings of the most vulnerable tenants.

The reality of a low (if at all) increase in earnings makes the case for rent controls in Scotland even clearer. It’s simply a matter of social justice that those who earn less should not be made to pay a higher proportion of their income on housing than higher earners. Rent controls would allow for the negotiation of rents based on the real earnings of the tenant, not the tyranny of the property market and the determination of landlords to return as substantial a profit as possible. We also know that high rents disproportionately affect those who are already disadvantaged. Women, young people, and migrant communities on average earn less than other groups, and are therefore hit harder by higher rents. It hardly seems radical to ask that we, as tenants, should only pay what is individually affordable on one of the most basic life necessities. 

The improved negotiating position of the tenant through rent controls could also offer benefits beyond just better rental prices. We know that the condition of many homes in the private rented sector is poor at best, and the 2016 Scottish House Conditions Survey showed that 60% of privately rented homes were classed as being in a state of disrepair. Living Rent members will no doubt be aware of just how dire the conditions of private rented homes can be, and how reluctant some landlords are to improve conditions for fear of having to reinvest their profits back into the property. The process of negotiation afforded by rent controls could increase tenants’ bargaining power, allowing them to demand improvements to rental properties before moving in, and repairs while living there. 

Rent controls would offer tenants a range of rights and benefits that we are currently not entitled to. The process of rental negotiation that tenants have had in Sweden, and briefly Berlin, effectively limits and controls excess rises in private rental prices, and is something we can aspire to here in Scotland as well. It is important to remember, however, that rent controls were not introduced on the goodwill of policy makers in Sweden and Berlin. The Tenants Association in Sweden fought for their negotiating position since the union’s inception in 1923 and have since remained central to Sweden’s wider housing system. In Berlin, rent controls were introduced after vociferous campaigning from tenants’ unions such as Deutsche Wohnen & Co Enteignen. It was the collective action of tenants that ultimately won controls on rent. 

To win rent controls in Scotland, it is clear that collective action from tenants is necessary. Living Rent is Scotland’s tenants union and we’re committed to winning rent controls for tenants to guarantee that everyone has access to a safe, affordable, and high quality home. Our 2021 Tenant’s Manifesto lays out our proposals for rent controls and what is needed to deliver a fair deal for tenants in Scotland. It is only by coming together that we can put power back in the hands of tenants, and only pay rent that is genuinely affordable for homes that are built for people, not profit.

References: 
1. Guthmann (2021), Market Report: Berline, accessed 25/06/2021, https://guthmann.estate/en/market-report/berlin/ 
2. Dutch News.nl (2021), New rent rules in The Hague may squeeze landlords and expats, accessed 25/06/2021, https://www.dutchnews.nl/news/2019/08/new-rent-rules-in-the-hague-may-squeeze-landlords-and-expats/
3. Common Weal & Living Rent (2019), The Rent Controls Scotland Needs, https://commonweal.scot/policy-library/rent-controls-scotland-needs
4. Scottish Parliament Information Centre (2020), Earnings in 2020, accessed 25/06/2021, https://spice-spotlight.scot/2020/11/09/earnings-in-scotland-2020/

 

Further Reading

https://jacobinmag.com/2021/06/sweden-stefan-lofven-no-confidence-housing 

https://www.generationrent.org/the_swede_side_of_renting 

https://www.theguardian.com/commentisfree/2021/apr/23/berlin-rent-cap-defeated-landlords-empty 

Article by Edinburgh Member David Yule.