Freeze could have long-term consequences say providers

Millions of pounds could be cut from housing associations’ budgets, as well as vital support services cut because of the Scottish Government’s rent freeze.

Scotland’s rent freeze for social and private tenants was announced by first minister Nicola Sturgeon at the beginning of September to protect tenants from spiralling rents and a cost of living crisis that she described as a “humanitarian emergency”. The intervention also included an eviction ban.

But the Scottish Federation of Housing Associations is urging the Scottish government to rethink the move saying it would affect affordable housing targets as well as climate aims of the government.

Social housing providers and private landlords will be unable to raise rents until “at least” March 2023 in a move that has been welcomed by tenants’ unions and housing campaigners across the UK.

Among social housing providers, there are fears that the loss of rental income will constrain the construction of much-needed new affordable homes and refurbishing existing stock.

Sally Thomas, chief executive of SFHA, said: “Housing associations are required by law to set social rents in consultation with tenants, providing them with certainty about their rents as part of a tenancy that is theirs for life.

“As a consequence of the power to set their own rents being removed, our members will find it difficult to consult with tenants as usual and cannot plan their vital work for next year. This removes power from tenants and reduces their say in their rents and services, effectively side-lining them from the process.”

Jn England councils can raise rents up to a maximum of the Consumer Price Index (CPI) of inflation plus 1%. Amid soaring inflation, the government is proposing to tighten this cap in a bid to stop social housing tenants being hit by huge rent hikes.

The current proposals are looking to cap increases by 5%. According to government estimates, this could see £1.3bn taken out of social housing providers’ budgets next year. 

Thomas added: “We are urging the Scottish government to think about the longer-term consequences of any proposal for a rent freeze beyond March 2023. These could be hugely damaging for tenants. SFHA is keen to work with the Scottish government, and other stakeholders, so that, together, we can find solutions that work for tenants, social landlords and the government.” 

Brendan Fowler, the director of Wester Hailes-based Prospect Community Housing, said the imposition of rent controls will “have a significant impact on the provision of new homes” as well as making it harder for rental properties to meet green targets.

Fowler said: “We are completely against the Scottish Government proposals that were recently announced regarding a rent freeze for both the social rented sector and private rented sector.

“Whilst the current proposal ends on 31 March, and therefore will not directly affect Prospect or most other Housing Associations as our rents are reviewed on 1 April, we are concerned about what may happen after 31 March, and also the potential of future government intervention on rents.

“It also brings challenges in how we engage with our tenants, due to the confusion brought about from the government announcement.”

He added: “This decision by the government was made without consultation with the sector representative bodies and has resulted in much frantic activity since the announcement was made.

“In Scotland, we have never had government rent controls in the social sector. We are independent organisations and have been able to set our rents each year taking account of tenant feedback, affordability and the resources required to invest in our properties and build new homes.

“The announcement is very worrying as it goes against the historical position and brings in the real possibility of wider rent controls for our sector. This is something that will be strongly resisted.”

Tenants’ rights minister Patrick Harvie said: “The cost-of-living crisis is an emergency situation demanding an emergency response. Even as energy, food bills and other day-to-day basics become more expensive, today’s legislation freezing rents and protecting tenants from eviction will give tenants stability in their homes and confidence about their housing costs.

“People who rent their homes are more likely to live in poverty or be on low incomes than homeowners. As such they are particularly exposed to rising prices, and it is imperative that we bring in support for them urgently.”