Just before Scottish Ministers slashed Scotland’s affordable homes budget by 26 per cent, Glasgow last month (November 30) became the latest major local authority in Scotland to declare a “housing emergency”, following the lead of Edinburgh and citing “unprecedented pressures” facing the council’s services (writes RICCARDO GIOVANACCI).
While of course there is a political element to these dramatic gestures – Labour-led Edinburgh is blaming Holyrood and SNP-led Glasgow is pointing the finger at Westminster – the declarations are a sure sign that the housing market isn’t working and that something needs to be done.
New statistics just released (December 13) show that the country’s housing crisis is intensifying, with plummeting numbers of both new starts and completions. Starts were down 24%, meaning that the crisis will only become more acute in years to come.
In more pragmatic times, before the private rental sector became public enemy No 1 in the eyes of some of the country’s more radical politicians, private landlords would have stepped into this breach and filled the gap between supply and demand.
They would have done this by bringing properties to market which would have accommodated a fluid and flexible population of tenants at rents they could afford until they found homes of their own or longer-term social rentals which suited their needs.
Now, however, many of the landlords who might previously have provided this service are abandoning the market, driven out by increasingly punitive legislation, fewer tax breaks, rent controls and the mora attractive market of holiday let sites such as Airbnb.
Is this sea change factored in to the concept of a housing emergency in the City Chambers of our great cities? There is little evidence to suggest that it is. Instead, councillors, single-issue charities and NGOs focus exclusively on the perceived plight of tenants. There is a marked lack of balance in current political thinking.
There does not appear to be much in the way of appreciation that elements such as the cost of living, rents, running costs, disposable income and inflation impact on landlords as well as the people for whom they are providing a roof over their heads.
Tenants’ Rights Minister Patrick Harvie was told in April this year by delegates at the Scottish Property Federation that rent control legislation he introduced the previous year had led to investors pulling millions of pounds out of Scotland.
Despite such warnings, the word on the street is that the Scottish Government is considering making the temporary restriction imposed on rent increases to help with the cost of living into a permanent rent control.
It is all very well to criticise others for inaction or for incomprehension of the seriousness of the situation, but what can realistically be done to help alleviate this escalating crisis?
Here are five suggestions which might go some way to help:
- The overall tax burden on landlords needs addressed. They are currently taxed full amount and there needs to be a reward to encourage further investment, since the activity is by no means risk-free. There is nothing at the moment withing the tax regime to encourage participants into the sector.
- Landlords should be treated with respect, rather than the current disdain. They are responsible grown-ups who want happy tenants. Longer-term lets are in everybody’s interest.
- There is no reason not to keep regulation as it is. Landlords have factored the current regime in. But upcoming legislation needs more balance, as it is too heavily weighted in favour of tenants at the moment.
- Rent caps are not working and experts said they wouldn’t work. The Government and other interested parties should listen to advice from professionals when it is asked for.
- Career advice for young people to consider the trades as a career to improve housing stock in long term.
These are simply suggestions, but the more the parties involved in Scotland’s housing market can work together, rather than against each other, the more likely it is that the current and future crises will ease.
Riccardo Giovanacci is Managing Director at Glasgow-based Rosevale Letting.
