Law News

Scrapping rent cap bill demonstrates advantages of industry self-regulation

Em Morley - August 14, 2020

The plan to introduce rent caps in Scotland was recently scrapped, which PayProp believes demonstrates the difficulty of introducing new lettings regulation amid ongoing uncertainty. 

The automated lettings payment platform has explained the situation in further detail:

What is the Fair Rents (Scotland) Bill?

The Fair Rents (Scotland) Bill was put forward by Scottish Labour MSP Pauline McNeill, with the intention to cap rent increases for Private Residential Tenancies. This cap was to be set at no more than the annual Consumer Prices Index plus 1%.

It was introduced to the Scottish Parliament in June this year but later withdrawn in July before it could be debated by politicians. It would have given private tenants the right to apply for a ‘fair rent’, based on the condition and amenities of the property. This would have been determined by a rent officer or First-tier Tribunal no more than once in any 12-month period.

Landlords would also have been required to disclose rent prices for each of their properties when registering or renewing their registration on the Scottish Landlord Register.

Why was the bill scrapped?

A spokesperson for the Scottish Parliament’s Local Government and Communities Committee said that the decision was made due to finite resources being available, limited time for scrutiny, and the need to investigate the impact of COVID-19.

PayProp also points out that another report states the bill might have been scrapped because it was unlikely to become law before the 2021 Scottish elections.

Neil Cobbold, Chief Sales Officer at PayProp, says: “It is not surprising to see the bill scrapped. Rent controls are complex to introduce and deeply controversial among landlords and property professionals.

“Therefore, now may not be the best time to consider such far-reaching regulation as the market continues to recover from the unprecedented shock of the last few months.”

A better way forward for future regulation?

Many rental market measures introduced in Scotland, such as regulation of agents and the banning of tenant fees, have recently been adopted south of the border.

Cobbold says in the same way, delays to new Scottish legislation could also be mirrored in England as the market continues to recover from the pandemic – but that industry self-regulation may fill the gap. 

He comments: “Before any additional top-down regulation is introduced across any part of the UK, there would need to be significant research and analysis carried out, as well as a full consultation with all PRS stakeholders.

“The difficulty of bringing forward new property industry legislation makes the role of industry self-regulation that much more important.

“In contrast, initiatives like the ongoing Code of Practice Steering Group consultation, based on the recommendations of the RoPA report, give property professionals a chance to agree new industry rules that are sensitive to challenging market conditions.”

The importance of having your say

Cobbold also says that while COVID-19 could affect the plans for many pieces of legislation, property professionals should take the opportunity to make their voices heard.

He concludes: “The consultation period will remain open until 4 September, and I would encourage everyone involved in the property industry to give their feedback..

“With so many from the sector already getting involved, we can reasonably expect the final document to reflect our needs and concerns while ensuring that we continue to do our best for landlords, tenants and homebuyers.”