24 Oct 2022

Labour peer shows the damage rent controls can do to housing

A Labour peer who was to have invested £1 billion in affordable homes has halted his scheme because of the threat posed by a rent freeze.

Labour peer Lord Willie Haughey had plans to invest £1bn in 11,000 affordable homes to rent in Glasgow.

However, Scotland now has a mandatory rent freeze imposed by the Green Party – which is part of the Scottish Government – and this will last at least until April next year, with the option for it to continue until April 2024. It’s been promoted by Scottish housing minister and Green Party leader Patrick Harvie.

Lord Haughey has explained his move to halt the development for homes by saying: “Patrick Harvie’s rent freeze is a big part of my decision. The housing market is in absolute crisis and without any plans on how to address it that crisis can only get worse. Patrick Harvie will go down in history as the man who stopped investment and added to the calamitous lack of housing that we have in Scotland, 100 per cent.”

David Alexander, chief executive of lettings giant DJ Alexander, says: “Mr Harvie stated at the weekend that he had received messages from constituents who stated that they had experienced increases of 10, 20, and 30 per cent on rentals. Either Mr Harvie doesn’t understand the Scottish rental system, or he is being disingenuous. 

“All rent increases are subject to appeal and no tribunal in Scotland would ever approve increases of this scale so either the tribunals aren’t doing their job correctly or Mr Harvie needs to produce proof of such increases.”

“With tens of thousands of viewing requests coming into our system monthly, students being asked to sleep on the floors of common rooms, and waiting lists at record levels, demand has never been greater.”

Harvie has gone on record as saying that tenants will be protected by freezing rents; he insists that opponents of the freeze are “vested interests” like housing associations, agents, universities, construction companies, Build To Rent investors, and individual and corporate landlords. 

Alexander continues: “The problem is that supply has not kept up with demand and so we have the worst shortages in the rental market that anyone has ever seen. Mr Harvie believes that the private rental sector will not shrink as a result. 

“He stated that the vested interests always warn of this but don’t leave. He better hope that he is right because if he is wrong the number of tenants who will not be able to find homes is going to explode in the coming years.”

And he adds: “At a time when the Scottish Government is publishing a paper on economic growth after independence, they state that re-joining the EU and encouraging greater immigration will be a key pillar of their policy. Perhaps they should check on where they will house these EU workers (prior to the pandemic 40 per cent of all private rental sector tenants in Scotland were from outside the UK). If the private rented sector continues to shrink, there will be no homes for these workers and economic growth in Scotland will be even harder to achieve.”

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