Rent controls

Private and rented housing plans for Scotland

Stephen Richard — Thu, 28 Oct 2021 09:59:00 +0000

Private and rented housing plans for Scotland Stephen Richard Thu, 10/28/2021 - 10:59

Author or Creator

Common Weal

― Scotland’s housing market should offer people a quality public rental option, whether for young professionals not ready to enter the mortgage market, lower income renters who have few good rental options or families at any point on the income scale who simply don’t want their lives dictated by mortgages. Public policy should also seek to constrain house price rises but also drive up the highest possible thermal performance for new build houses.

― Scotland also needs forms of stimulus after the Covid lockdown and public rental house building linked to an industrial strategy to create many more domestic supply chains can create that stimulus.

― There is a financing model which means this can be achieved at unlimited
scale without public subsidy, involving three steps:

Use ‘Land Value Capture’. At the moment the public buys land and pays
for it as if planning permission had already been granted – but planning
permission is a value added by the public sector and the public sector
can capture that value rather than give it away by buying land only at
its current use value and not its later value with planning permission.
Then borrow from the Scottish National Investment Bank over
mortgage-style periods of time (30 years) and spread the cost of the
borrowing over that period so that rents are low.
Finally, build in a proper maintenance budget so these remain high-
quality houses in perpetuity. It is also possible to sell off a limited
number of plots (for self build) and a small proportion of the houses.
This can give the public developers some additional budget to include
extra public infrastructure in new developments.

― To achieve this the Scottish National Investment Bank should be given
immediate dispensation to operate as a proper bank and local authorities
should open ‘lists’ for families who want to live in one of these houses.
Supply can then be allowed to meet demand.

Rents

Initial rents should be set against a points system to reflect the value of the property. Rent increases be capped at a rent affordability index to ensure increases do not push tenants into hardship. A move towards indefinite tenancies as default, away from short-term contracts. Ensure that all tenants are entitled to a hardship defence in relation to evictions. Create a Scottish Living Rent Commission, to oversee these recommendations and to serve as a centre of expertise for the Scottish Private Rental Sector.

Rents in Scotland are increasing faster than many tenants can afford, and many are being forced into poverty by these increases. Women are particularly hard-hit by high rents due to a gender pay gap of almost 18%. PRS tenants are disproportionately young, non-white and non-British, meaning there is a crucial equalities aspect to making the PRS fairer. High rents, insecure tenancies and poor quality housing have an enormous public cost; directly through housing benefit and discretionary housing payments; and indirectly through the costs associated with homelessness and the health impacts of damp and cold housing. Scotland’s tenants are amongst the least secure in Europe.

In order to bring rents under control and to give tenants security of tenure, we propose the following changes: That initial rents be set against a points system to reflect the value of the property That rent increases be capped at a rent affordability index to ensure increases do not push tenants into hardship A move towards indefinite tenancies as default, away from short-term contracts Ensuring that all tenants are entitled to a hardship defence in relation to evictions The creation of a Scottish Living Rent Commission, to oversee these recommendations and to serve as a centre of expertise for the Scottish Private Rental Sector

Keywords

A new housing settlement

Stephen Richard — Tue, 14 Sep 2021 08:54:06 +0000

A new housing settlement

Primary Author or Creator

Common Weal

Stephen Richard Tue, 09/14/2021 - 09:54

Alternative Published Date

2020

Category

Housing

Type of Resource

Policy Paper

Fast Facts

There is so much wrong with our housing system, from needless homelessness to spiralling costs (which have shut a generation out of housing) to over-mortgaged homeowners struggling financially to the sheer environmental inefficiency of much of the housing we build to the failure to build homes how and where communities need rather than where a developer can make most money.

More details

It is almost politically impossible these days to say that we must control house price inflation – but we absolutely must control house price inflation. The best way to do this is to give people a high-quality, affordable alternative to the private market which is fuelling the rising house prices. Rather than seeing public rental housing as a solution to the ‘problem’ of people who can’t get on the housing ladder or a response to poverty we should see it as a positive choice for people to make. If we developed desirable new sites as public rental housing and built those houses to the highest quality and made them available for social rent, just as in many other European countries young people and families would chose to live in them because its the best option for them and not only because it is the only option.

Common Weal has produced an economic model for how to do this called Good Houses for All. First, we need to use Land Value Capture (explained in this report ) so that the public can buy land at its value pre-planning permission (which after all is a right granted by the public in the public interest). Then by using long term patient finance supplied by the Scottish National Investment Bank it is possible to build houses to the very highest environmental standard without requiring any public subsidy. That means that the number of houses that could be built would be limited only by how many people wanted them. And rents would be slashed – the average two-bedroom house currently costs about £1,400 to rent, heat and maintain each month and yet these new, higher, quality ones would cost only a little over £800 a month. This could represent a revolution in Scotland’s housing system.

But there are other, more direct ways to impact on house prices. The existing Council Tax is grossly unfair, with people living in the least expensive houses paying something like five or six times as much tax proportionately as those living in the most expensive houses. Replacing this tax with one that taxed houses fairly based on their real value would mean that people who have benefited from rising house prices would pay their fair share. That’s why we propose a Property Tax to replace the Council Tax and to dampen down house price inflation.

In the Common Home Plan (our Green New Deal which you can read here) we explain how Scotland can improve the housing it has, bringing it up to the highest possible environmental standards without the homeowner having to pay. By replacing heating systems and properly retrofitting houses with insulation (which will be discussed in more detail in a forthcoming report), borrowing to fund it over a long period, connecting it to a proper industrial strategy so the supply chains for this are captured and by doing it all collectively as part of a Green New Deal we can generate more new public income than the work itself costs.

We have also published two visions for the kind of housing system Scotland should aspire to – House Keeping Scotland and the more economically-focussed Housing for a Better Nation. They cover everything from why we should repair rather than knock down existing buildings to why we should build our new buildings primarily from Scottish timber.

And as explained in our Big Idea on protecting tenants, we have also set out details of why Scotland needs rent controls, why the ones we have don’t work and what it would look like if they were done properly.

Resource Address (URL)

https://commonweal.scot/big-ideas/a-new-housing-settlement/

Keywords

Language English