Rental Housing

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

How can Scotland provide adequate rented housing?

Stephen Richard — Sun, 17 Oct 2021 08:13:20 +0000

How can Scotland provide adequate rented housing? Stephen Richard Sun, 10/17/2021 - 09:13

Author or Creator

Common Weal

Scotland’s housing market should offer people a quality public rental option. There is a financial model which would allow the Scottish National Investment Bank to finance high quality housing for rent.

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.

Keywords

Housing

Rental Housing

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

Resource Address (URL)

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

Keywords

Language English

Alienating, insecure and unaffordable: Living in Scotland’s private rented sector

Stephen Richard — Tue, 07 Sep 2021 08:51:23 +0000

Alienating, insecure and unaffordable: Living in Scotland’s private rented sector

Primary Author or Creator

Ben Wray

Stephen Richard Tue, 09/07/2021 - 09:51

Additional Author(s) / Creators

Common Weal

Alternative Published Date

October 2017

Category

Private rental

Type of Resource

Assessment report

Fast Facts

Ben Wray analyses new data on the experience of living in Scotland’s private rented sector, and argues for reversing the trend under devolution of increasing privatisation of the rental market.

More details

― The findings of this analysis paper are based on data in the Scottish Households Survey 2016, published by the Scottish Government at the end of September. This data provides fresh insight into the experience of living in housing in Scotland – this paper focuses on the private rented sector (PRS) in particular.

― Young people are the demographic most affected by the growth of PRS, with 40% of 16-34 year olds using PRS today compared to 13% in 1999. Young people face specific challenges in terms of low-incomes, insecure work and poverty. While poverty levels among young people for those in social housing has fallen, it has nearly tripled in PRS from 2005-15. Other demographic groups disproportionately represented in PRS include students and people of Asian descent.

― Private rent is uniquely insecure, with over two-thirds (68%) of people staying less than two years in one flat and 41% staying less than one year. The average PRS stay is 2.8 years, compared to 10.6 years in social housing, nearly five times longer. While it is too early to assess the effectiveness of new Scottish Government legislation to address security of tenure, further measures could be taken to make the power between landlords and tenants more balanced.

― Tenants in PRS accommodation are considerably more alienated from their community than in social housing. Only one in five (19%) PRS tenants had a very strong connection to their neighbourhood, compared to 33% in social housing. 40% in PRS felt they were not very or not at all connected to their neighbourhood, compared to 23% in social housing. Alienation has been linked to public health problems in Scotland. Increasing security of tenure and tackling gentrification – which acts to displace poorer people from their communities – could be part of addressing this issue.

― There is significant demand within PRS for moving to social housing. Approximately 40,000 people in PRS (11%) are on a social housing waiting list. Approximately 5,000 (12%) of that number have been on a waiting list for 10+ years. Nearly one-third (31%) of those are on the waiting list because they can’t afford their current housing, while 11% are on because they’ve been threatened with homelessness. These figures are an indication of the lack of affordability of PRS housing and the under-supply of social housing. The introduction of rent pressure zones is likely to have some effect in restricting future rent rises and tackling regional inequities, but is not necessarily going to reduce the number of PRS tenants finding rent unaffordable. A Dutch model of rent controls which links cost to quality of property and ensure affordability would be a step forward. The Scottish Government’s social housebuilding programme should be stepped up considerably.

― PRS has lower energy efficiency levels than social housing, with only one-third (34%) of homes meeting the Scottish Government’s band-C energy efficiency rating target. Poor energy efficiency is a major driver of fuel poverty, with the PRS sector being the highest contributor of emissions per home. One-third (33%) of PRS households are in fuel poverty. Over half (51%) of PRS properties still fail the Scottish Government’s Scottish Housing Quality Standard, which is mandatory for social housing. 5% of PRS homes fall below the Tolerable Standard, which is categorised as homes that it is not reasonable for a person to continue to live in, compared to 1% in social housing. Quality could be addressed by a system of rent controls which ties quality to cost, incentivising the landlord to improve the property.

― The value of the private rented sector to society as a whole should be reassessed by the Scottish Government, and consideration given to a long-term strategy to reverse the trend since devolution towards increasing privatisation of the rented sector. This could be done through a combination of strengthening and increasing the diversity of social housing so that it is once again a universal service and establishing a regulatory regime for PRS that puts it on at least a level playing field with social housing in terms of quality, affordability and security, restricting its profit-making capacity for landlords. The reversing of privatisation in Scotland’s rental market should be something for Scottish politicians to triumph not fear.

Resource Address (URL)

https://commonweal.scot/wp-content/uploads/2017/10/Alienating-insecure-and-unaf…

Keywords

Scottish Households Survey

Rental Housing

Secure tenancies

Housing quality

Language English

The Rent Controls Scotland Needs

Stephen Richard — Tue, 07 Sep 2021 08:30:27 +0000

The Rent Controls Scotland Needs

Primary Author or Creator

Common Weal

Stephen Richard Tue, 09/07/2021 - 09:30

Additional Author(s) / Creators

Living Rent

Date Published

Thu, 02/21/2019 - 12:00

Category

Private rental

Type of Resource

Policy Paper

Fast Facts

This paper makes the case for national rent controls and outlines the problems with the current system of rent pressure zones which have so far been inadequate at preventing the problems high rents and rent insecurity in Scotland.

Instead, rent controls could be designed around a points-based system links to the quality and amenities of a property (rather than market rates) and would be attached to the property rather than the lease.

A new Scottish Rent Affordability Index would peg maximum rents at affordable levels.

A Scottish Living Rent Commission would act as an umbrella body and a centre of expertise and regulation in the private rented sector.

More details

The Private Housing (Tenancies) (Scotland) Act 2016 granted the Scottish Government the power to introduce localised rent controls or rent pressure zones (RPZs) if local authorities could convince them that:

Rents payable within the proposed rent pressure zone are rising by too
much.
The rent rises within the proposed zone are causing undue hardship to
tenants.
The local authority within whose area the proposed zone lies is coming
under increasing pressure to provide housing or subsidise the cost of
housing as a consequence of the rent rises within the proposed zone.

Despite this legislation, or perhaps because of the limitations of it, rent controls are yet to be implemented anywhere in Scotland, and there are significant grounds to be sceptical that they ever will be. Most notably — as bodies such as Shelter Scotland , Edinburgh City Council and the Highland Council have noted — because there is currently no comprehensive survey of rent level data available on which to make such an assessment.

This paper makes the case for an amended system of genuinely effective, national rent controls, outlines the problems with RPZs, and proposes an alternative model that represents the kind of rent controls Scotland needs.

The key points it makes are as follows (with full detail in the main report):

The case for rent controls:

Rents in Scotland are far too expensive, with increases continuing to outstrip both inflation and wage increases for many tenants.
The quality of Scotland’s private rented housing stock is woefully inadequate.
There has been significant growth in the private rented sector (PRS) since it was deregulated in the 1980s—meaning that issues in the PRS now affect far more people than in previous decades.
Lower-income groups are more likely to live in the PRS and are thus disproportionately affected by rising rental costs in the sector.
Better regulation provides an opportunity for substantial savings to the public purse.

The problems with RPZs:

The burden of proof on local authorities is unreasonable and creates unnecessary barriers in making successful applications.
RPZs only create rental limits within tenancies and do not prevent rent hikes between tenancies—doing little to stabilise rents in the long term.
RPZs only limit increases in rent, so do not address the fact that rents in much of Scotland are already too high.
RPZs do nothing to improve the quality of Scotland’s PRS housing stock. As detailed below, we believe this is a significant missed opportunity and that proper rent controls represent a powerful tool to improve the quality of Scotland’s PRS stock. The 2016 Act sought to provide greater tenant security, but without workable controls on rent, landlords can easily force out tenants through
rent increases.
RPZs can only be applied to small, localised areas, so cannot address the scale and degree of the rent problem in Scotland.

The rent controls Scotland needs:

A points-based system of rent controls linked to the quality and amenities of the property, not simply market rates.
A points-based system which attaches limits to the property, not the lease.
A new Scottish Rent Affordability Index to peg maximum rents at affordable levels for tenants.
A Scottish Living Rent Commission to act as an umbrella body and a centre of expertise and regulation in the private rented sector.

Resource Address (URL)

https://commonweal.scot/wp-content/uploads/2019/02/Rent-Controls.pdf

Keywords

Rent controls

Housing quality

Rental Housing

Scottish Rent Affordability Index

Scottish Living Rent Commission

Rent Pressure Zones

Language English

Good Houses For All

Stephen Richard — Tue, 07 Sep 2021 08:08:35 +0000

Good Houses For All

Primary Author or Creator

Craig Dalzell

Stephen Richard Tue, 09/07/2021 - 09:08

Additional Author(s) / Creators

Common Weal

Date Published

Sun, 04/05/2020 - 12:00

Category

Social housing

Type of Resource

Policy Paper

Fast Facts

This paper presents a model for building an unlimited number of houses for social rent on a zero-subsidy basis using the Scottish National Investment Bank.

These houses would be built to extremely high standards of thermal efficiency and on a stable finance model ensuring costs to the tenant are far lower than the private market.

The case is made that this model could be used as a post-pandemic stimulus scheme which will reform and secure the housing and construction sector.

More details

― 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.

― In the current market a three-bedroom family home would incur a monthly
cost in rent, heating and maintenance of about £1,400. A house built using
the above methodology would have a monthly rent, maintenance and
heating bill of only £820.

Resource Address (URL)

https://commonweal.scot/wp-content/uploads/2020/05/Good-Houses-For-All.pdf

Keywords

Scottish National Investment Bank

Housing quality

House prices

Language English

Housing For A Better Nation

Stephen Richard — Wed, 18 Aug 2021 17:48:18 +0000

Housing For A Better Nation

Primary Author or Creator

Sarah Glynn

Stephen Richard Wed, 08/18/2021 - 18:48

Additional Author(s) / Creators

Common Weal

Alternative Published Date

August 2014

Category

Social housing

House ownership

Type of Resource

Policy Paper

Fast Facts

Good housing needs more than good housing policy: housing policy needs to be part of wider social changes towards a more equal, community-centred, environmentally sustainable society, but good housing policy can make an important contribution to those changes. Economic considerations remain key, but we need to transcend the destructive veneration of GDP.

This paper outlines a radically different approach to housing policy. It also looks at immediate improvements that will be steps on the way to more fundamental transformation.

More details

― The current focus on housing as speculation fails to provide the homes people need, pushes up housing costs, encourages bad design and short-termism, concentrates wealth among a small elite, and has brought economic crisis on a world scale.

― We need to move housing away from the market, and this means a major shift of focus towards social and environmental priorities.

― Various policies are outlined with the aim of moving housing policy away from satisfying “the market” and towards ensuring adequate housing provision.

― These include Land Value Taxes, expanded mortgage-to-rent schemes, better regulation of private renting and second homes, and better planning for Green New Deal quality housing.

― Housing policy is integral to the wider economy, so we must look beyond the moral imperative to the wider economic implications and the economic case for public investment.

Resource Address (URL)

https://commonweal.scot/wp-content/uploads/2020/09/Housing-for-a-Better-Nation…

Keywords

Language English

Housekeeping Scotland: Discussion paper outlining a new agenda for housing

Stephen Richard — Wed, 18 Aug 2021 17:21:35 +0000

Housekeeping Scotland: Discussion paper outlining a new agenda for housing

Primary Author or Creator

Malcolm Fraser

Stephen Richard Wed, 08/18/2021 - 18:21

Additional Author(s) / Creators

Common Weal

Alternative Published Date

October 2016

Category

House ownership

Social housing

Type of Resource

Policy Paper

Fast Facts

The United Kingdom’s housing policies have been ideologically-driven, and have led to the current crisis of strangled investment, under-provision and a general flow of power and money from civic society to the wealthy. UK housing has suffered greatly from its politicians’ fixation with a single form of home and tenure, the mortgage-backed and privately-owned home. But it is clear that not everyone is going to get a mortgage; and it is also clear that the ideological pursuit of this helped poison, and nearly bring down, the world economy, as well as being a key contributor to our current housing crisis. While Scotland has shown some appetite for broadening our housing horizons it needs to set out a clear agenda for achieving a diverse and sustainable market, that suits all incomes and interests while providing the shelter that is a fundamental right for all, and this brief paper suggests the three overarching principles we should consider, and key areas of change which, taken together, would deliver them.

More details

KEY POINTS

― Principle 1: Sustainability: the Built Environment as Precious Resource, and the Need for Structural Change to Reflect this. A better strategy is needed around returning vacant homes to use and VAT must be changed to make it more advantageous to repair and rebuild houses than it is to build new stock.. Land and Planning regulations can be changed to reduce “land banking” and to help regenerate town centres. Compulsory Purchase Orders and taxes such as a Land Value Tax or Derelict Land Tax can correct land ownership inequalities and allow land to be used more effectively.

― Principle 2: What We Build, and How. Public Rental: Scottish National Investment Bank and Company based on a re-engineered Scottish Futures Trust. Self-Build: models set out to encourage Local Authorities to bring land and cooperative groups together. The Private Rented Sector (PRS): ‘build to rent’ – long term investment. Infrastructure Funding: community-infrastructure projects. Land Assembly: Local Authorities given power to acquire land.

― Principle 3: Leadership. The Scottish Government needs to create a central Housing Unit, which can assist Local Authorities, Registered Social Landlords, Volume Housebuilders and house buyers and renters to deliver the programme we need.

Resource Address (URL)

https://commonweal.scot/wp-content/uploads/2016/10/Housekeeping-Scotland.pdf

Keywords

Housing

Land Value Tax

Derelict Land Tax

Local Planning powers

Rental Housing

Language English

Resilient Scotland Part One

Stephen Richard — Sun, 15 Aug 2021 16:00:56 +0000

Resilient Scotland Part One

Primary Author or Creator

Common Weal

Stephen Richard Sun, 08/15/2021 - 17:00

Alternative Published Date

2021

Category

Economy

Banking

Type of Resource

Policy Paper

Fast Facts

The borrowing cap for the Scottish Parliament should be removed or lifted substantially so public expenditure can be used where needed; but, more importantly the Scottish National Investment Bank should be given full dispensation to act as a bank and thus capitalise from sources such as pension funds and lend to the public as well as private sector. Public procurement should be entirely reprofiled with the public policy goal of supporting Scottish business and achieving the maximum number of manufacturing jobs.

More details

By using Resilience Economics we can replace an economic toolbox with few policy options which creates inequality, environmental harm and repeated economic crises with one based on a much more balanced set of economic theories which prioritise public-good outcomes and will result in a more stable economy. This can be made to work under devolution if we focus on unlocking Scotland’s economic underdevelopment and support this not with bailouts for existing businesses but transition packages linked to reprofiled public spending and sustainable investment from the Scottish National Investment Bank.

This is underpinned by a series of over-arching policy goals which explain what kind of economy we are seeking to achieve; replacing an unhealthy focus on GDP growth with these will make clear the kind of economic change Scotland is pursuing. Scotland is inordinately well positioned to achieve this because of the current underdevelopment of our copious natural and human resources.

To achieve this we must do the following: Set up a Transition Academy to help policy-makers adapt to the new agenda. Set up a Diversification Agency to support new and existing businesses to grasp the opportunities being unlocked. Create a guaranteed retraining programme for those who lose employment. Reprofile public procurement spending to support this transition Begin a major programme of public rental house-building linked to an integrated supply chain strategy. Create a mortgage-to-rent scheme for households at risk of losing their home. Introduce a tourism rescue package with all citizens being given a £100 voucher for a stay at a Scottish hotel Introduce a similar voucher scheme for the hospitality sector. Develop a form of Universal Basic Income for artists. Devise plans for a future Festival of Scotland to support the entertainment and events sector. Create an industrial strategy to unlock new economic activity in food production, materials manufacture, light manufacturing, housing, energy, hydrogen, land, design and innovation.

Resource Address (URL)

https://commonweal.scot/wp-content/uploads/2020/06/Resilient-Scotland-Part-One…

Keywords

Scottish National Investment Bank

Re-training

Housing

Rental Housing