Scotland’s First Minister, Nicola Sturgeon, has announced that emergency legislation will be brought forward to freeze rents and establish a moratorium on evictions over winter for both the private rented and social sectors. The emergency measures will be in place until at least the end of March 2023, with the rent freeze to practically take place from today, Tuesday 6 September.
Read on to find out more about this development as reported by The Goodlord Team.
Sturgeon made the announcement as part of a statement on the Programme for Government 2022-2023, which was focused on the cost of living crisis. She described the soaring cost of living as a crisis that will require measures comparable with those put in place to protect people during the first years of the Covid-19 pandemic.
Sturgeon said that these are “temporary measures but will provide much needed security”, and will be supported by the future introduction of a new housing bill, A New Deal for Tenants, which will improve affordability and strengthen tenants rights. She highlighted in her speech that the cost of any financial support now “must not simply fall on consumers in the longer term”.
Sturgeon added that, although the Scottish government doesn’t control mortgage or borrowing rates, it will aim to encourage banks to maximise security for homeowners and businesses. It will also raise the minimum threshold for bank arrestments and will introduce regulations to give greater protection those those repaying debts through the Debt Arrangement Scheme.
The First Minister criticised the UK government in a statement released ahead of her address on the Programme for Government 2022-2023, saying “the most significant powers to tackle this crisis rest squarely with the UK Government and their inaction has compounded the difficulties everyone is facing.”
Like Sturgeon, Scottish Labour Party leader Anas Sarwar has compared the impact of the cost of living crisis and last week called on the government to introduce a rent freeze. “The cost-of-living crisis is a national emergency on the scale of the pandemic – and dealing with it requires both of Scotland’s governments moving quickly and decisively.”
Tom Mundy, Goodlord COO and co-founder, said “the rent freeze represents a potentially seismic new frontier in UK lettings policy. While we understand the need to support tenants, introducing rent control could mark the end of the private rental sector as we know it by stripping away the central incentive which encourages people to invest in buy-to-let properties.
“There’s a major risk that this freeze will push landlords out of the PRS market at a time when pressure on rental stocks is particularly acute. This will squeeze the whole lettings market and create bigger headaches for the Scottish Government later down the line. Long-term, it could serve to stymie all future investment in the space and fatally undermine the system.”
Additional support proposed
As a devolved nation, Scotland has the power to make decisions and implement its own policies relating to the economy, education, health, justice, rural affairs, housing, environment, equal opportunities, consumer advocacy and advice, transport and taxation, independent of England, Wales, and Northern Ireland.
Although Sturgeon says that the Scottish government’s “powers over tax and borrowing are woefully inadequate,” the government has also announced additional support in the form of amending the Scottish Child Payment from 4 November, upping it to £25 a week for each eligible child.
Councils will be given more powers to help offer discretionary housing payments and rent, with an increase in funding of £5 million. The Scottish government will also extend the eligibility criteria for the tenant grant fund as part of covid response, to help those struggling to pay rent.
While Scotland has made a strong statement with this rent freeze, it’s also rumoured that new Prime Minister Liz Truss will announce a freeze to the current energy price cap – something which will further benefit Scotland’s residents and which Sturgeon has previously proposed.
The BBC reports that energy companies would need to use loans to subsidise their customers’ payments, which will be repaid over 10 to 20 years through additions to bills, or through extra, future taxation.