UKAA statement on Scottish Rent Cap
Friday 10th February 2023
Build to rent (BTR), by its virtue and design, provides good quality homes with security of tenure, to meet the chronic demand for housing as well as stimulating local economies, creating communities and employment opportunities. In short, it delivers good quality social value.
The BTR investor community recognise the opportunity around the supply and demand of housing and are well positioned to meet the grossly unsatisfied demand for quality homes across the UK. It is not however solely about the investment opportunity but also the creation of social value. The two facets go hand in hand with BTR and highlight one of the many differentiators between the BTR industry andtraditional PRS.
For the BTR industry to deliver the quantity of good quality, professionally managed homes that it can (the future pipeline currently stands at 113,500 homes, Savills, 2022), confidence is required of investors, developers, contractors, and all those involved right through to the customer. This confidence is built through clarity, certainty, and consistency.
In principle, the UKAA opposes rent control in any form as it lowers confidence and inhibits the ability to deliver value.Investors invest for the long term, for stable returns and if rent control is in play, it can disrupt and harm the certainty of those returns.
This has been witnessed with the current situation in Scotland where a rent cap has been announced for private landlords by the Scottish government from April 2023.
The limited BTR stock in Scotland has been well received by the market to date but following the rent cap announcement, investor confidence has been affected. Some investors are already pausing and / or withdrawing from the market entirely which can only harm the delivery of these much-needed, good quality homes.
The Scottish government has made social housing providers exempt from this cap yet with both social landlords and BTR providers both holding the same aspirations to deliver good quality housing, in good quality communities, surely the BTR sector should be treated in the same manner?
It is important that the BTR industry is part of the conversation around this issue and the UKAA and its Scottish Hub stand ready to consult with the Scottish government as we have historically done, during the Parliamentary updates on the emergency legislation. It should be noted that the Scottish government did not consult on this issue, rather it was announced in September 2022 under emergency legislation. We question this methodology preferring a consultative process.
We are very concerned to be an effective conduit between our members, the BTR industry and the Scottish government, and will work with all stakeholders to ensure a full understanding of the impact of rent control. This UKAA’s pro-active engagement in Scotland will prepare us for any future discussions with governments should rent control be consider in any other parts of the UK. We will always take a robust andcooperative position should this occur.
If you, as a UKAA member, are affected by the Scottish rent cap, please get in touch to share your views and work with us to take this matter forward on your behalf.