In the News Teaching Activity – Lessons from Scotland’s cap on rent increases (Nov 2023)
Scotland introduced a maximum annual rent rise of 3% in September 2022 to solve the issue of rising rents during the cost-of-living crisis, but the outcomes have not been as beneficial as hoped.
The article from Legal-for-Landlords considers the rent control debate in the English housing market, focusing on Scotland's experience. While those in favour argue rent controls aid affordability, the Scottish case reveals their downsides. Controls reduced property supply, hindered landlord investment in upkeep, and increased difficulty for new renters. London Mayor Sadiq Khan supports controls, yet warnings persist about their adverse effects on the housing market. The Scottish scenario emphasises the complexity of implementing rent controls and there needs to be consideration of the right balance between tenant protection and a thriving rental market.
1 Rent controls are an example of government intervention using a price cap or maximum price. What arguments support the introduction of rent controls?
2 Using a rental market diagram, show the impact of rent controls on the market price and quantity.
3 What unintended consequences of rent controls have arisen from Scotland’s price cap that suggest introducing rent controls in London may not bring the expected benefits?