Rising rents leads to calls to unfreeze LHA and strengthen rent controls

scotland-house-home-stockConcerns have been raised that more people could lose their homes after the cost of a typical two-bed private rental property rose by 4.4% in the last year.

Nationally the average rent on a two-bed property is £643 this year up from £616 in 2016 and the charity says that people will struggle to cope with rent increases alongside stagnating wages and other cost of living increases. The Scottish Government figures also found that rents in Greater Glasgow rose by 7% (to £745) and by 6.9% (to £888) in the Lothians.

Housing and homelessness charity Shelter Scotland is calling for Chancellor Philip Hammond to unfreeze Local Housing Allowance (LHA) in next week’s budget to make sure those relying on the benefit to meet their rent can stay in their homes.

Adam Lang, head of communications and policy at Shelter Scotland, said: “Rent increases of these amounts will hurt those who are already living on a knife-edge.

“We already know that a great many families are struggling day-to-day to keep a roof over their heads. Affordability was the single biggest reason people came to Shelter Scotland with last year and private renters are the biggest group who contact Shelter Scotland for help.

“The UK government has frozen the rate of local housing allowance which means that increasing numbers of people will be unable to keep up with price rises.

“We strongly urge the Chancellor to unfreeze LHA in next week’s budget. If this doesn’t happen those people who rely on help to pay their rent will be at greater risk of homelessness.”

Analysis of the Broad Rental Market Area figures, which samples rents in eighteen large areas across Scotland, found that average rents rose in all but three parts of Scotland; Aberdeen City and Shire, Argyll and Bute and West Dunbartonshire.

Adam Lang added: “In some areas there is already a big gap between what a property costs to rent and the amount of LHA a person can claim. This shortfall will only grow as rents increase but LHA remains frozen forcing tenants to cut back on other essentials like fuel or food or fall into arrears.

“It is not the fault of renters that there is a massive shortage of housing. They shouldn’t face homelessness because of a failure of successive governments to build enough affordable homes.”

In just over two weeks Scotland’s new private residential tenancies will be introduced and begin replacing the current assured and short assured tenancies. Included in this legislation will be a limit on one rent increase in a year, three months-notice of any increase and an opportunity to appeal to the housing and property chamber to have rent set by an independent party.

The Common Weal think-tank called for “serious action” from local authorities and the Scottish Government to make housing affordable and deal with “out of control” costs.

Head of policy, Ben Wray, said: “The cost of private rent has got out of control. For those struggling on low incomes, every pound extra spent on rent is a pound less on essentials like food and heating. While rents have risen by one-third in Edinburgh and Glasgow since 2010, wages have stagnated. It can’t go on like this.

“Local authorities with above inflation rent rises must use new powers to apply for a rent cap in their area immediately. Residents should use this new data to inform their local councillors of the need to apply for a rent cap.

“But this will not be sufficient. The rent cap only limits rents to inflation plus 1%. Currently that means 4%, but wages are not rising that fast. A cap will not make housing affordable for those who have experienced huge rises since 2010. Serious action is needed.

“The Scottish Government must get its priorities right – instead of more subsidies for property developers and landlords, as it has proposed to do with the new rental income guarantee scheme, it must rapidly increase the size and speed of it social housebuilding programme.”

Ben Wray added: “The Scottish Government should strengthen rent controls by establishing a mechanism for tying rent prices to an index of affordability. And the Scottish Government must get its priorities right – instead of more subsidies for property developers and landlords, as it has proposed to do in the new Rental Income Guarantee Scheme, it must rapidly increase the size and speed of it social housebuilding programme.

“Social housebuilding can be made significantly cheaper by legislative change such as land value capture and compulsory sales orders which will reduce the cost of land in the construction process.”

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