The Point

Last updated: 27 June 2022.

If You Build Them, They Will Come

Private tenancies are largely a bum deal, argues Rob Dewar, and the Scottish Government needs to massively expand its ambitions on social housing.

I wish in this piece to show the scale of the need for a massive ongoing programme of social and council house build in Scotland; and to show also why the current reliance on private landlords in the housing market is very damaging indeed both to the people who must rent from them, and to the nation’s economy.

I suggest that in embarking on an extensive programme of social and council house build, the present large-scale need for private landlords will ultimately disappear. I suggest also that it should be made very much less attractive for private landlords to enter the rentals market.

The 2011 census estimated there were 2.4 million households in Scotland. 62% of these, or 1.5 million, owned their home; either outright (28%) or they owned with a loan or a mortgage (34%).  24% (576 000) lived in social rented accommodation, and 14% (325 000) lived in private rented accommodation.

In Scotland, the private rented sector has doubled over the last decade to more than 300 000 households. (The Independent 26 February 2014).  It is unacceptable that so many people live without long term security of tenure, dependent on fate and on their landlords for their ongoing health and happiness.

Scotland needs a radical solution to the housing crisis, not the half-hearted measures the SNP promotes – measures carefully calibrated not to overly offend the rentier class (for fear of alienating its vote). 

Social housing is certainly more prevalent in Scotland than in England, comprising almost 24% of all Scottish housing stock, compared with 17% in England. The proportion of housing in the private rented sector is 12% in Scotland, compared with 17% in England  In 2011, just under a quarter (24%) of all households in Scotland were living in social housing, down from 41% in 1991. Within the same period, the proportion of households who rent their homes privately had doubled, from 7% in 1991 to 14% in 2011. These are figures that ought to incense every Scottish socialist as much as they incense me.

Shockingly – but perhaps not surprisingly - average private sector rents are 86% higher than the average cost of renting a property in the social housing sector, according to the research by the New Policy Institute. In a 2013 report by the Auditor General for Scotland, it was estimated there would be an additional half a million households in Scotland by 2038. Single person households over the same period would almost double.

The SNP announced towards the end of the previous parliament that it would build 50 000 “affordable homes” during the lifetime of the current Scottish Parliament, of which – it said – 35 000 would be social housing; that works out at 7 000 social housing units a year planned to be built.

During the previous parliament’s life, the SNP administration claimed that it would have built 30 000 additional “affordable homes” between 2011 – 2016, of which 20 000 were to have been for social rent; that’s 4 000 social housing units a year. However, in the year ending September 2015, only 1 450 new council houses were commenced building, of which 1 051 were completed.

In other words, the SNP commits to only increasing the number of houses for social rent to be built during the current parliament’s lifetime by 15 000 over the previous parliament’s target. That’s only 3 000 extra social housing units planned to be built a year over the number planned to have been completed each year between 2011 – 2016. It remains to be seen whether there will be any more success in meeting this target than there was with the unmet 2011-2016 target.

To give an idea of the scale of the need for social housing in Scotland, I quote these figures. According to the Liberal Democrats (3-7-14), of the 170 352 people on Scottish local authority waiting lists for social housing, 33 334 had been on the list for at least 5 years, with 13 021 on it for a decade or more.

It is true there is one achievement the SNP administration can indeed rightly boast of, that the right of council tenants to buy the homes they rent, is to be abolished.

Thatcher’s Housing Act of 1980 (right-to-buy) savaged council housing stock, as tenants rushed to make use of the generous discounted purchase prices for their homes. New council tenants in Scotland are already denied the right to buy their homes; the right-to-buy scheme will have been totally abolished by 2017.

The SNP’s Private Housing (Tenancies) Bill of this year (2016) claims to make provision for protecting 700 000 people from the prospect of unforeseen and unfair eviction, and from unpredictability over rent increases. These claims are however only minimally met. Should a private landlord wish to sell his property, the tenant, if asked to quit his tenancy, would have no choice but to comply – and thus, lose his or her home. Should the private landlord’s new legally permitted annual rent increases ultimately cripple the tenant, there is little the tenant can do about it but leave, unable to afford to pay the rent any longer.

I consider that this bill is if anything biased in favour of the rentier class, even if in extreme cases yet to be evaluated in practical terms, it allows for the authorisation by Scottish ministers of rent controls to be applied by local authorities in “rent pressure zones”.

It seems to me that an investment considerably exceeding the £1.7 billion the Scottish administration claims to have invested in affordable homes over the lifetime of the 2011 - 2016 parliament, must be made during the lifetime of the current parliament – and the next again – if we are to match the greater part of growing demand for homes in Scotland; especially in demand for social/council housing.

But, however you cut it, the existence of a growing rentier class in Scotland – that class which waxes rich off the most fundamental human need after food and clothing (I refer to the need for secure shelter) – is a national disgrace. As mentioned earlier, in Scotland the private rented sector has doubled over the last decade to more than 300 000 households. The percentage of home-makers living in private rented accommodation is far too high. In as much as many of these will be receiving housing benefit to help pay their rent, this high figure equates with an unjustifiable state subsidy ultimately passed on to private landlords.

So many of Scotland’s social ills are linked to the insecurities, frustrations, hardships, fears and anger associated with the dearth of affordable homes, above all, of the shortage of affordable homes to rent. More and more young people are coming to realise that they are unlikely ever to own, or even to be able to rent, a decent home in which they can hope to raise a family. For tenants of private landlords, life is almost always insecure and cripplingly expensive. And these tenants’ numbers are growing.

True, Westminster has closed a number of tax loopholes associated with residential property ownership, along with having imposed an extra 3% stamp duty surcharge. However, these measures are too few, and too modest by far, to address the problem.

(Which, considering that one of the Tories’ major constituencies comprises buy-to-let residential property owners, and that many Tory MPs are major landlords in the residential market, is not surprising).

I would point out that the growing attraction of “buy-to-rent” is economically damaging also. Cash to invest in manufacturing goods for local and export consumption, and for associated research and development, is being choked off at source, channelled into speculative home ownership. Investment in buy-to-let needs to be made less financially attractive

The Resolution Foundation has warned that nine out of ten people under the age of 35 on modest incomes in Scotland would within another ten years find it impossible to ever own their own home, being unable to save for a deposit on a mortgage due to high rents – especially in Scotland’s cities.

It is becoming critically urgent that something be done to eject private landlords from the homes rental market, whilst providing many more social housing units to rent.

The most effective way to achieve this – after more stringent fiscal and financial restraints being imposed – is for the Scottish administration to embark on a truly massive programme of building social and council housing. 

The housing charity Shelter Scotland, in its outline in February this year, has highlighted four challenges for the (current) Holyrood parliament:

• Build at least 12 000 affordable rented homes each year for the parliament’s lifetime, with most of these being socially rented homes. If the SNP administration meets its target, it plans to have built only 7 000 social housing units a year during the lifetime of the current parliament.

• Improve conditions for private tenants by greater enforcement of standards on landlords, and more support for tenants’ rights.

• Put homes at the heart of strategies on addressing child poverty and advancing social justice.

• Tackle homelessness with a strategy that includes better temporary accommodation and more support for the vulnerable.

In my view, if we are to loosen the stranglehold that private landlords currently apply in Scottish home rentals, the most effective way to do so would be to hugely increase the supply of council housing. No matter which way you look at it, the demand for social housing (including council housing) still far outstrips Scottish administration plans for new social housing build. Until this shortfall is addressed, 12% and rising of available housing in Scotland (this is the proportion for private rentals) offers little to no long-term security of tenure to home-makers, and provides them with inadequate protection in law.

I yearn for a Scottish administration bold enough and radical enough to make buy-to-let very unattractive indeed, and to force private landlords almost entirely out of the homes rental market. The primary means to accomplish these ends is also the answer to the shortage of affordable homes to rent.

 It is to engage in a huge programme of social housing and council housing build.

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