SNP Housing Bill blamed for collapse of 'build to rent' plan

Earlier this month, the SNP administration declared a national housing emergency.

On the same day, Vertu Motors published its final results for the year revealing that the sale of a 1.15 acre site next to its Macklin Motors Nissan Glasgow Central dealership in Cowcaddens had fallen through.

The accounts said the deal had “not completed as contractually anticipated, due to the impact of recent legislative changes in Scotland imposing rent controls.”

READ MORE: Scottish Government declare national housing emergency

Caps on rent were first introduced by the Scottish Parliament in 2022 in response to the cost of living crisis.

It meant that private landlords could only increase rent for tenants by 3% a year although larger hikes could be put in place between tenancies.

The law initially applied until the end of March 2023 but was extended by the Scottish Government until March 31 this year.

Earlier this year, ministers introduced the Housing (Scotland) Bill, which includes new proposals for long-term rent controls for private tenancies.

It would also introduce rent control zones which would see councils assess and send details of rent prices and increases to the Scottish Government, which would have the power to put controls in place.

However, the legislation was a key plank of the Bute House Agreement with the Scottish Greens.

There is speculation that since the collapse of the power-sharing agreement last month, and the subsequent change in First Minister, John Swinney might now row back on some of the proposals.

READ MORE: Rent controls risk £5bn of house spending, say industry

Planning permission had already been granted for flats on the brownfield site in Cowcaddens.

While not classed as affordable housing, the proposal approved by councillors would have been the first build-to-rent development in that part of the city.

That means all of the studio apartments, and one and two-bedroom flats, would have been built specifically for tenants rather than for selling.

The proposals show it would also have included a roof terrace, a gym, a cafe with a terrace, a bike workshop, washing facility, and lounges with balconies.

Scottish Conservative shadow housing secretary Miles Briggs said: “The ditching of this major housing development in the heart of Scotland’s largest city lays bare the reality of the SNP’s disastrous rent controls policy.

“After backing Patrick Harvie’s plans, SNP ministers have refused to accept it has decimated Scotland’s housing market at a time they have finally accepted we are facing a housing emergency.

“Individuals and families are crying out for housebuilding projects like this, which would have delivered nearly 350 homes and offered many a route out of temporary accommodation or onto the housing ladder.

“This should be the wake-up call for SNP ministers to halt their plans for permanent rent control zones as part of their housing bill and deliver practical solutions to fix Scotland’s housing crisis.”

Housing Minister Paul McLennan said: “The Scottish Government wants to build a rented sector that both encourages investment and provides a great service to tenants.

“A fairer, well-managed private rented sector is in the interest of both tenants and responsible landlords.

“Our Housing Bill includes a package of important reforms to the rented sector that aim to improve affordability and strengthen tenants’ rights.

“We will continue to work with tenants, landlords and investors as we develop a system of rent control that works for Scotland.”

READ MORE: Visitors to homeless support centre in Glasgow double

Earlier this month, The Herald revealed industry fears that Scotland could miss out on £4.5 billion of housing investment and thousands of new homes because of the rent controls. 

David Melhuish, director of the Scottish Property Federation, said Glasgow and Edinburgh should be attractive cities for investors in the market but the state of uncertainty around Scotland's "political and regulatory regime" put Scotland generally in a category of higher risk than other parts of the UK.

"The build to rent market started in the UK about ten years ago. There are about 100,000 units in built in the UK during the last the years, but only around 2000 in Scotland - and that is pretty much entirely down to uncertainty with the political and regulatory regime.

"Cities like Glasgow and Edinburgh in theory should be doing very well with this form of investment," he said.

Earlier this week, protesters gathered outside Bute House to demand the First Minister push ahead with rent controls plans. 

Data from the Scottish Government published in November revealed that between 2010 and 2023, rents increased on average 51.6% or even more steeply – including 79.3% in Lothian, and 86.2% in Greater Glasgow, while inflation was 45.7% during the same period.

However, in the last year, rents have increased by 14.3% to an average of £841 per month, and in Greater Glasgow, rents rose by 22.3% to average £1050 per month, while in Lothian, rents rose by 18.4% to average £1,192 – among the highest year-on-year growth in the UK.