New subsidy for the building of private rented housing “a step in the wrong direction”

New scheme not aimed at affordable housing and increases subsidies for already over-subsidised private landlords

A NEW Scottish Government subsidy announced today to guarantee income for developers in the building of private rented sector housing is a backwards step which will accelerate privatisation in the rental market and increase unaffordability for tenants, the Common Weal think-tank has argued.

The Rental Income Guarantee Scheme will cover up to 50% of the gap between actual and projected income for landlords of new private developments during the initial years of letting, a major subsidy for private developers alongside increases in tax relief for the building of multiple dwellings.

“After the positive news of a not-for-profit public energy company at SNP conference, this announcement is a step in the wrong direction for housing. It is not logical to argue public is better than private for energy but not for housing.” Ben Wray

Commenting on the scheme, Ben Wray, Common Weal head of policy and author of a new report on the experience of living in the private rented sector in Scotland, said: “After the positive news of a not-for-profit public energy company at SNP conference, this announcement is a step in the wrong direction for housing. It is not logical to argue public ownership is better than private for energy but not for housing.

“Ratcheting up privatisation of the rental market – which has already tripled in size since the establishment of the Scottish Parliament while social housing has declined – will only lead to more alienation, insecurity and unaffordability for tenants, who have already seen costs rise well above incomes over the past 10 years since the financial crash.

“Common Weal’s report last week showed that private rental housing was, compared to social housing, insecure and unaffordable, with many stuck in the private rented sector who are on the social housing waiting list actively seeking to get out of it because they can’t afford their rent or have been threatened with homelessness.

“The Scottish Government should be focusing all of its housing budget on new public rental housing, rather than more subsidies for private landlords who are already subsidised massively through the billions they receive in housing benefit payments.

“It could also introduce changes to make it cheaper to build public housing, including a land value capture policy which would allow public authorities to capture the uplift in land values to finance housebuilding. The Centre for Progressive Capitalism has shown this could raise £8.6bn in Edinburgh City Council alone over a 20 year period.

“The new Scottish National Investment Bank announced by the Scottish Government could be another source of patient capital for local authority housebuilding, borrowed against future rent returns.”

“This scheme appears to signal that the needs of business are more in focus than the needs of people who desperately need quality, affordable housing with secure, socially owned tenancies.” Craig Dalzell

Craig Dalzell, head of research at Common Weal, said it was clear that the Scheme would not even be supporting affordable housebuilding.

“Prices in the Scottish private rented sector are already unaffordable for far too many people. £500 million worth of investment for just 2,500 houses translates as £200,000 per house. This scheme appears to signal that the needs of business are more in focus than the needs of people who desperately need quality, affordable housing with secure, socially owned tenancies,” Dalzell stated.

300 people attended a housing convention in Glasgow on Saturday, the day before SNP conference, where public-led solutions for tackling the housing crisis in Scotland was discussed and debate by those across the sector and beyond.

Common Weal’s report on the private rented sector may be debated in the Scottish Parliament after a motion was put forward by Andy Wightman, Scottish Greens MSP.

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