Figures released by the Scottish Government yesterday confirm what thousands of renters across Scotland are experiencing. Rents are rising, and in most cases, faster than incomes.
The new figures show that on average, rents rose by 4.4% for a 2 bed home (the most common size of property), bringing the monthly average rent up to £643, from £616 in 2016. Looking beyond the average, rents have risen by 7% to £745 in Greater Glasgow, and by 6.9% to £888 in the Lothians – both areas with large concentrations of renters. Only three areas of Scotland – Aberdeen and Shire, Argyll and Bute and West Dunbartonshire saw rents fall on average.
At Shelter Scotland, we hear from people every day who are struggling to cope with the cost of renting. Rents are rising at the same time as wages are stagnating and other costs of living are increasing. Affordability was the single biggest reason people came to Shelter Scotland for help last year, and private renters are the biggest group who contact Shelter Scotland for help.
Renters across the board will be feeling the pinch, but we are most concerned about the 1 in 5 renters in Scotland who rely on support from housing benefit (known as Local Housing Allowance or LHA in the private rented sector) to pay for their homes. The cost of housing is one of the biggest contributors to in work as well as out of work poverty, with an additional 170,000 households pushed into poverty in Scotland after housing costs. But some of the squeeze that low income renters are facing is the result of policy choice, rather than market forces, and this choice can be reversed.
As part of the sweeping reforms of the benefit system, the UK Government has frozen the rate of LHA. This means that the benefit for which people are eligible may not cover the cost of their actual rent. And the freeze forces more people to compete for a more limited pool of affordable homes. Shelter has estimated that a million households across Britain could be at risk of homelessness by 2020 unless the freeze is lifted.
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. In Scotland, nowhere more so than in Glasgow and the Lothians. With rents on a rising trend, this gap will continue to grow if LHA remains frozen. We know the hardships that this causes for people already in a precarious housing situation, often forcing them to cut back on other essentials like fuel or food, or fall into arrears. Shelter is strongly urging the Chancellor to unfreeze LHA in next week’s budget to make sure those relying on the benefit to meet their rent can stay in their homes, and you can support our call by signing our petition.
We won’t stop campaigning to get the UK Government to reverse the freeze, but the Scottish Government has powers it can use as well. A sustained commitment to driving up standards in private renting in Scotland over the last few years has brought big changes to the sector.
Improving private renting is vital to the Scottish Government’s commitments to tackling poverty and inequality. A growing number of low income households are now renters, and one in four households who rent are families with children. Both of these groups need predictability and stability from rents and renting. So perhaps the Scottish Government should be looking at how it can use newly devolved powers to vary and create new benefits to close the gap for private renters?
Ultimately, the question of affordability for renters will always return to whether there is a need for rent controls. From 1st December, Local Authorities will have new powers in Scotland to implement Rent Pressure Zones and impose controls on rent rises. We know some Councils, including Glasgow and Edinburgh, are actively investigating using these powers, and we will watch with interest to see how this new information about rents may prompt others to do the same.