Get livedeveloper of the 1,500-home Stalan Brand Home College Street Good Yards developmentHowever, he said the viability of the scheme was now “uncertain” due to the rent cap and “current market challenges”, meaning he was unable to move forward with the scheme.
Get Living planned to build 823 rental homes, along with 687 student studios on an 85,600 square meter site near Glasgow High Street, winning council approval last month.
Emphasizing that he was unable to comment specifically on the fate of the Get Living scheme, Paul Stalan claimed that the Scottish government was ‘undermining its own efforts to tackle Scotland’s housing crisis’ by temporarily banning rent increases during rents in response to the cost-living crisis.
The Scottish government said last September that landlords cannot raise the rent on their property unless the mortgage, service charge or insurance premiums increase. The rent cap is expected to expire on March 31. After that, landlords can raise the rent by 3 percent. The law can only be applied for a maximum of 18 months.
But the government said initial rents for new buildings were “determined by the market” and were not affected by the cap. Student rents are not protected by the cap.
The policy was intended to help people suffering from inflation and rising bills, but Stalan said it made the situation worse by discouraging developers from building construction-to-let (BTR) properties.
He told AJ: ‘The Scottish Government’s Cost of Living (Tenant Protection) Act was conceived in good faith. However, the reality of this policy is that it acts as a disincentive to inward investment in relation to the BTR. This policy exacerbates Scotland’s housing crisis and accelerates tensions.
Stalan noted the scale of Scotland’s housing crisis, with 95,293 children, 183,185 families and 233,343 adults on social housing waiting lists in the country as of April last year.
He added that building for rent ‘fills the void for households who have been priced out of owner-occupation, or who have chosen not to buy, but who do not consider social rented housing a viable option also due to demand to reduce inventory.
More importantly, the government is not only undermining its own efforts to tackle Scotland’s housing crisis, it is also undermining its own sustainable goals of developing more compact and beautiful places, and halting the expansion of the construction of private homes for sale on the Green Belt.
With the public sector building nowhere near the scale required, regardless of the tsunami of maintenance backlogs it faces in existing stocks, the last thing the government should do is stifle inward investment, especially at a time when the industry is affected by Brexit. The European Union and the Ukraine conflict.
“The Scottish government must address the cost of living crisis much more directly with people within the community, starting with the ‘living wage’, rather than pulling on some less well-researched economic levers.”
A Get Living spokesperson said the company’s chiefs have been ‘big advocates of Glasgow as a thriving business centre’, adding that ‘there is huge demand for quality rental homes which are essential to driving growth and productivity more broadly in the region’.
However, the ongoing policy on rent controls in Scotland, combined with the current market challenges, has resulted in a shift in investor support, meaning the viability of this development is now uncertain.
Whilst our ambition remains to be part of the solution to the city’s housing shortage, at the moment we cannot move forward with the scheme on this backdrop and hope the Scottish Government will reconsider its position.
While it sounds like an attractive prescription for reducing rent levels, rent controls have unintended consequences that only exacerbate the underlying problem.
“By reducing investment in the rental market, such policies stifle future supply, lower standards and risk creating an unregulated secondary market for subletting.”
The Scottish government has adhered to the policy, with a spokesperson saying: “We are in the midst of a cost of living crisis, and our emergency legislation is protecting tenants from significant rent increases and the risk of eviction.”
They added: ‘Guarantees are in place for landlords, and we are allowing modest rent increases from April onwards.
We are also suspending the rent cap for student accommodation effective March 30, recognizing its limited impact on annual rents set on an academic year basis.
Across Europe, it is clear that better regulation of rental housing can go hand in hand with investment in more and better homes.
“Here in Scotland, our track record of investing in affordable housing has been supported by the investment of our partners, who have delivered 115,558 affordable homes since 2007, more than any other part of the UK.”
The College Street Goods Yard scheme was granted planning permission earlier this year. The scheme includes an 18-storey tower and a 21-storey portion as well as six other buildings ranging in height from nine to 11 stories.