Part six of our series on the cost of living crisis ...

THE cost of housing has been the aspect of the cost of living crisis which has perhaps been debated the least but what we spend on rent or on the mortgage makes up the largest single item of household spending. No assessment of living costs is complete without paying due attention to the price of the home we live in.

And in this area, most of the powers needed to tackle the problem reside at Holyrood, not Westminster. An argument can be made that when it comes to rising petrol and food costs, the Scottish Government’s hands are to a large degree tied. But in the realm of housing, we rightly look to Bute House more than 10 Downing Street for solutions.

What does Scotland’s housing market look like at present, and what can and should be done to alleviate the strain of housing costs?

‘We can’t afford to live here any more’

EDINBURGH, Scotland’s capital, is also the capital of property values in Scotland, with average house prices and rents higher than any other part of the country. This is nothing new but the problem of affordability has become increasingly pressing. Rents have increased by more than 40% in Edinburgh since 2010, while average house prices are up 67%.

Suffice to say, more than a decade of stagnating incomes means Edinburgh’s residents are paying out a much larger share of their income on housing than in the past. And that’s only if they have not been pushed out of the city altogether, as formerly lower cost areas such as Leith in the north of the city and Gorgie in the west have long since been gentrified.

Two of those who are still living in Edinburgh, but not for much longer, are Mirela Vasileva and Andy Murray, students who also work part-time. They moved into a one-bedroom flat costing £800 a month in May last year. The problems they have since encountered should have anyone with a conscience asking questions about whether regulation of the private rented sector is fit for purpose.

“We have basically had no heating for a year because the pre-pay energy meter is so old – it was put into the flat in 1994 – that when you go to the shop to put credit on it, the meter doesn’t accept the card,” Vasileva said. “We told our letting agent but they wouldn’t do anything about it, they just completely ignored us.”

Vasileva and Murray had to buy electric heaters to keep warm through winter, which cost them over £200 a month when “our heating is supposed to be capped at £15 a week”.

As a result, they are both in debt and have had to take on extra shifts at work, which has had an impact on their studies. On top of all that, they say the letting agent charged them £200 for an additional key fob – they had only been given one despite it being clear that two people would be moving in.

Then came the icing on the cake. In November, water started coming in through the ceiling. They had a leak. “It took them two weeks to send someone out to have a look, and they sent a decorator to paint over it but the decorator said it was too wet,” Vasileva said. “After that, they didn’t do anything about it. We have asked them multiple times, forwarded emails, forwarded videos of the leak, and they still haven’t done anything about it.”

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The couple say the leak passed close to a lightbulb, so they became afraid to turn the light on in case they were electrocuted. Thankfully, after winter passed, water stopped gushing through the leak. “We are just praying the rain doesn’t get bad again,” Murray said.

Despite being unresponsive to all the major issues at the flat, Vasileva and Murray said the letting agent was quick to react when rent was not paid on time.

“The deadline was at midnight, and three minutes later we got an e-mail saying, ‘Where is the rent money? Your landlord has to pay his mortgage and he’s unable to until you pay the rent’,” Murray said.

Their financial predicament has forced the couple to prepare to move out of Edinburgh altogether and into Murray’s parents’ house in Kirknewton, West Lothian. “Our jobs are here and our university is here but we can’t afford to live here any more,” Vasileva said.

“It’s a 50-minute drive from Kirknewton and in traffic it’s an hour and a half, so that’s another extra thing we are going to have to pay for,” Murray added.

Thankfully, the couple have some hope of retrieving at least some of the money they have lost. They recently joined the Living Rent tenants’ union, which is helping them to pursue a compensation claim. “They’ve given us a lot of confidence to fight and they are helping us make a change now,” Vasileva said. “That’s what we really need: to change things now. And the more tenants there are working together in a union the bigger impact we can have.”

How can housing be made affordable?

HAVING to pay £800 a month for a one-bedroom flat indicates the difficulty hundreds of thousands of households are facing as the price of property continues to rise, pushing up both the cost of rent and of a mortgage.

Perhaps the reason why we don’t talk about house price inflation as much as food or fuel inflation is because it has been so consistent. In just two years this century (2008 and 2011) have average Scottish house prices fallen.

The result is declining home ownership. Data from 2021 showed 62% of Scots now own their own home, down from a high of 69% at the turn of the millennium. In 2000, the average house price was £51,000. In February it rose to an all-time high of £181,000, 11.7% higher than a year previously.

But aren’t rising house prices supposed to be a good thing? For Sarah Glynn, a geography academic and architect, the media narrative has been far too favourable towards house price inflation for far too long.

“There is this persistent idea in Scotland and the UK that it’s always good if house prices go up and it’s always bad if they go down,” she said. “That sort of thinking doesn’t exist in a country like Germany, for example.

“If you read recent articles in the Scottish press about house prices it’s all about concerns if house prices go down after the big rise, rather than saying, ‘hang on a minute, people can’t afford these prices’.”

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Glynn is also critical of what she feels is a lack of scrutiny over government subsidies for mortgages, such as the Scottish Government’s help-to-buy policy. “It has been shown so many times that all

help-to-buy does is push up house prices, so it’s really just a subsidy to housing developers,” she argues.

If help-to-buy is not the answer, what should be done to make housing more affordable? Glynn, who has authored a report on housing policy for the Common Weal think tank, believes the Scottish Government should be implementing a land value tax (LVT) to replace the council tax. Scottish land values have risen more than five-fold since the start of this century.

"If you put the LVT rate high enough it can be a real leveller in terms of tackling property inequality,” Glynn said. “It also addresses the problem of land banking, because LVT taxes the potential value of the land, so it forces developers to get on and build. The big-volume house developers sit on land to restrict supply and thus push up house prices.”

And what about for tenants? The Scottish Government has promised to introduce a new system of rent controls. Rent Pressure Zones (RPZ), brought in as part of the Private Housing (Tenancies) Act 2016, have not been used by a single local authority in the six years of its existence.

The time and cost of data collection for councils just to make an application to ministers for an RPZ has been considered far too high, with the Scottish Government refusing to follow the Republic of Ireland’s RPZ model in collecting the data centrally.

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However, current plans are to introduce the new rent controls system in 2025, which is little use for those struggling with the cost of living now. Rents in the private sector increased by 2.6% across Scotland over the past year, a larger increase than in both England and Wales and the biggest rise since the ONS began collecting data.

Vasileva and Murray, who have experienced the effects of an under-regulated private rental sector, believe there’s no excuse for not acting sooner.

“In Germany, the government passed legislation about controlling rents within three months of coming into power in 2015, and the law came into effect 13 months later. It’s really not good enough what the Scottish Government are saying right now,” Vasileva said.

“Doing it at the end of the parliamentary term in 2025, I feel like they are just saying that so hopefully it will get them votes at the next election,” Murray adds. “It’s too far away and they seem more than happy with the way things are right now.”

Happy or not, what is clear is that Scottish Government criticism of Westminster inaction is blunted when it does not use the powers it does have to tackle the cost of living crisis.

Glynn, author of Where The Other Half Lives, a book about low-income housing in Scotland, says there’s nothing stopping the Scottish Government from introducing an emergency rent cap “right now”.

She said: “I wrote Where The Other Half Lives in 2009 and although we have seen some positive changes since then, on the whole the general trends remain the same and so the problems have not gone away, and if anything are getting worse.

“If you really want to tackle poverty then regulating housing needs to be right at the top of the list in terms of priority areas for action.”