Scotland’s ‘fair rent’ scandal


• The tribunal ignores professional advice

• The tribunal takes bizarre decisions

• The tribunal inflicts misery on the 0ld

 Part 1 of an SR investigation by Kenneth Roy

Here is a tenant’s description of how it is to live alone in a century-old tenement flat, of two rooms and kitchen, in Dumbarton Road, Glasgow, owned by Partick Housing Association:
     My flat is situated on the top floor of a very busy road with traffic and noise 24/7. I have double glazing but still hear a lot of noise. There are two pubs, one at the corner and one across from my house. It is noisy from Thursday to Sunday at 1am. Buses and taxes run all night. My buzzer is pressed all night by drunk people. I am also dealing with anti-social behaviour issues and have been for over 14 months. These matters have a detrimental effect on my health and I feel that I no longer enjoy living in my flat. Against this background, an increase in rent of 28% does not seem to be justified.
     This woman’s story is typical of cases coming before a Scottish government tribunal known as the Private Rented Housing Panel.
     She has lived in the property for 12 years and has been a tenant of Partick Housing Association for 30 years. Until recently her rent was £2,284.44 a year. The landlord applied for an increase to £2,921.76. The local rent officer fixed a rent of £2,801.76 with effect from 23 March this year. The landlord was unhappy with this figure – although it was only £10 a month less than the rent it had been demanding – and appealed to the panel. The tenant was equally unhappy.
     It is the duty of the panel to fix a fair rent. So what did the panel do? It rejected the rent proposed by the landlord, and the rent recommended by the rent officer, and instead, having had the benefit of the tenant’s own testimony (including the paragraph published above), fixed a rent of £4,450 – an increase, not of the 28% she thought she was being threatened with, but of a staggering 95%.

The Private Rented Housing Panel consistently hikes rents way above the level requested by landlords and recommended by rent officers.

     Why did this happen? There is another way of putting the question. Why does it go on happening? For the case of the tenant in Dumbarton Road, Glasgow, is not at all unusual. The Private Rented Housing Panel consistently hikes rents way above the level requested by landlords and recommended by rent officers. When a landlord goes to PRHP (as it styles itself) he can be pretty sure of an early Christmas present.
     What, then, is the rationale which leads to such bizarre outcomes?
     The panel, if it found there was a scarcity of similar properties for rent in the area, would be obliged under the terms of the Rent (Scotland) Act to take account of this in fixing what it considers a fair rent. Scarcity would always work to the tenant’s advantage: he or she would be entitled to a discount. But the panel rarely accepts that there is scarcity. More often it looks around the area and decides that there is no shortage whatever. The fact that so many people are on council house waiting lists seems to elude the panel. It goes on inhabiting a parallel universe in which there are houses for all.
     The next question is how it arrives at this manifestly strange conclusion. It does so by scanning newspaper property ads and the internet. In the case of Dumbarton Road, it found ‘details of a number of similar-sized properties to lease in the area’ at rents ranging from £4,560 to £6,300 a year. Then it had a look at two of its previous decisions in the same area.
     We have not been able to access the panel’s decision in one of these cases, but we did manage to find an adjudication for the other: a property in Vine Street containing two rooms, dark kitchen and bathroom. The landlord had asked for £3,422 against an original rent of £2,650 and the rent officer had recommended £3,250. Neither of these figures suited the panel, which imposed a 51% increase to £4,000 a year – almost £600 a year more than the valuation of an experienced firm of surveyors.
     There are three judicially approved methods of approach open to the panel: comparison with the rents of regulated tenancies in the area; comparison with market rents, discounted for any scarcity; and calculating a reasonable return on the capital value. In Vine Street, no evidence was produced about any of these, so the panel simply fixed a rent based on ‘experience, knowledge and information available on the internet and from local letting agents’. This then formed a precedent for the panel’s next odd decision in Dumbarton Road.
     In this way a cycle of injustice is perpetuated.

The tenants who come before it, and who leave shocked by its devastating effect on their lives, are without voice or clout.

     As it surfs the web – a somewhat unusual modus operandi for a tribunal – how does the panel know that it is comparing like with like? Is it not more than possible that the flats being advertised on the internet are being marketed, not to the single old people who tend to be the panel’s main clients, but to the upwardly mobile or for multi-occupancy by students?
     We asked a former member of the panel, Ewan Kennedy, a retired solicitor, for an opinion. He told us: ‘No specification is given of the nature of the market rental comparisons, the addresses, the types of property, the extent to which they were furnished or improved. There are massive differences between the typical regulated tenancy flats and those being offered on short assured tenancies by estate agents. Are the rents sought even being obtained? How can examples from quite diverse forms of tenure be compared?’ In Mr Kennedy’s view, some of the panel’s decisions – including the decisions in Vine Street and Dumbarton Road – are ‘inadequate, unreasoned and potentially open to challenge’.
     Yet the panel, a public body, proceeds unchallenged. The tenants who come before it, and who leave shocked by its devastating effect on their lives, are without voice or clout. But we must be grateful for the panel’s small mercies. The tenant in Dumbarton Road would have been faced with an even higher rent had the panel not observed that the property was unfurnished and that it contained no decoration, floor coverings or appliances supplied by the landlord. For the absence of any of these comforts, the panel considered that a deduction of £350 a year was ‘reasonable’. Where does the panel do its furniture shopping?

Tomorrow: Who makes these decisions?

This article was reproduced with the kind permission of Kenneth Roy.

Read Kenneth Roy in the Scottish Review.