Exclusive:Why SNP rent control plans would add £5.5m 'burden' amid savage cuts and halt house building

The Scottish Government is pressing ahead with its Housing Bill, which includes long-term rent controls for private tenancies and stronger protection against eviction.

But officials at Edinburgh City Council, which has faced acute housing pressure and soaring rents, has warned SNP ministers over the cost of introducing rent controls, with concern initial estimates “do not appear to be proportionate”.

In the financial memorandum published by the Scottish Government, it states an “initial screening assessment” for rent controls would only cost “around £21,500 for each local authority”.

Council bosses have disputed this figure and warned “it is also assumed that these additional costs will not be funded by the Scottish Government and will need to be met by the local authority”. The submission adds: “This would result in either an additional financial burden or a reduction in time being spent on services elsewhere.”

For the detailed assessment of a rent control zone at stage two of the legislation, the Scottish Government has estimated this would include 6,000 properties at a cost of £550,000.

But council chiefs in the capital have warned that “in order to establish whether rent controls should be implemented city wide or only within certain areas, data will need to be collected and assessed from the whole of Edinburgh’s private rented sector”.

The private rented sector in Edinburgh consists of about 60,000 properties, which council bosses warn “would therefore equate to a cost of £5,520,000 to assess the sector”.

SNP ministers have also been warned that reducing the likelihood of eviction could hamper the council’s ability to invest in new housing through its housing revenue account (HRA).

The council submission said: “If the likelihood of eviction is decreased, there is less incentive for tenants to pay their rent. This could lead to increased rent arrears on the HRA account with no recourse to secure payment.

“A major consequence of this would be a reduction in the capacity to borrow to fund HRA capital investment and core spending from the HRA being placed under increasing strain, making it more challenging to deliver modernisation and energy efficiency programmes as well as new homes to address housing need driven by population change.”

The legislation also requires local authorities act sooner to prevent homelessness. But council chiefs in the capital have stressed “the financial memorandum significantly underplays the cost of implementing and administering such a scheme in Edinburgh and relies almost entirely on” the council putting forward all necessary costs.

Leader of Edinburgh City Council, Cammy Day said: “We have serious concerns about the resources that will be required to comply with this bill in its current form and we have expanded on this in the memorandum. 

 “The council, along with many others across the country, is in an increasingly challenging financial position and this needs to be properly reflected in the Scottish Government’s planning. Fundamentally, we are not able to absorb these extra financial costs and would urge the government to consider this carefully. 

“I'd also highlight the compound difficulties created by the cut to affordable housing by the Scottish Government to date.

“We’re committed to improving our housing system so that everyone has access to quality, affordable housing, but this needs to be carried out in an appropriate and responsible manner.” 

Scottish Conservative shadow housing secretary Miles Briggs said: “This stark warning cannot be ignored by SNP ministers. They have imposed savage cuts on councils like Edinburgh year after year and it is clear they are significantly concerned about the costs the proposed housing Bill would have on them.

 “Their damaging rent controls have put a halt to major developments at a time when the capital – and Scotland as a whole – is facing a housing emergency.”

SNP housing minister Paul McLennan, said: “Scotland already has the strongest rights in the UK for people who become homeless – but nobody should have to experience the trauma and disruption of losing their home.

 “Early action, through the kinds of measures included in the Housing Bill, results in fewer people reaching the point of housing crisis. It also means people facing homelessness have more choice and control over where they live, helping them to maintain relationships in their community and stay in work.”