Mid Market Rent: Why make it harder to build homes people can afford to rent?

Scotland is desperately short of homes. This is not new information: official figures suggest there are 144,000 households on the social housing waiting list, while recent Freedom of Information data shows 327,585 people are waiting for either a council or housing association home. 

Meanwhile, the Herald recently reported that the average house price in Scotland has risen to £201,596: far beyond the reach of many people, particularly those without access to the bank of mum and dad.  

So it’s essential to support initiatives that make housing more accessible. That’s why some of our members offer Mid Market Rent (MMR) homes as well as more traditional social rented tenancies.  

MMR offers a middle option for people who are unlikely to qualify for social housing, but are priced out of home ownership and keen to avoid the insecurity and higher cost of private rentals. Rents are lower than the private sector, but higher than a social tenancy. MMR homes are popular with working couples and younger people who are on a low or modest income, and they have rent controls built in through a link with Local Housing Allowance, which is set by the UK Government and has been frozen since 2020. A Scottish Government literature review cites evidence that MMR provides “an alternative to the private rented sector but with high quality, grant-funded new units”.  

Yet the Scottish Government has just taken action that makes it harder for our members to keep providing these homes.  

Even though MMR properties are usually provided by housing associations and councils, they are technically defined as private tenancies. That means they are affected by the Scottish Government’s Cost of Living Act, which temporarily allows government to limit rent increases in the private sector. 

Earlier this month, ministers confirmed plans to limit private sector rent increases to 3% for a further six months, up until March 2024. This measure is aimed at protecting people in the more expensive private sector, not those renting from housing associations and councils. Nevertheless, MMR tenancies are caught within this act.  

Our members already provide lower rents: it’s what affordable housing is all about. But like any organisation, they need to be able to cover their costs. And with inflation levels at 8.7% at the time of writing, it’s clear that imposing this real-terms cut on rents that are already well below market levels will make it much harder to balance the books. Ultimately, this could lead to fewer MMR tenancies: an outcome which is in no-one's interests.  

That’s why SFHA is calling on the Scottish Government to redefine Mid Market Rent as a type of social housing in the upcoming Housing Bill. We hope the Government will heed our call, and act to prevent even more people being unable to access decent, affordable homes.