Official Report 766KB pdf
Cost of Living (Tenant Protection) (Scotland) Act 2022 (Amendment of Expiry Dates and Rent Cap Modification) Regulations 2023 [Draft]
Cost of Living (Tenant Protection) (Scotland) Act 2022 (Early Expiry and Suspension of Provisions) Regulations 2023 (SSI 2023/8)
Our second item is evidence on the draft Cost of Living (Tenant Protection) (Scotland) Act 2022 (Amendment of Expiry Dates and Rent Cap Modification) Regulations 2023 and the Cost of Living (Tenant Protection) (Scotland) Act 2022 (Early Expiry and Suspension of Provisions) Regulations 2023.
We will hear from Patrick Harvie, Minister for Zero Carbon Buildings, Active Travel and Tenants’ Rights, who is joined by Scottish Government officials Yvonne Gavan, who is a team leader in the housing services and rented sector reform unit; Yvette Sheppard, who is the head of that unit; Adam—I am sorry; I am not sure that I will get your name right, but I will try—Krawczyk, who is head of housing, homelessness and regeneration in the Government’s communities analysis division; and Poppy Prior, who is a lawyer. I welcome the minister and his officials to the meeting, and I invite him to make an opening statement.
I appreciate that the full titles of the instruments are a bit of a mouthful. I am pleased to be at the committee to present on the Cost of Living (Tenant Protection) (Scotland) Act 2023 (Early Expiry and Suspension of Provisions) Regulations 2023—sorry, there was a typo in my brief; that was the 2022 act—and the draft Cost of Living (Tenant Protection) (Scotland) Act 2022 (Amendment of Expiry Dates and Rent Cap Modification) Regulations 2023.
The convener and committee members will remember that the emergency act that we introduced last year had three key aims: to protect tenants, stabilising their housing costs by freezing rents; to reduce the impact of eviction and homelessness through a moratorium on evictions; and to avoid tenants being evicted from the rented sector by landlords who wanted to raise rents between tenancies during the temporary measures, reducing the number of unlawful evictions. The act came into force on 28 October. Since then, it has provided additional protection for tenants across the rented sector as we continue to live through these challenging and uncertain economic times.
Last month, we published our first report on the operation of the emergency legislation, which covers the period from when it came into force in October until the end of December. In that report, in line with the act’s requirements, we set out our intended position for the social rented sector rent cap after March 2023. That is the main focus of one of the instruments that is before you.
Scotland has led, and continues to lead, the way across the United Kingdom in the delivery of affordable housing, having delivered more than 115,000 affordable homes since 2007, and we have equally ambitious targets over the next decade. We also lead the way in the UK on our decision to end the right to buy in order to ensure that we retain social rented homes for people who are in the greatest need.
Our commitment to affordable housing is second to none, which is why we have placed so much emphasis on enabling continued investment in the delivery of high-quality social housing. During the passage of the Cost of Living (Tenant Protection) (Scotland) Bill through the Parliament, concerns were raised by members from across the chamber about the impact that a continued zero per cent rent freeze could have on that investment; indeed, some members of the committee who are here today expressed those concerns. However, due to the unprecedented economic circumstances at the time, we felt that it was imperative that all tenants living in the rented sector be afforded the protection that the emergency measures provide.
We agreed to work closely with social sector landlords and, by the time that the bill completed its passage through the Parliament, we had already established a short-life task and finish group to support that work. The group, which comprised a number of key social sector landlord representative groups including the Convention of Scottish Local Authorities, the Scottish Federation of Housing Associations and the Glasgow and West of Scotland Forum of Housing Associations, stressed the fine balance between affordability and investment, and stressed the need to set our social sector rents at levels that would ensure the continuation of essential work such as new build programmes and work towards energy efficiency and carbon neutral targets.
The group reached an agreement that would result in increases of 6.4 per cent in respect of local authority social housing and 6.1 per cent for housing associations as an average across Scotland. It is important to note that the agreement of an average figure is essential to allow some degree of flexibility. The majority of rents will be increased at levels below the agreed 6.4 and 6.1 per cent figures, but there might be some landlords who will, for specific reasons, need to go beyond those levels.
In the light of that agreement, the draft Cost of Living (Tenant Protection) (Scotland) Act 2022 (Amendment of Expiry Dates and Rent Cap Modification) Regulations 2023 and the Cost of Living (Tenant Protection) (Scotland) Act 2022 (Early Expiry and Suspension of Provisions) Regulations 2023 expired the rent cap for the social sector from 26 February, enabling social landlords to set rent levels that they judge, in the light of tenant feedback, to strike a balance on supporting repairs and maintenance, working towards meeting carbon neutral targets and continuing to provide the wide range of support that they offer every day to their tenants in times of such pressure.
The regulations also make changes to the rent cap for the student accommodation sector. As laid out in the first report, feedback from stakeholders demonstrated that the rent cap was having no impact on the student accommodation sector, in contrast to the mainstream private rented sector. That was because the nature of the majority of contractual student tenancy agreements means that rents are set annually, tenancies typically last for the entire academic year and they rarely, if at all, allow for in-tenancy rent increases.
In the light of that feedback, and in recognition that student accommodation tenancies are structured differently from other types of tenancies, we concluded that the rent cap should be suspended from 30 March, which is what the two sets of regulations seek to do. However, I make it clear that, by suspending the student accommodation rent cap instead of expiring it, ministers will continue to monitor the sector, and they have powers to revive the provisions if fresh evidence shows that there would be benefit from doing so to deliver a necessary and proportionate response to the cost of living.
I turn now to the affirmative instrument that the committee is considering today. Soon after we published our first report to the Parliament, we laid the draft Cost of Living (Tenant Protection) (Scotland) Act 2022 (Amendment of Expiry Dates and Rent Cap Modification) Regulations 2023, along with a statement of reasons. In addition to the first report on the 2022 act, which was laid before the Parliament on 12 January, the statement of reasons sets out updated data and economic analysis that shows that the unprecedented economic position has not yet changed fundamentally and that many households in the private rented sector in particular continue to struggle.
Yesterday’s announcement by the Office of Gas and Electricity Markets on energy price caps from April this year will bring no consolation, despite the decreases, as the UK Government measures mean that the average domestic energy bill will still increase from £2,500 to £3,000, at the same time as the £400 energy bill support scheme is ended, which will drive up fuel poverty to more than 50 per cent in the private rented sector. For that reason, the draft Cost of Living (Tenant Protection) (Scotland) Act 2022 (Amendment of Expiry Dates and Rent Cap Modification) Regulations 2023 seek to extend the rent cap measures for the private rented sector for a further six-month period to 30 September, as well as the eviction moratorium provisions across all rented sectors covered by the 2022 act, and the other important provisions in the act.
On the continuation of the private sector rent cap measures, although the focus continues, of course, to be on protecting tenants, we recognise the on-going impacts that the cost crisis might be having on some private landlords. That is why the regulations propose that the rent cap be varied to allow for in-tenancy rent increases of up to 3 per cent.
The voluntary approach to rent setting that is taken by landlords in the social sector is intended to equate to an approximate average rental increase of less than £5 per week across the country. As rents in the private rented sector are generally significantly higher, allowing for a maximum 3 per cent rent increase equates to a similar average rent increase for tenants in a two-bedroom property, which is the most common property size in the private rented sector. We consider that that gives a measure of parity in monetary terms while continuing to protect tenants from unaffordable rent increases. There is also a safeguard for private landlords, who can opt to apply to rent service Scotland for a rent increase of up to 6 per cent if they have an increase in their defined prescribed property costs within a specified period.
On the proposed continuation of the eviction moratorium provisions, tenants in the private and social rented sectors as well as those living in student accommodation will continue to benefit from the additional time to find alternative accommodation that is provided by the six-month pause in the enforcement of eviction action. In addition, they are protected from private landlords seeking to end a tenancy to raise rents above the cap, and there is provision to reduce the number of unlawful evictions by increasing the level of damages payable.
As with the rent cap, the eviction moratorium provisions include a number of safeguards for landlords and recognise that there are some circumstances in which enforcement of an eviction order or decree should be able to proceed—for example, it could be done to protect communities in instances of serious antisocial behaviour. The provisions strike the appropriate balance between the protection of tenants and the rights of landlords.
In summary, we believe that the evidence that the cost crisis is still very much with us shows that it is crucial to continue beyond 30 March some of the protections that were brought in by the 2022 act. As promised during the bill’s passage through the Parliament, we have kept the measures under review and continue to consider their on-going necessity and proportionality. We have used our powers to make changes to the act where the evidence has shown that measures were required, and that is what the two sets of regulations that are before the committee seek to achieve.
Thank you, convener, for giving me the time to introduce the measures. I thank the committee for its scrutiny and look forward to members’ questions.
Thank you very much for your detailed opening statement. We have a number of questions; you might well have touched on some of the issues already, but we will ask our questions all the same, because it will give us—and you—an opportunity to open things up and go a bit deeper.
I will begin with a general framing question. Last week, the committee heard concerns from witnesses that the measures in the act were not addressing some fundamental problems in the housing system such as the lack of supply of affordable housing, high initial rents of private rented homes and homelessness provision. Fenella Gabrysch, who is trying to access private rented accommodation, told the committee:
“The ... barriers that we face”
day to day to try
“to access property are horrific”.—[Official Report, Local Government, Housing and Planning Committee, 21 February 2023; c 53.]
Minister, I am interested in hearing how the emergency act fits in with what the Scottish Government is doing on affordable housing and renting reform. How can we use the act’s powers as a bridge to that wider reform?
As I think that we discussed with a number of members in the debates in the Parliament during the bill’s passage, there are connections between the emergency measures in the act and the Government’s longer-term work through the new deal for tenants and the commitment to a new housing bill later this year.
However, although there were strong expectations of the emergency legislation, which delivered important necessary protection, it could not deliver everything that people wanted from longer-term legislative reform, particularly the protections around rent levels, which relate to in-tenancy rent increases and do not apply to the setting of rents for new tenancies. That issue is well understood through the debates on the legislation that we have had.
09:15Longer-term work on rent controls is on-going. We are keen to engage with the sector, by which I mean landlords and tenant interests, as well as academics who can bring expertise on the way in which the housing rental market works. We are doing that work in line with our commitment to the ethos that is set out in “Housing to 2040”, which is that the right to adequate housing is a human right. We will have a great deal more to say on that in due course.
The principal bridging mechanism between the emergency legislation and our longer-term work is the power to alter the system of rent adjudication. If we were to move directly from the emergency measures by switching them off entirely at some point in the future and go back to open market comparisons for rent adjudication, there would be severe and unintended consequences. Therefore, in due course, we will announce proposals on how we intend to use those powers in the act.
Thank you for highlighting the fact that rent adjudication will create a bridge between the current position and your proposals.
You touched on the rent cap in your opening statement, but I would like to hear more on that. Why has the Scottish Government taken a different approach to the continuation of the rent cap in the different sectors, and how proportionate and fair is that?
Again, as we debated during the passage of the Cost of Living (Tenant Protection) (Scotland) Bill, we recognise that the two dominant parts of the rented sector—the social rented sector and the private rented sector—operate differently. In particular, the social rented sector has a long tradition, and requirement, for consultation and engagement with tenants in relation to rent setting. We wanted to respect that necessary and valuable engagement and consultation.
We know that rental income does not necessarily provide for profit—social landlords are not profit-making bodies—but it provides for investment in new build, for retrofitting for energy efficiency and net zero, for maintenance and upgrades of properties and for a wide range of services that social landlords provide in the community. The social rented sector plans such investments over a long time. Given that several members echoed concerns from across the sector during the passage of the bill, more people recognised that some short-term protection was necessary but that, if the zero per cent cap continued for an extended period, it would not only reduce rental income in the year of the cap’s operation but have a compound impact on the financial planning of social landlords over a much longer period, and there would be a detrimental impact on tenants because of the reduced investment.
Such factors do not apply to the private rented sector in the same way. That sector tends to be profit making and tends to have a lower level of energy efficiency than the social rented sector, because some properties have not been upgraded in the way that will be required in the future under the new-build heat standard and the heat and buildings regulations on retrofitting. In the absence of some of the factors that apply in the social rented sector, we felt that the legislation was appropriate.
The difference in approach was also necessary because, in the absence of large organisations representing private landlords—we have a diverse and fragmented private rented sector—there was no opportunity to negotiate a voluntary agreement with private landlords that would have achieved the same effect as the agreement that I am pleased to say that we reached with the social rented sector.
The difference in approach is a mixture of a recognition of the different factors and characteristics of the two parts of the rented sector and the differences in opportunity to achieve a voluntary agreement in the nature of how rent is set. All those factors led us to recognise that a different approach had to be taken. However, I emphasise, again, the broad level of parity that we are talking about. As private rented sector rents are significantly higher than social rented sector rents, we believe that there will be, roughly speaking, parity in monetary terms between the rental increase that will be allowable for that most common type of property—two-bedroom properties—in the private rented sector.
Thank you very much for that response.
Good morning to you and your team, minister. We heard in committee last week about the below-inflation rent rises that you mentioned, which will provide challenges for social landlords in relation to improving homes and retrofitting. Have we been able to do any kind of assessment of the impact of those rises? Are they bound to have an impact in the immediate years to follow? What can we do to assist with that particular problem? Is there, perhaps, consideration of any additional resource?
The impact has been a subject of concern from the social rented sector, but we have been pleased with our ability to reach agreement with the sector. The average approach—the approach of not setting a cap and not even seeking a voluntary, uniform cap for the social rented sector, but of offering an average instead—allows for some flexibility.
Some social landlords will have an urgent need to invest in quality and maintenance as well as other aspects of their investment programme. Some will have managed more successfully than others to keep rents low and under control during the pandemic. They will not all have followed exactly the same path, because they are independent bodies. Given the different circumstances that different social landlords are in, it was appropriate that we allow some degree of flexibility.
Social landlords exist for a social purpose and they are not there to extract the maximum rent that they can extract from the properties that they have on offer; they take that social purpose very seriously. None of them would seek to impose unaffordable rent increases or ones that could reasonably be avoided. In fact, we are seeing early indications that the rents that are being set are significantly below average. I have seen figures from some local authorities that have set their rent increases for the coming year at 2, 3 or 4 per cent—significantly below the average that we have been seeking. We anticipate that that will continue to be the case, and the Scottish Housing Regulator will continue to give us information on that.
I presume that there has been knocking on your door with requests for consideration of additional resource. Will we keep an eye on the matter and invite some kind of data gathering to help us to understand how it is progressing and what impact it is having over the next few years, so that we can be in a position to adjust in future years, if necessary, when times are—let us hope—a bit better?
Absolutely. The commitment to social housing from the Scottish Government remains very strong. There has always been an understanding that the targets for new provision in the current decade are likely to be backloaded to some extent, and the impact of construction costs is affecting that, too. We will continue to commit to work with the social rented sector to understand not just the impact that the legislation might have had and might continue to have, but the wider necessity to provide the high-quality, net zero and sufficient social housing that Scotland needs.
Last week, we heard from the North of Scotland Regional Network of Tenants and Residents, which reminded us that the issues are not just about rent but are also about the whole costs of housing, as tenants have mentioned. Things such as service charges and energy costs are falling on tenants and they need to be considered.
Is the Scottish Government aware of the wider impact that some of those economic issues are bringing to bear? Have we considered that impact and can we do anything to assist?
Yes. I reinforce the point that we have never suggested that the emergency legislation is a solution to every aspect of affordability in the rental market. We believed that it was necessary in order to prevent some very significant rent increases, of which we were becoming aware, and to protect people in the throes of the extreme cost of living crisis. The longer-term goal of having a broader and deeper understanding of what affordability really means in housing is about acknowledging those wider costs, which include things such as service charges and utilities, as Willie Coffey said.
A genuinely comprehensive understanding of affordability is also about place. It is about issues such as transport costs and energy costs, which we have talked about, and it requires that longer-term work. “Housing to 2040”, as well as our commitment to legislation in the area, will continue to deliver on those aspirations.
Good morning to the minister and the officials. The committee has heard from a number of private landlords with regard to investor confidence in the sector being knocked and what they believe will be a significant number of landlords seeking to leave the market. What assessment has the Scottish Government made of the impact that the private rent cap will have? Do you have any data specifically on urban and rural and island landlords that you can share with the committee?
A longer-term argument can obviously be had—it has played out in the chamber on a couple of occasions—about whether a regulated approach to private renting is compatible with continued investment. Our view, which is also acknowledged in the report on rent control by the cross-party group on housing, is that regulated markets can be attractive to investors. Indeed, we regularly make that case in relation to the long term.
If we consider the history of the devolved approach to housing, for example, we have seen a very substantial increase in the size of the private rented sector at the same time as continued improvements in the robustness of regulation. We therefore do not believe that there is a fundamental contradiction between having a well-regulated sector that strikes appropriate balances for tenants’ rights and continued investment in the sector.
On current data, it is more of an administrative than a statistical source, but the Scottish landlord registration scheme shows that 340,149 private rented properties were registered in Scotland in December 2022, which is slightly more than the 339,632 that were registered in August, before the introduction of the rent cap. I was told just yesterday that we have now seen the figures for January, which are roughly the same—they are still very slightly, albeit not significantly, up on the August figure.
Of course, there will be those who suggest that there is an intention among landlords to leave the private rented sector at some future point. It is fair to say that we hear that in Scotland as well as south of the border. Some of the push factors there have involved tax changes that the UK Government has pursued, which impact on landlords’ profitability throughout the UK. There are severe challenges in the housing system throughout the UK, and severe challenges to affordability. We believe that it is necessary and achievable to strike the right balance between protecting tenants in relation to affordability through regulation and ensuring that we have continued investment in housing supply.
I do not know whether the Scottish Government has live data on this that the minister could share with the committee. Especially as we approach the September date, it is important to see how potential changes and the decisions of individual landlords will impact. That may be the critical point.
I return to the question that the convener asked about the setting of a 3 per cent cap and the Scottish Property Federation’s suggestion in its evidence that it should be closer to 5 per cent. Given inflation and what the minister has outlined, why was the private rented sector figure not closer to that, or to the 6 per cent average for the social sector?
09:30
As I said in my opening remarks and reinforced to the convener, we believe that we have struck a balance that achieves a degree of parity. Private rented sector rents are significantly higher than social rented sector rents. A 3 per cent increase in the private rented sector is broadly equivalent to an impact of £5 a week—or thereabouts—in the social rented sector, if we look at the most common property type, which is the two-bedroom property. Obviously, there will be slight variations for one-bedroom, three-bedroom and four-bedroom properties, because we cannot apply that average at a uniform level. We would need to control each rent individually to achieve that, but setting that 3 per cent cap achieves something that is broadly in parity in monetary terms.
I reinforce the point that the additional safeguard for landlords is there. If they face additional prescribed property costs during the specified period, they can apply for an increase of up to 6 per cent through Rent Service Scotland. I think that that strikes the appropriate balance between tenants and landlords, who will in a significant number of cases face significant challenges through the cost of living crisis.
On average, tenants in the private rented sector tend to have lower incomes than those in other tenures. They tend to spend a higher proportion of their income on their rent and are facing a number of other challenges. We believe that the legislation strikes the appropriate balance, going forward.
You touched on students, and I want to ask specifically about Edinburgh. As an Edinburgh MSP, I have never known it so bad with regard to the numbers of people who are contacting me to say that they cannot find any available property. The levels of homelessness in the capital are going up. The number of people who are living in temporary accommodation is at its highest ever level and it includes a record number of children and pregnant women. The third outcome that you mentioned—limiting homelessness—does not seem to have helped in the capital.
I am concerned that, when students return this autumn, accommodation will not be available for them because many properties, when students move out, are going straight into being rented longer term to people who work here in the capital. Along with the universities, what assessment have you made of that situation, especially for Edinburgh? Last term, the message was put out to students that, if they did not have accommodation, they should not matriculate.
We have to continue to engage with the universities around the obligations that they have to look after the students that they choose to attract, whether those are domestic or overseas students.
We took the view that the specific measures in the emergency legislation in relation to the purpose-built student accommodation market were not having a significant effect, because the scope for in-tenancy rent increases was negligible to non-existent. Although the intention to achieve parity of protection was always there, we had to take the view that the specific measures on the rent cap in the purpose-built student accommodation sector were not having that effect, so that has been suspended.
In relation to the wider arguments, we have long acknowledged that there are deeper issues to explore in relation to student accommodation. That is why we have the current review. The members of the steering group for that have been working hard, and the review is nearing completion. We expect the steering group to make its recommendations to ministers, and at the appropriate time we will report to Parliament and give our response.
Mr Hepburn—the minister who is responsible for the higher and further education side—and I will continue to engage with each other across Government and with the education sector around those issues.
Have universities contacted the Scottish Government to express their concerns on that issue?
I am not aware of recent contact from the universities on that issue.
Education colleagues are in on-going dialogue with the universities and colleges, but nothing specific has come to us.
Miles Briggs also mentioned homelessness. If we look at the tenures from which homelessness referrals come, there has been an extended period of a number of years in which the private rented sector has been a significantly higher source of homelessness than other tenures. That reduced significantly during the period of the emergency legislation for Covid, but there has been a continual rise and, before the introduction of this emergency legislation, it was exceeding its pre-Covid levels.
That increase has not been seen in other tenures, so we have an issue in relation to eviction from the private rented sector as a source of homelessness. That is another reason why we believe that the measures—particularly those on protection from eviction—remain necessary.
We move on to questions from Mark Griffin, who is online.
I declare an interest as the owner of a private rented property in the North Lanarkshire Council area.
Good morning, minister. You touched on some of my areas of questioning in your opening statement and your answers to the convener’s questions, but will you expand on the Government’s long-term plans to introduce private sector regulation and on how the transition from the emergency legislation into further long-term rent controls might happen? Can you give the committee a more definitive timescale for when you expect to introduce that legislation?
We confirmed fairly recently that we intend to introduce that legislation as soon as we can after the summer recess this year.
There are a number of areas where there is a clear public expectation from stakeholders about the provisions in the plan, particularly around homelessness prevention. Through the new deal for tenants, we have also signalled a number of other areas where we expect to make progress. It talks about not only the development of a national system of rent controls, but other tenants’ rights—for example, some of the softer things that give people a sense of dignity at home, such as the ability to personalise their home or to keep pets. We have also talked about some of the more challenging issues, such as protection from eviction during the winter months. The legislation that we will introduce to Parliament later this year will address a number of those measures as well as others.
It is important to flag up the recognition across political parties of the value of the approach that is taken in “Housing to 2040”. It is also important to flag up that the approach involves not only developing plans extensively with stakeholders and the public, but trying to create a long-term vision for the role that housing plays in meeting wider policy objectives for people in Scotland. That includes tackling poverty and inequality, creating and supporting jobs, looking at issues around demographics and depopulation and the work on our hugely important targets for emissions reduction and net zero. Between the housing bill and the heat in buildings bill, we will address all aspects of that.
Thank you for that answer. The other issue that I want to cover is one that the SFHA raised last week. What is the Government’s view of mid-market rent being part of the affordable housing supply programme and being covered by the private sector rent cap? Given the SFHA’s comments last week, is the Government considering amending the type of tenancy for mid-market rent in the housing bill that you plan to introduce after the summer recess?
That is a very good question. We acknowledge that, given the nature of mid-market rent, there are differences not only in rent levels, but in what is included in the rent. For example, there are issues in relation to service charges.
Although we took the view in relation to the emergency legislation that mid-market rent properties tend to be private residential tenancies and would be treated as such in the act, we recognise that there are longer-term issues to work through before we introduce the new bill and get to a national system of rent controls. We are keen to engage with the social rented sector to understand people’s concerns about that and identify the appropriate way to address them.
Annie Wells also joins us online.
Minister, why do you think that extending the evictions pause is necessary and proportionate, given that landlords generally pursue eviction as a last resort and that precautions are already in place, such as the need for landlords to comply with rent arrears pre-action requirements?
I begin by reinforcing my earlier answer to Miles Briggs about the pattern of evictions in different tenures. For quite a long time, eviction from the private rented sector was extremely dominant as a source of new homelessness. That began to come under control, but it remained high before the pandemic. The emergency regulation that was brought in at the start of the pandemic significantly reduced that. After that time, and before the introduction of the Cost of Living (Tenant Protection) (Scotland) Act 2022, we saw a steady and very marked increase in homelessness from the private rented sector. We did not see that same effect in social housing that is provided by either local authorities or registered social landlords. We recognise that something significant and harmful has happened regarding the sources of homelessness.
We took the view that the economic situation has not markedly changed since the introduction of the legislation. There is a necessity to give a level of protection, not only by pausing evictions to allow people more time to find new accommodation but by having significant measures to create disincentives for unlawful eviction, which remains a serious problem in Scotland. Landlords previously faced a very low level of penalty, which meant that they did not find it to be a disincentive.
We have made it easier and more relevant for tenants who are faced with unlawful or unreasonable eviction to take action to protect themselves from that. We believe that both the moratorium and the additional protections that are provided by the measures against unlawful eviction remain necessary in the current circumstances. The concerns that other members have raised about the availability of rented housing in some parts of the country reinforce the necessity of those measures.
I declare an interest as the owner of a property in East Lothian, which is rented to my in-laws.
Last week, Shelter Scotland expressed concerns about tenants being evicted for rent arrears of more than £2,250. Shelter called for that amount to be increased, because evidence from its law service about work on eviction cases showed that the average amount of arrears was about £5,700. Have you considered increasing that figure?
We debated that issue and I reflected on it during our debates on the bill. We weighed up various factors while trying to reach an approach on rent arrears. In my opinion, tenants in very severe rent arrears need support so that they do not become stuck where they are, building up ever more rent arrears. They need support through the tenant grant fund and from other forms of financial support and they need to be able to work constructively with their landlords to resolve the reasons why they are in rent arrears, so that they can work out the best way forward.
We think that the approach that we took in setting that level of severe rent arrears gives appropriate protection without leaving people stuck where they are and building up ever more unaffordable rent arrears. If arrears reach a level of severity that is significantly beyond what we have currently set out, they will be extremely destructive and disruptive to a person’s circumstances. Whether they stay where they are or move to another property, those debts will become a burden that we believe is unreasonable. The type of protection that people who are facing those arrears need is not simply for us to say that they should stay where they are and see the arrears grow ever higher.
09:45
The report on the 2022 act does not provide any data on changes in homelessness over the period in which the act has been in force. Can you say any more about the impact of the measures to protect tenants from homelessness? Are you expecting any increases in homelessness as the six-month restriction on enforcement of eviction orders comes to an end?
In our view, the provisions will clearly, almost by definition, have prevented some rented sector households from falling into homelessness by, as I said, giving them extra time to find alternative accommodation or seek housing advice and support from specialist agencies.
For private rented sector tenants, the measures continue to provide protection by making it easier and more meaningful, as I said, to challenge unlawful eviction. Unlawful eviction is a type of experience that people can go through that is more likely to lead to homelessness. In fact, I count myself among their number. I narrowly avoided homelessness when I was evicted from a flat by a dodgy landlord long before some of the current protections were in place, so I take very seriously the impact on people’s lives when they encounter those behaviours or practices.
The longer-term work on homelessness prevention duties is, I think, long awaited by the sector. We have engaged extensively with stakeholders to make sure that the measures that we bring forward will help to strengthen the protection against homelessness and to reduce it. I am not sure whether Adam Krawczyk has any current data that he wants to throw into the conversation on current patterns.
We published homelessness data at the end of January. As has been said, there is a bit of a time delay before local authorities provide us with the record-level data, so the data that we published in January took us to the end of September 2022. The next release, which will be around July, will take us to the end of March, so it will include the period that is covered by the act.
The statistics that we published in January showed increasing trends across homelessness and the use of temporary accommodation, but the publication provides an insight into where the homelessness cases are coming from. It is not just about the private rented sector; it is also about people wanting to leave their parental homes, and about relationship breakdown. An analysis has been published on the website as to the causes of homelessness.
The increase in the number of households from the private rented sector who are presenting as homeless may or may not be due to evictions. There can be other reasons why people choose to leave or to present as homeless, so I do not think that we can pin it down to evictions. However, we can pin it down to the previous tenure and the main reason why people are presenting as homeless.
We move back online with some questions from Marie McNair.
The committee heard from Shelter Scotland that its advisers have reported that tenants are unclear about their rights under the act, that there is a lack of clarity on the eviction provisions and that the Scottish Government messaging is causing some confusion. How do you respond to those concerns? What more can you do to ensure that tenants and landlords are aware of their rights under the act and future changes?
I am aware of Shelter’s criticisms, and I would very much welcome having further dialogue with it and, indeed, with other agencies—I know that Citizens Advice Scotland has been discussing the same issues—and hearing their ideas about what more we can do.
That said, I draw attention to the significant amount of work that we have done as we have developed the new deal for tenants and in our particular focused activity around the 2022 act. I am talking not just about conventional news releases and other activity across conventional media but about a wide range of social media content. For example, the renter’s rights website has been updated and advertised widely, and we have made wider cost of living information available through general practice surgeries, libraries, community centres and leisure centres. That information has included numbers and contact details for organisations that can offer individual advice and support, not just generic information about the legislation’s provisions, and of course it includes Shelter and Citizens Advice Scotland.
There has also been direct communication through key partner organisations such as tenant and landlord representative bodies, social and local authority landlords and educational establishments, giving tenants the information that they need about the new legislation and telling them how to access more information, should they need it. We have also had direct communication with registered landlords via local authority text message alerts and with registered letting agents, and there has also been engagement with the three tenancy deposit schemes to facilitate dissemination of information to tenants who are registered on their newsletter. There have also been direct messages to an extensive list of stakeholders, including colleges, universities and purpose-built student accommodation providers, confirming the nature of the measures and giving information for tenants.
As I have said, though, we continue to be very open to further suggestions about what more we can take forward on this. I know that, particularly as changes come through, landlords as well as tenants will continue to have questions about what those changes will mean for them, and we are keen to ensure that they have access to the answers that they need.
That information will be really useful to the committee.
I have no more questions, convener. They have all been covered.
I just want to look at the social rented sector side a bit more, minister. I have been made aware of one social rented housing provider—and I know that you are in discussions with it—whose experience since the act came in has been that tenants seem to be getting the wrong message. It has seen a 1.16 per cent increase in rent arrears, and the figure is higher than in any other reporting period in the previous financial year. It has suggested to me that people seem to think that they can just stop paying their rent, with the result that they are increasingly going into arrears that they will have to pay. There is therefore an issue with messaging and communicating what is really happening with the act and other measures, and I was just wondering whether you have discussed that issue with housing associations.
Obviously, we are in regular dialogue with them. I have to say, though, that I have seen some media reports that have not quite captured the full detail of this. If there is an announcement about what is going to happen to the cap, not every media report will properly capture the difference between the impact on the social rented sector and the impact on the private rented sector. That is why we need to continue to work directly with social landlords, for example, who have that on-going responsibility for consultation and tenant engagement, as well as with private landlord representative bodies and organisations that speak directly to and advocate on behalf of tenants.
It also worth reflecting on the fact that there is a role for organisations that engage with tenants in the social rented sector but which are not social housing providers, such as the Tenants Information Service, and the work of local authorities such as Glasgow’s tenant-led housing panel—is it a panel? [Interruption.] I have been told that it is a commission—I will actually be seeing some of them later this week. They, too, continue to have a role not just in letting us know about additional channels of communication that we should be using but in speaking directly to tenants. Indeed, they have been very active in doing so.
Thank you. It is good to hear that you are connected and proactive on that issue. I agree that the nuance of this is not necessarily conveyed in the media.
Finally, I am interested to hear about the relationship between increasing intervention and regulation on private renting over the past 20 years and the experience of other European countries.
Previously, when we have debated not so much this legislation but the new deal for tenants, it has been clear that ideology comes into the debate a little bit. There are some who are of the view that a more deregulated, more free-market approach to housing will increase supply and that any impact on prices will be detrimental to that. Actually, if we look at some European countries that have had systems of rent controls in place for a long time, we see a larger private rented sector as a proportion of the housing stock than we see in Scotland.
That is not the universal experience, and it is well understood that rent controls can achieve their objectives well or poorly. We continue to engage with all stakeholders to ensure that we design a system that is right for Scotland and that will be able to achieve protection in terms of affordability but which will also be consistent with what Scotland needs in terms of good-quality housing supply and investment in all the hugely important priorities around the transition to net zero.
There is a connection between rental income and investment in either sector. That relationship between rental income and investment is not the same in the social rented sector—which, as I said earlier, is a non-profit-making sector—as it is in the private rented sector. There are examples of build to rent, but a great deal of private rented accommodation is not actually provided by landlords—it is not necessarily built by them but is acquired by them as existing property.
Therefore, there are huge differences between the sectors, and we are keen to continue to do the work that we have been taking forward since the publication of the new deal for tenants and which will continue to be in development until the bill is introduced later this year. I look forward to further extensive dialogue with the committee at that point.
Thank you, minister. I am sure that we all look forward to that coming forward. Thank you for your evidence.
Item 3 is consideration of the motion on the draft regulations. I invite the minister to move motion S6M-07703.
Motion moved,
That the Local Government, Housing and Planning Committee recommends that the Cost of Living (Tenant Protection) (Scotland) Act 2022 (Amendment of Expiry Dates and Rent Cap Modification) Regulations 2023 [draft] be approved.—[Patrick Harvie]
Do members wish to comment?
I will not rehearse the arguments that we made in the chamber with regard to our concerns about the legislation, but I will place on record once again that it is clear that this has impacted on both the social and private rented sectors and very much destabilised them. Those are not necessarily my words but the words of the sector when it has expressed its concerns. I welcome some of the changes that the Scottish Government has brought forward, but we will not support the instrument today.
Minister, do you wish to add anything?
No. We have covered the main arguments that needed to be made.
The question is, that motion S6M-07703 be agreed to. Are we agreed?
Members: No.
There will be a division.
For
Burgess, Ariane (Highlands and Islands) (Green)
Coffey, Willie (Kilmarnock and Irvine Valley) (SNP)
Griffin, Mark (Central Scotland) (Lab)
McLennan, Paul (East Lothian) (SNP)
McNair, Marie (Clydebank and Milngavie) (SNP)
Against
Briggs, Miles (Lothian) (Con)
Wells, Annie (Glasgow) (Con)
Motion agreed to,
That the Local Government, Housing and Planning Committee recommends that the Cost of Living (Tenant Protection) (Scotland) Act 2022 (Amendment of Expiry Dates and Rent Cap Modification) Regulations 2023 [draft] be approved.
The committee will publish a report setting out its recommendations on the instrument in the coming days.
Local Governance (Scotland) Act 2004 (Remuneration) Amendment Regulations 2023 (SSI 2023/21)
The next item is consideration of two negative instruments: the Cost of Living (Tenant Protection) (Scotland) Act (Early Expiry and Suspension of Provisions) Regulations 2023 (SSI 2023/8) and the Local Governance (Scotland) Act 2004 (Remuneration) Amendment Regulations 2023 (SSI 2023/21). There is no requirement for the committee to make any recommendations on negative instruments. As there are no comments from members, are we agreed that the committee does not wish to make any recommendations in relation to the instruments?
Members indicated agreement.
I now suspend the meeting to allow for a change of witnesses.
10:01 Meeting suspended.