Chamber and committees

A rent increase notice needs to tell a tenant by how much a landlord intends to change the rent from the current rent level. Rent increase notices during the period will have to be consistent with the cap as it stands at any particular time, which is zero per cent initially, with the potential for that to be changed. Of course, some flexibilities have been built in, particularly where landlords are facing increased costs that are outwith their control as a result of letting out a property and making it available for rent. Those increased costs will be within the clearly defined limits of 50 per cent of the increased costs and a total of 3 per cent of the existing rent. Rent increase notices have to be issued in that way in terms of their relationship to existing rent.

I come back to the points that were made earlier about engagement with the social rented sector. The social rented sector not only operates in a different way from the private rented sector around things such as reinvestment of rents and consultation mechanisms for rent setting, but it also provides a wider range of services. All of those things, as well as the investment in supply and quality, need to be protected, and we will engage actively with the social rented sector well ahead of any decision. In fact, that active engagement is already under way. We will make sure that we take account of all of those circumstances. Nobody, not the Government, tenants or the social rented sector, would want to endanger those services.

Yes. We are defining “substantial rent arrears” as up to or the equivalent of six months’ rent in the private rented sector. We are using the specific figure of £2,250 in the social rented sector, which is roughly equivalent to six months’ average rent in that sector. Amanda, do you want to comment?

Rent increase notices that were issued before 6 September will not be covered by the cap.

If the cap continues at zero per cent until 31 March, as is our current intention—albeit that we have the power to remove it earlier or extend it further—a rent increase notice issued in that period will need to be consistent with that cap.

It is worth adding that a large part of what we are seeking to do is to provide the reassurance and stability that people need. From 6 September, as the First Minister said when she announced the programme for government, people can have confidence that they will not be issued with a rent increase notice that will go beyond the cap. If people are issued with those notices, that means that their landlords will have acted unlawfully, and in those circumstances, there are provisions and measures that can get that redressed.

The cabinet secretary and I have both had one-to-one conversations with a number of individual RSLs and social rented sector bodies. We have had two meetings of the task and finish group—it began its work two weeks ago and had another meeting last week. As I said, the SFHA and others are involved in that and are making valuable contributions.

I am convinced that there is creativity to be brought to bear on how we protect tenants in what is an emergency situation that, as Aaron Hill acknowledged, requires an emergency response, and on how we support the social rented sector to continue to deliver the high-quality and affordable housing that we know is so important in communities across Scotland.

I am very happy to give it. The bill specifies the reporting requirements on Government to Parliament, but we will be very happy to discuss with the committee the best way of ensuring that it is involved in discussions.

Good morning to colleagues across the committee. I am grateful for the opportunity to speak on the Cost of Living (Tenant Protection) (Scotland) Bill, which we introduced in the Parliament yesterday, and for the committee’s agreeing to take evidence at very short notice. My colleagues and I listened to the first panel of witnesses, and I am grateful to all those who have contributed to the debate.

As members are aware, the emergency bill aims to provide critical temporary protection for people who rent their homes. On average, tenants have lower household incomes, higher levels of poverty and are more vulnerable to economic shocks. Sixty-three per cent of social rented households and 40 per cent of private rented households do not have enough savings to cover even a month of income at the poverty line. That is compared with 24 per cent of households that buy with a mortgage, and 9 per cent of those that own outright. Tenants are, therefore, particularly exposed to the cost crisis.

With that context in mind, the bill has three key aims: to protect tenants through stabilising their household costs by freezing rent; to reduce the impact of evictions on homelessness, through a moratorium on evictions; and to avoid the eviction of tenants in the private rented sector by a landlord who wants to raise rents between tenancies through the temporary measures, and to reduce unlawful evictions.

The provisions are intended to be in place until 31 March in the first instance. With the approval of the Parliament, the Scottish ministers can extend them for two further six-month periods, should circumstances and evidence show that to be necessary. Similarly to the approach to the coronavirus emergency legislation, the on-going necessity and proportionality of the provisions will be reviewed and reported on. Regulations to suspend or expire any provision that is no longer appropriate must be made.

I know that time is limited, but I want to give a very brief overview of the main provisions in the bill. First, we intend to achieve the rent freeze by setting a variable cap on the level of increase in rent. Initially, that will be set at zero per cent until 31 March next year. The cap will operate separately for the social and private rented sectors and will apply to all rent increase notices that were served on or after 6 September—the day of the programme for government announcement.

To reflect the various circumstances that landlords might face, we have allowed for applications to increase rent for prescribed and legitimate costs that are associated with offering the property for rent, when those costs have increased. Rises are restricted to a maximum of 3 per cent of rent, although ministers will have the power—subject, again, to Parliamentary scrutiny—to propose a change to that percentage.

Recognising that some of the most economically vulnerable people live in the social rented sector, we believe that it is an important signal of equal protection to cover both sectors. However, to reflect the critical differences in the nature and structure of the social rented sector, we are already working closely with the sector to consider what should happen after 31 March.

On the moratorium on eviction, we intend to prevent enforcement of eviction action in the private and social rented sector and in college and university halls of residence and purpose-built student accommodation. Those restrictions will apply to all eviction orders that are issued in proceedings that are raised after the moratorium comes into force. They will also apply to proceedings that are raised before the moratorium comes into force where the eviction notice was served on or after 6 September. The moratorium will not apply to eviction orders that are granted in proceedings before the legislation comes into force, which will ensure that no one is evicted in a case that is started after or as a result of the programme for government announcement.

Recognising that the cost crisis is impacting on some landlords, too, we have allowed for specific limited exemptions to deal with serious cases of antisocial or criminal behaviour, substantial levels of rent arrears and a property being repossessed and sold by a mortgage lender.

We know that the majority of landlords are law abiding and responsible and are appalled and frustrated by those landlords who try to bypass the law to evict people unfairly. To guard against that, the bill makes important changes to the way in which civil damages can be awarded for unlawful evictions, making it easier for tenants to challenge them and, by substantially increasing the potential damages, making it less attractive for landlords to carry them out.

Finally, the rent adjudication provisions in the bill look ahead to a time when, hopefully, we will be transitioning out of the emergency measures as economic circumstances change. That part of the bill gives the power to adjust the adjudication process to avoid a cliff-edge effect. Again, that will be subject to parliamentary scrutiny.

To summarise, the proposed legislation will help to keep people in their homes and to stabilise their housing costs during this extraordinary cost crisis. We believe that the package of measures strikes the right balance between that aim and ensuring that landlords can continue to offer properties for rent and manage tenancies sustainably.

I look forward to the committee’s questions and the discussion.

I was pleased that, in one of his first answers, Aaron Hill acknowledged that an emergency response is necessary. The desire to protect tenants is shared by the Government and the sector. Social landlords are non-profit organisations; they exist to provide affordable housing. We recognise that a huge amount is being asked of the sector, generally, in terms of provision of supply, maintenance and the retrofit agenda to address the net zero challenges that the whole Parliament has agreed are important.

It is important to recognise that there are significant factors that operate differently in the social rented sector compared with the private rented sector. There are existing requirements to consult with tenants on rent setting, and rental income is reinvested in provision and quality. A higher proportion of tenants in the social rented sector access benefits, so any prolonged and extended rent freeze would benefit not the tenants but the UK Treasury.

We are conscious of all those differences and more, and we are already working closely with the sector, not only to reassure it but to reassure its lenders that the Government will take a proportionate and responsible approach. The SFHA and others have been invited to, and have agreed to participate in, a short-life task and finish working group that will look at those issues. The group has already begun meeting and those discussions have been very constructive.

I know that some people in the social rented sector have concerns, but I have also spoken to many who see a positive opportunity to ensure that we are protecting tenants at a very difficult time. As I told Parliament last week, no decision has been made about what will happen to the cap after 31 March. We will make that decision in a responsible way, bearing in mind how economic circumstances change over time and the arguments and discussions that we take forward the social rented sector.