Cost of Living (Tenant Protection) (Scotland) Act 2022: first report to the Scottish Parliament

1. Introduction

1.1 The costs crisis exacerbates existing social and economic pressures faced by those living in a rented home, making them more vulnerable as a whole. These pressures are particularly acute in the winter given the rise in fuel use and costs during this period. Rented households are more likely to have lower household incomes, higher levels of poverty and to be financially vulnerable.

1.2 63% of social rented households and 40% of private rented households in Scotland are estimated to be financially vulnerable, with savings which would cover less than one month of income at the poverty line, compared to 24% of households buying with a mortgage and 9% of households owning outright.

1.3 The Act came into force on 28 October 2022 as a response to the ongoing emergency situation caused by the impact of the costs crisis on those living in the private and social rented sectors, and students living in college or University Halls of Residence and Purpose Built Student Accommodation in Scotland.

1.4 The intended effect of the temporary Act is to:

• protect tenants by stabilising their housing costs through the introduction of a temporary, variable rent cap;
• where possible, during the costs crisis, reduce impacts on the health and wellbeing of tenants caused by being evicted and/or being made homeless by giving them more time to find alternative accommodation; and
• seek to avoid tenants being evicted during the cost of living crisis (unless an exemption applies), through a moratorium on evictions.

Our approach to reporting

1.5 Section 9 of the Act sets out statutory reporting requirements for Scottish Ministers. This means that every three months Scottish Ministers must review and report on the need for the provisions in the Act to either be continued or to expire, where appropriate, based on the evidence available at the time. The statutory reports must undertake a review of the operation of the measures with a view to considering whether they remain necessary and proportionate in connection with the cost of living (section 9(1)(a) in accordance with sections 9(2) and 9(5)).

1.6 Before Scottish Ministers prepare a report, section 9(3) of the Act sets out that they must consult stakeholders who represent the interests of tenants and landlords that may be affected by the provisions in Part 1, and also with Local Authorities. Scottish Ministers may also consult other persons considered appropriate. Section 9(4) also sets out that Scottish Ministers must include a summary of how those views were taken into account in finalising their report. The report details initial engagement with stakeholder groups – representing tenant, landlord, financial institutions/investors and local authorities – in order to understand and gather evidence on the impact of the provisions, since they came into force.

1.7 The report must also set out the steps the Scottish Ministers have taken to meet the requirements in section 3 (information and advice for tenants) to demonstrate action taken to ensure that tenants affected by the provisions of Part 1 receive appropriate information, advice and support for the period during which Part 1 remains in force.

1.8 Section 9(7) of the Act also sets out that, in respect of the reporting period ending 31 December 2022, Scottish Ministers must - in considering the application of the permitted rate (within the meaning of section 24A(1) of the Housing (Scotland) Act 2001) of 0% - explain whether they propose to:

a) retain the permitted rate at 0%;

b) increase the permitted rate;

c) make regulations under section 8(1) to provide for the expiry of paragraph 3 of schedule 1; or

d) make regulations under section 6(1) to suspend the operation of that paragraph.

1.9 It is important to acknowledge that this first report covers only the first nine week period that the Act has been in force (28 October to 31 December 2022). In addition, some of the reporting arrangements are newly established and require new reporting and monitoring arrangements to be put in place, therefore the reporting process is likely to evolve and develop further over the coming weeks.

Status Update

1.10 The table on pages 7 and 8 of this report, provides detail on the status and operation of the provisions in Part 1 of the Act.

1.11 In addition, and in line with the range of evidence and supporting information provided in the accompanying documents and Impact Assessments that were published alongside the Cost of Living (Tenant Protection) Bill when it was introduced to Parliament on 6 October, this report also provides an updated overview of the current economic context underpinning the provisions (see Section 4).

1.12 As outlined above, our approach to reporting will ensure that Parliament is given as much information as is available on the operation of the Act. Where supplementary information has been provided, this is indicated within the 'Operation of provision in the reporting period' column within the table on pages 7 and 8, and can be found at section 7 of this report.

1.13 Finally, in line with section 9(7), section 6 of this report sets out Scottish Ministers consideration of the rent cap provisions within the social rented sector beyond 31 March 2023.