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

5. Consultation with stakeholders

5.1 The Act sets out that before preparing this statutory report, Scottish Ministers must consult with persons representing tenants and landlords, and local authorities. It goes on to set out that Scottish Ministers may also consult other persons considered appropriate, and detail how the views of those consulted have been considered in finalising the report.

Call for Evidence

5.2 Scottish Ministers issued a call for written evidence to a wide range of rented sector stakeholder groups in respect of the social, private, and student rented sectors representing a range of interests. A list of the stakeholders consulted as part of this exercise is available at Annex Aof this report.

5.3 For the private rented and student accommodation sectors, stakeholders representing landlords' interests were invited to share their views on the impact of the measures on landlords and those involved in the provision of private rental accommodation.

5.4 In respect of the social sector, a key focus of stakeholder engagement with the social housing sector has been undertaken through the Short Life Task and Finish Group (see section 6 of this report for the Group's remit and Annex B for membership). Scottish Ministers were also committed to providing a further opportunity for individual organisations to respond to understand how the measures are affecting those working directly in the social housing rented sector in Scotland. The call for evidence was therefore also shared with Regional networks, Registered Tenant Organisations, Registered Social Landlord Chief Executives and Local Authority Directors of Housing.

5.5 The call for evidence set out three questions:

• What has been the impact of these temporary measures on your perception of risk associated with involvement in the rental sector in Scotland?
• Do you have evidence of behavioural changes as a direct result of the temporary measures coming into force?
• Is there any other evidence (qualitative or quantitative) you can provide at this stage about the impact of the temporary measures to date?

5.6 Stakeholders representing tenant groups were also invited to share their views on the impact of the measures on tenants across the private and social rented sectors and student accommodation sector. That call for evidence sought responses to the following three questions:

• Have the temporary measures provided any immediate assistance to tenants?
• Are you aware of any wider impacts of the provisions on tenants, such as reducing impacts on health and wellbeing due to the additional security being provided by the temporary measures?
• Do you have evidence of behavioural changes as a direct result of the temporary measures coming into force?
• Are you aware of any evidence that tenants are experiencing landlords not meeting the terms of the emergency requirements (seeking to increase rent, unlawful evictions etc)?

5.7 Recognising the potential for measures to have an impact on homelessness, the call for written evidence was also shared with the Change Team.

Summary of Call for Evidence Reponses

Note: The following summary was prepared on the basis of evidence supplied in response to a targeted call for evidence from key stakeholder groups by the Scottish Government in November/December 2022.

The evidence outlined in these submissions was drawn from a wide variety of sources including; anecdotal evidence, lived experience examples, internal stakeholder data such as member surveys, stakeholder perspectives and externally published data.

In most cases, it has not been possible for Scottish Government analysts to verify the data provided in these submissions.

5.8 In total, 68 responses were received to the call for evidence, as follows:

• 7 from tenant representative and advice groups;
• 3 from student accommodation providers;
• 1 from a housing professionals membership organisation; and
• 57 from landlord/financial/investor representative groups, local authorities and housing associations, of which;
  • 22 represent interests in the private rented sector
  • 31 represent interests in the social rented sector
  • 4 represent interests in both the private and social rented sector.

Main findings

Private Sector Rent Cap

5.9 Some tenant representative organisations set out that – whilst it appears too early for evidence to be available on the impact of the emergency rent cap measures – they are welcomed as the unprecedented economic position, that gave rise to the need to take emergency action, has not yet changed fundamentally.

5.10 Across the board, private landlord representative bodies set out significant concern that the emergency measures may be leading to landlords leaving the sector due to their business no longer being financially viable and concerns about further legislation having a detrimental impact, which appeared to be based on anecdotal evidence. One landlord representative body flagged that this unintended consequence would be felt more acutely in rural areas.

5.11 One landlord group suggested that the current safeguard within the legislation relating to a maximum 3% uplift for prescribed property costs is not sufficient to cover the additional cost of borrowing for landlords with Buy to Let mortgages given the scale of interest rate rises in recent months.

5.12 It was also suggested by a private landlord representative body that as a direct result of the emergency measures, landlords behaviours are changing with many now raising rents significantly between tenancies, when they may not otherwise have done so. A further concern was landlords only carrying out essential repairs and postponing, or halting altogether, any planned improvement works.

5.13 Some financial/investor stakeholders set out examples of new build to rent developments being placed on hold due to the impact of the emergency measures, asserting that this was primarily due to decreased investor confidence and uncertainty around future legislation. A particular issue was the concern that investor confidence had been impacted negatively by the introduction of the emergency legislation without prior consultation.

5.14 In addition some landlord and financial/investor stakeholder respondents, set out that the risks of investing in Scotland have now increased, making it a less attractive to financial institutions than other parts of the UK.

Social Sector Rent Cap

5.15 The majority of social landlord respondents stated that to date the rent cap measures are having either no impact - or a negative impact - with many highlighting that social landlords already engage fully with their tenants in relation to setting affordable rents and the announcement in early September caused confusion amongst many tenants. However, one tenant representative body provided testimonies from social rented tenants who state that the rent freeze should continue due to the impacts of the ongoing cost of living crisis.

5.16 There was significant concern about the unintended consequences of the rent cap measures, such as the potential of messaging on a moratorium on evictions leading some tenants to deprioritise payment of rent over other bills. There was concern about the impact of increasing rent arrears both on housing association finances and the tenants accumulating such debt.

5.17 Many housing associations and local authority landlords stated that should the rent cap provisions continue beyond 31 March 2023, then it would have a direct impact on future investment – both in terms of new build projects and the ability to carry out maintenance, repairs and improvements (including work towards achieving energy efficiency and net zero targets).

5.18 Some financial/investor stakeholder respondents set out examples of new build social housing developments being placed on hold due to the impact of the emergency measures. A particular issue of concern in this respect was the impact on investor confidence caused by the introduction of the emergency legislation without prior consultation.

Student Accommodation Rent Cap

5.19 There was limited response to the call for evidence from student tenant representative organisations. The main theme emerging from the responses received is that for this first reporting period, there is insufficient evidence to understand whether there have been any positive or negative outcomes from the emergency measures.

5.20 A common view amongst the responses was a concern that the emergency measures – coupled with ongoing regulatory change across the rental sector in Scotland – may have the unintended effect of contracting the availability of private rented accommodation for students and result in further pressure being placed on accommodation provided by colleges, universities and purpose built student accommodation providers.

5.21 There was further concern raised by financial/investor stakeholders who responded to the call for evidence, in relation to the impact the emergency rent cap measures may have had on future investment to deliver purpose built student accommodation.

5.22 Anecdotal evidence from one response in the student accommodation sector suggests that the emergency measures provide reassurance and protection for tenants against unaffordable rent increases – both for students and college/university staff who are reliant on the private rental sector as a housing solution.

Evictions Moratorium

5.23 From a social sector perspective, due to eviction already being a last resort, the eviction moratorium provisions appear to be having minimal impact. The safeguard measures in place in relation to antisocial behaviour or criminality were welcomed by some and ensure that there is no wider, detrimental impact to neighbourhoods – as social landlords can continue to take action in such cases. Some respondents highlighted that where eviction action is taken in relation to rent arrears, the amount already accumulated is usually above the threshold set out in the legislation and therefore the eviction moratorium is resulting in minimal impact.

5.24 Similarly, stakeholders suggest that the eviction moratorium is having little impact on students living in university/college accommodation or purpose built student accommodation due to the fact that only a very small number of students are evicted in any given year and these are normally in relation to antisocial behaviour grounds, which the emergency legislation permits.

5.25 For the private rented sector, one tenant representative group flagged the importance of the emergency measures remaining in place as the unprecedented economic situation persists. They state that even the recent announcements by the UK Government to increase the minimum wage and uplift benefits by inflation, they remain very worried for private renters in more vulnerable circumstances if, and when, current restrictions are lifted – particularly in respect of possession/eviction proceedings.

5.26 One private rural landlord representative group suggests that the eviction moratorium measures have resulted in behavioural changes between landlord and tenant, with landlords moving to eviction proceedings quicker than they would otherwise have done in the absence of the emergency measures. In addition, it was also suggested landlords are becoming more cautious in the selection process for new tenancies making access to the private rented sector more difficult.

5.27 Concerns were also raised by some landlord representatives that the moratorium had also resulted in tenants not paying rent and reduced the incentive for tenants already in rent arrears to work with their landlord, leading to larger arrears putting the tenancy at risk in the longer term.

5.28 An over-riding theme emerging from many of the responses related to awareness raising and the view that the announcement of the Government's intention to bring forward the emergency measures caused confusion amongst both tenants and landlords alike. It was suggested that the delay in providing clarity on how the rent cap and eviction measures would work, meant that some private landlords rushed to instigate eviction proceedings or to increase rent, while some tenants believed they couldn't be evicted due to the legislation and have de-prioritised paying rent. Many respondents called for the Scottish Government to continue raising awareness of how the measures work in practice.

5.29 In addition, many respondents suggested that the lack of consultation prior to the measures coming into force may have alarmed investors and created significant uncertainty that has already had a detrimental impact on investment in Scotland but that could have been avoided had a different approach been adopted.