The Cost of Living (Tenant Protection) (Scotland) Act 2022: report to the Scottish Parliament - 1 June to 30 September 2023

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 In September, Scottish Ministers issued a call for 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 invited to take part in the call for evidence is available at Annex A of this report.

5.3 The Call for Evidence set out that in order to help inform Scottish Ministers' statutory review of the remaining emergency provisions and inform the next report to Parliament, any representations stakeholders wished to make or bring to our attention were invited.

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

5.5 In respect of the social sector, Scottish Ministers were also committed to providing a further opportunity for individual organisations to respond to understand how the remaining emergency measures affecting the sector were impacting. 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.

5.6 In addition to the call for evidence, the Scottish Government has undertaken meetings and engagements with a range of stakeholders during this reporting period in order to listen to their views on the impact of the emergency legislation.

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 views from key stakeholder groups by the Scottish Government in September 2023.

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.

5.7 In total, 10 responses were received to the call for evidence, as follows:

• 3 from tenant representative and advice groups;
• 3 from a housing professionals membership organisation; and
• 4 from landlord/financial/investor representative groups, local authorities and housing associations, of which;
• 2 represent interests in the private rented sector
• 2 represent interests in both the private and social rented sector.

Main findings

Private Sector Rent Cap

5.8 Some tenant representative organisations set out that the provisions in the Act continue to provide reassurance and protection against rent increases, and remain "absolutely necessary" whilst the pressures of the cost of living crisis persist.

5.9 Responses from two local authorities set out concerns that the emergency measures may be leading to landlords leaving the sector due to their business no longer being financially viable, which is consequently contributing to increased homeless presentations. For example, in one local authority in 2022/23, there were 210 homeless presentations from the private rented sector, an increase of 41% since 2021/22 (149 presentations), with the reason stated as 'other action by landlord' and 'termination of tenancy/mortgage due to rent arrears/default on payments'. However, consistent with national level statistics, this increase is driven by applications received in the first half of the 2022/23 financial year, before the introduction of the emergency legislation. It is highlighted that any decline in the private rented sector will have direct implications for social rented housing in terms of pressure and demand.

5.10 One response from a local authority reported evidence of landlords choosing not to renew their landlord registrations, which has resulted in a real term decline in the number landlords in the area. However, there is no evidence to support that this is a direct consequence of the emergency legislation, and the number of registered properties for rent in Scotland has remained broadly stable since 2020. In this scenario, a decline in the number of landlords registered in the area could potentially be due to the average landlord portfolio size increasing over this time period e.g. a scenario of smaller landlords leaving the sector, but larger landlords remaining or entering the sector and buying up further properties.

5.11 A housing professionals membership organisation also reported a marked increase in social housing applications due to private rented properties being marketed for sale by landlords, and they have concerns that the Act is placing demand and pressure on the social sector. They also highlighted that the cumulative impact of regulatory changes, including the New Build Heat Standard and new Building Regulations, combined with the emergency measures and wider economic challenges, will undoubtedly have a negative impact on the supply of housing of all tenures.

5.12 A housing professionals membership organisation raised concerns around investment and financial planning in the mid-market rent (MMR) sector. Increased construction costs coupled with the rent cap were cited as reasons for delaying or halting development of sites designated for MMR, as they are no longer deemed to be financially viable. Anecdotal evidence provided suggests this comes at a time of increased demand for MMR as a result of the decline in availability of private rented sector properties. In the response, their view is that MMR properties should be considered separately to any rent cap measures, as they already have a strategic commitment to keep rents as low as possible. As MMR providers issue Private Residential Tenancies, they are able to make use of the Prescribed Property Costs safeguard built into the Act and can apply to Rent Service Scotland to increase the rent for a let property above the rent cap (up to 6%) in connection with defined 'prescribed property costs' where applicable.

5.13 A response from a charity providing residential care for people with learning disabilities, that is operating as a private landlord, noted that the emergency measures are well intended to protect tenants from excessive rent increases during these challenging economic times, however they are concerned that they are being conflated with the private sector. They called for their tenancies to be excluded from the extension of the Act. The respondent's view is that the measures are not helpful due to the distinct pressures they face with regards to the care and support services they provided.

5.14 This response noted that they issue private residential tenancies which means that they would be able to apply to the prescribed property cost safeguard to seek to secure an increase in their rents of up to 6%. However, they raised concerns around the bureaucracy of the application process, because it requires an application for each tenancy given each rent increase affects an individual tenancy. They stated that this places pressure on them and felt it may not take account of the particular costs associated with their organisation.

5.15 In addition, some respondents had the view that the emergency legislation has damaged investors' confidence across the Scottish housing market, and suggest that Scotland is falling behind other areas of the UK in the delivery of Build to Rent homes.

5.16 A tenant representative group stressed the importance of maintaining the rent cap to avoid unaffordable rent increases, and reference was made to anecdotal evidence of landlords increasing rents by between 10-30% between tenancies. The response also calls for reform of the rent adjudication system to prevent a cliff edge when the temporary measures come to an end.

Evictions Moratorium

5.17 From a social sector perspective, due to eviction already being a last resort, the eviction moratorium provisions appear to be continuing to have minimal impact. A social sector representative reiterated concerns about the definition of substantial rent arrears i.e. equal to or more than £2,250, as it may be being perceived as an acceptable level of debt that is unmanageable for some tenants and delays social landlord intervention. They state that the moratorium may have resulted in tenants not paying rent, or deprioritising the payment of rent, and reduced the incentive for tenants already in rent arrears to work with their landlord.

5.18 The response also refers to recently published data from the 2022-2023 Scottish Housing Regulator Annual Returns Charter data collection which indicates that the sum of housing association gross rent arrears at year end has increased from £59,548,145 in 2021/22 to £65,608,420 in 2022/23, an increase of 10%^[30]. However as the response notes, the reporting period of April 2022 to April 2023 does not fully align with the Act's introduction in October 2022 to enable a direct comparison of the effects of the Act.

5.19 One tenant representative group reported members and tenants feeling reassured by the protections of the moratorium on the enforcement of evictions. They note that the evictions moratorium has been especially important in conjunction with the rent cap in order to prevent landlords from abusing grounds for eviction in order to increase rent. This is in the context of increasing numbers of private sector tenants seeking advice regarding illegal evictions, as reported by Citizens' Advice Scotland^[31].

5.20 A response from a religious group, who operate as a private landlord, highlighted the impact of the evictions moratorium on the letting of vacant manses. Due to the potential delay around recovering the property when it is required for occupation by a new minister, many congregations are choosing to leave properties vacant which is impacting on finances and future planning for retiring ministers.