The Cost of Living (Tenant Protection) (Scotland) Act 2022: report -1 October to 31 December 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 line with previous reporting periods, Scottish Ministers issued a further call for evidence in November 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 November 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, 6 responses were received to the call for evidence, as follows:

• 2 from tenant representative and advice groups;
• 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 the social rented sector

Main findings

Private Sector Rent Cap

5.8 One tenant representative group highlights the sustained financial pressures tenants are facing and their view that the rent cap remains “absolutely necessary and entirely proportionate” to protect tenants from unaffordable rent increases. The response also makes reference to YouGov polling carried out in June 2023 which found that renters are more likely to report difficulty making their housing payments, and 55% say they are finding it hard to do so^[26]. The response also refers to anecdotal evidence of landlords seeking to increase rents by between 10-30% between tenancies, and some reports of threatening behaviour to implement rent increases well above the rent cap.

5.9 Two responses from private landlord representative groups set out their view that the emergency measures are leading to landlords leaving the private rented sector, however they also make reference to wider contributing factors such as landlord concern about future rent controls and increasing regulation in the sector.

5.10 One private landlord representative group conducted a member survey in December 2023 which found that 56% of respondents are planning to reduce their portfolio size in the next 5 years, which they compare with 44% in December last year. The number of respondents is not confirmed, and as stated above this could be attributed to multiple factors.

5.11 Another private landlord representative group also conducted a member survey in December 2023, which received 114 responses. The survey found that 47 respondents have removed properties from the private rented sector since September 2022.^[27] However they report that 77% of the properties that have been removed from the sector by those 47 respondents have not yet been removed from the Scottish Landlord Register, and it is suggested the register may be overstating the number of properties available to let.

5.12 However, the latest data from the Scottish Landlord Register shows that the number of properties available to let has increased by 1.5% between August 2022 and November 2023, while the number of registered landlords has remained stable (down only 0.1%) over the same period. While it is acknowledged that there can be delays in the removal of properties from the sector showing up on the register, the data from the register does not at this stage confirm declining numbers of properties across Scotland as a whole.

5.13 In a response from a social landlord representative group, they reiterate their ongoing call for Mid-Market Rent (MMR) properties owned by social landlord subsidiarises to be reclassified as social rent. The response recognises that the emergency measures are well intended, however they feel that MMR should be considered separately as they already have a strategic commitment to keep rents as low as possible and protect tenants from financial pressures. They report some Registered Social Landlords pausing or postponing the provision of MMR, and feel that the rent cap is impacting on the financial viability of RSLs and their ability to provide services to tenants.

Evictions Moratorium

5.14 One tenant representative group reported members feeling reassured by the protection offered by the moratorium on the enforcement of evictions, and say this is particularly pertinent in the context of increased demand for advice and information on illegal evictions from their members.

5.15 From a social sector perspective, one social landlord representative group is of the view that the moratorium is not a necessary measure to influence social landlords’ behaviour or offer protection to tenants, due to eviction already being a last resort when other interventions fail. Both responses from social landlord representative groups highlight ongoing concerns about the definition of substantial rent arrears i.e. equal to or more than £2,250, as it is being perceived as an acceptable level of debt for some which prevents early engagement and risks unmanageable rent arrears for tenants.

5.16 One response from a social landlord representative group refers to data from the Scottish Housing Regulators Annual Returns Charter which indicates there has been a 0.7% decrease in the average percentage of court actions initiated that resulted in eviction for rent not paid between 2021/22 and 2022/23^[28] (16.7% in 2022/23 compared with 17.4% in 2021/22).

5.17 The response also raises concern that increased levels of debt may risk higher rates of property abandonment, and Annual Returns Charter Data indicates that property abandonments increased by approximately 12% between 2021/22 and 2022/23^[29]. The response notes that this is particularly worrying because there is a lack of available affordable homes for tenants to move on to, however there is no evidence that the recent increase in property abandonments has been caused by the emergency legislation.

Rent Adjudication

5.18 Two responses highlight the need to bring in measures to avoid a cliff edge of rapid rent increases and evictions when the emergency legislation is expired. A range of measures are proposed, including; reform of the current rent adjudication system, increased penalties for landlords abusing grounds for eviction, increased support for tenants experiencing fuel poverty or food insecurity and long term funding for advice and support services.

5.19 The Cost of Living (Tenant Protection) (Scotland) Act 2022 contains a power to modify the basis on which rent is determined when there is adjudication of rent disputes. Once the rent cap is expired we would expect that many rent increases proposed by landlords will proceed as normal, with tenants agreeing to pay the proposed rent increase.

5.20 However, there may be cases where the proposed increase is considered by the tenant to be unreasonable. The emergency Act provides Scottish Ministers with the ability to temporarily modify how rent increases referred by a tenant are adjudicated. Any changes made to the adjudication process would be intended to smooth the transition out of the rent cap and protect tenants from steep rent increases which could be experienced if there is a sudden move to open market rent from rent levels that have been supressed.

5.21 From December 2023 to January 2024 the Scottish Government consulted with stakeholders on the proposed approach to temporarily modify the rent adjudication process, as part of the transition away from the temporary, emergency measures. The consultation set out that, under the emergency Act, Scottish Ministers may:

• make provision about the basis on which the rent is to be determined by a rent officer or the First-tier Tribunal, which may include (but is not limited to) matters to be taken into account in determining the rent, matters to be disregarded in determining the rent, and/or assumptions to be made in determining the rent by the Rent Officer or Tribunal.
• limit the rent that may be determined by a Rent Officer or the Tribunal to an amount that is no more than the rent specified by the landlord in the rent-increase notice.
• make provision about the procedure relating to referral to a Rent Officer or appeal to the First-tier Tribunal.

5.22 The current rent adjudication process (suspended whilst Part 1 of the Cost of Living (Tenant Protection) Act is in place) allows for a rent officer or the First-tier Tribunal, dependent on the tenancy type, to make a determination on whether a rent increase is reasonable. This determination is based on comparison with the rent for other properties in an area (open market rent).

5.23 It is proposed that, when the emergency rent cap is removed, the rent adjudication process would be amended to require a rent adjudication determination to be based on the lowest of three comparators:

1. open market rent;

2. the new rent proposed by the landlord; and

3. a maximum ‘reasonable’ increase for that tenancy, to be defined by reference to a new ‘taper’ that supports a transition away from the rent cap

5.24 Any proposed modification to the rent adjudication process would be subject to the approval of the Scottish Parliament.