Housing (Scotland) Bill: response letter

To: Professor Russel Griggs OBE

From: Paul McLennan, Minister for Housing

Thank you for your letter of 15 November 2024 on behalf of the Regulatory Review Group (RRG) providing independent advice on the Housing (Scotland) Bill which aims to prevent homelessness and improve the housing outcomes for people who live in rented accommodation. The Bill has now passed Stage 1 of the Parliamentary process.

We value the RRG’s independent advice and recognise the RRG as a key partner in supporting effective implementation of policy. We are aware of the importance of the New Deal for Business in cultivating a high-functioning relationship between business and government.

We are grateful for your consideration of the Housing (Scotland) Bill and note the recommendations made by the RRG. These are being considered as part of the policy development and legislative process as we move towards stage 2 of the Bill.

As you are aware, since you met with my officials on 26 September, I have confirmed that we will set out the formula for the rent cap in the Bill via a Government-led Stage 2 amendment. This responds to calls from stakeholders to provide clarity on the effect on rent increases where rent control is applied. My statement to the Scottish Parliament is available online.

I also outlined in my statement that the Scottish Government will consult in spring 2025 to support consideration of exemptions from or flexibility in rent control in certain circumstances – for example for newly built or developed private rented housing, or where there has been significant investment by landlords in the quality of a rented property. This will include consideration of how new housing built specifically for private rent, including Mid-Market Rent, should be treated.

Our consultation will also consider how the powers in the Bill that allow for rents to be increased above the level of the rent cap in some circumstances could be used. For example, where there has been significant investment by landlords in the quality of a rented property. We are seeking views on how best to ensure that these powers can be used in a way that stabilises rents for tenants in rent control areas, whilst continuing to deliver new and improved rented housing.

We note the importance of balancing the Bill with other policy priorities due to the already declared national housing emergency and your concerns that rent controls in particular have generated uncertainty which is deemed to be impacting on investment in private rented housing in Scotland. Our approach strikes a balance between increasing protections for tenants with appropriate safeguards for landlords in a way that supports continued investment in rented housing in Scotland. Stakeholders have welcomed the clarity provided by the recent statement and the Scottish Government will continue to work constructively with stakeholders to deliver the clarity that will support continued investment to maintain quality and the vital supply of new homes for rent that our communities need.

We are aware that some local authorities are concerned about resourcing their role in carrying out rent control assessments. We acknowledge that the collection of robust data is a complex task. We will liaise closely with Local Authorities on their experiences of collecting data from landlords for rent control assessment purposes. This engagement with Local Authorities will inform any necessary longer term data development work by the Scottish Government to ensure we are collecting the right data in a practical and cost effective way to support our long term aspirations.

We note the RRG recommendation to engage with the Heat in Buildings policy team to balance priorities to try to lessen the potential negative cumulative impacts of legislation around housing generally but specifically for those in the rented sector. I can reassure the RRG that this engagement is taking place.

We thank you once again for your continued interest in this work. Officials would be delighted to return post consultation analysis to further explore implementation challenges and to constructively engage on mitigations.

Yours sincerely

Paul McLennan