Mobile homes: business and regulatory impact assessment

Costs

At the time of the consultation, inflation rates were significantly higher than they have been over the longer term and the gap between RPI and CPI was notable, giving rise to significant increases in pitch fees. RPI to November 2022 was 14% while CPI was 10.2%, leaving a difference of 3.8% points. In the longer term, between 2015 and 2021 the difference between RPI and CPI fluctuated around 1% point. There is limited information on pitch fees (which vary widely) and the number of pitches in Scotland. However, illustrative figures can be calculated using an indicative pitch fee of £172 per month^[13] and an assumption of 4,288 pitches in Scotland.^[14] It is further assumed that CPI grows at 2% per annum in line with the Bank of England inflation target, and that RPI grows at 3% per annum, one percentage point above this. Based on these assumptions, the average foregone pitch fee income will be around £21 (or £88,504 across all pitches in Scotland) in the first year of the change, rising to £65 (or £278,957 in total) by the third year due to compounding.

These estimates are subject to significant uncertainty, due to the limited information on the number of pitches and average fees, and also from future trends in inflation – there can be periods where the RPI falls below the CPI. Furthermore, from 2030, when the ONS brings the CPIH methodology and data into the RPI, there will be limited impacts from the proposed change.^[15] Foregone rental income for site owners is also equivalent to the benefit to site residents, i.e. in economic terms, the main impact of changing the index is a transfer between owners and residents rather than a net cost to society as a whole.

In addition to the reduction in income, which is the most significant impact for site owners, there may be a minimal one-off cost from implementing the change, for example, where documents, web pages or other systems need to be updated.

Table 2 sets out the estimated foregone income apportioned by financial year as an indication of the likely distribution. This is not an implementation timeline, which will depend on a range of factors including timescales for passage of the Bill, Ministerial priorities and resources.

Gypsy/Traveller pitches on publicly provided sites

There are less than 400 public sector Gypsy/Traveller pitches currently operating in Scotland so any impact on Local Authorities will be small. The facilities that are provided are different to private sites. Provision varies but tends to include a pitch and amenity block with kitchen and bathroom. Local authorities may align pitch fee setting with their rent setting processes and take a number of issues into consideration. Alignment with management of housing has become more common as some local authorities have moved management of their sites to Housing Revenue Accounts. While the 2022 Act was in force, the Association of Local Authority Chief Housing Officers (“ALACHO”) and the Convention of Scottish Local Authorities had a statement of intent in place that social rents would not rise above £5 per week. Most local authorities with pitches extended this agreement to pitch fee increases. ALACHO published a survey of Council rent and rent rises for Gypsy/Traveller pitches^[16] for 2021-22 and 2022-23. In 2021-22, the average pitch fee was £77.90 per week with the lowest being £53 per week and the highest £98 a week. The average for 2022-23 was £78.91 which equates to a 1.33% rise, well below both RPI and CPI. ALACHO supported the consultation proposal to change the basis of uprating from RPI to CPI and highlighted that rents are set by local authorities based on the need to balance income with expenditure in a reasonable way. It stated that CPI is already used by local authorities, therefore a legislative change from RPI to CPI would not pose a risk to local authorities.