Mobile homes: business and regulatory impact assessment

Summary and Recommendation

In order to ensure that the protections relating to pitch fee uprating for residents of residential mobile homes on permanent licenced sites remain fair, appropriate and in line with development of statistical measures of inflation, the Bill proposes to amend the basis of pitch fee uprating under the 1983 Act from the RPI to the CPI for current and existing contracts. Although there is an impact on site owners who are likely to see a slower increase in pitch fees because the CPI has historically been lower than the RPI, this has a corresponding benefit for residents. The CPI is considered a more accurate measure of inflation than RPI, which is no longer classified as a national statistic. It has the advantages for businesses that it is used in other parts of the UK and that forecasts are available.

Summary costs and benefits table

Option 1 – no change – pitch fee uprating by RPI

Total benefit per annum:

• - economic, environmental, social

No legislative change required

Total cost per annum:

• economic, environmental, social
• policy and administrative

Outdated measure of inflation may overstate price increases, causing pitch fees to rise more quickly than under other options, impacting on residents, some of whom share protected characteristics (older people, people with a disability, Gypsy/Travellers).

No impact on income for site operators.

Option 2 - move from RPI to CPI

Total benefit per annum:

• - economic, environmental, social

CPI is considered a more accurate measure of inflation than RPI.

CPI is typically lower than RPI so residents will benefit from lower fees than under option 1.

CPI is used in uprating of state pension and other benefits so is more likely to align with increases in income for residents, impacting on affordability.

CPI is used as the basis for uprating pitch fees in England and in Wales, giving consistency for businesses that operate in more than one part of the UK by aligning the basis for uprating.

CPI forecasts are available to allow for planning ahead.

Total cost per annum:

• economic, environmental, social
• policy and administrative

Site operators will see a slowing of pitch fee increases because CPI is typically lower than RPI.

The change in income across sites in Scotland as a result of the amendments to the 1983 Act will depend on the difference between inflation rates. Based on the assumptions in the Costs section above, with a 1% gap, between RPI and CPI 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.

Option 3 – move from RPI to CPIH

Total benefit per annum:

• - economic, environmental, social

CPIH is considered a more accurate measure of inflation than RPI.

CPIH is typically lower than RPI and CPI so residents would benefit from lower fees than under option 1.

Total cost per annum:

• economic, environmental, social
• policy and administrative

Site operators would not benefit from alignment with the index in other parts of the UK.

Currently, CPIH has a lower public profile than the CPI, and forecasts are less readily available.