A New Deal for Tenants - draft strategy: consultation

Chapter Six: Quality- Raising Standards

Introduction and vision

To ensure that everyone has access to a warm, comfortable home that meets their needs, homes in the rented sector must meet a consistent minimum standard for private and social rent and landlords must understand what is expected. Tenants must know what to expect from their landlord, look after their home, raise any issues early with their landlord and have access to redress and solutions when landlords do not meet the expectations set out.

Delivering quality homes and raising standards across the sector means both ensuring that the physical buildings are suitable to be people’s homes and that the services tenants receive are professional and supportive. This means active regulation and implementation of standards.

Through improving standards and regulation we aim to have tenure neutral outcomes for tenants with clear procedures, protections and rights that all tenants should benefit from and be able to rely on across both sectors. This is a key principle for a unified approach across the rented sector as a whole, whilst recognising that different methods may be needed to achieve these outcomes given the significant disparities in the scale and structure of the social and private sectors and the different legislative basis within which they operate.

Existing Housing Standards

For both the private and social rented sector there is a complex set of existing legislation that governs standards and services. These laws dictate both the minimum housing standards expected for homes in the social and private rented sectors and the standards expected from landlords. In addition to the physical standard of the property, the rent tenants pay also covers the service they receive. As a customer there is a minimum standard of service that they can expect.

For social housing Scottish Secure Tenancies are regulated by the Housing (Scotland) Act 2001. The Scottish Housing Quality Standard (SHQS) applies. Whilst not a statutory standard, it is included in the Scottish Housing Charter and the independent Scottish Housing Regulator has powers to intervene if landlords are failing to meet the standards and outcomes set out in the Charter.

In the private sector most, though not all, tenancies are Private Residential Tenancies regulated by the Private Housing (Tenancies) (Scotland) Act 2016. For most private tenancies, the Repairing Standard (RS) in section 13 of the Housing (Scotland) Act 2006 applies with a number of exceptions, including social housing.

Despite work already underway to harmonise many of the differences between the standards, for example through changes to the SHQS in 2021 and an amendment to the RS which comes into force in 2024, there remain key differences in provision between the social and private sectors with examples set out below.

Energy Efficiency

Private Sector

EPC C from 2025 at change of tenancy, and all tenancies by 2028, where technically feasible and cost effective.^[51] Not yet in place.

Social Sector

Homes must meet the Energy Efficiency Standard for Social Housing (EESSH). This is already in place.

Adaptations

Private Sector

Scheme of Assistance funding if adaptation is assessed as required. At landlord’s discretion but there must be a reason for withholding consent.

Social Sector

Landlord will assess and provide adaptations.

Compensation for improvements

Private Sector

At landlord’s discretion.

Social Sector

Compensation for qualifying work carried out with the landlord’s consent, at end of tenancy and subject to depreciation^[52].

Timescale for repairs

Private Sector

Within a reasonable time of being notified^[53].

Agreed in consultation with tenants and set out in the landlords repairs policy. Some specified small repairs within a fixed number of working days,^[54] otherwise within a reasonable time of being notified^[55]. Where certain repairs are not completed by target date tenant has a right to arrange them themselves and receive compensation from the landlord.

Choice about when work is done

Private Sector

At landlord’s discretion, though landlord must give reasonable notice.

Social Sector

Tenants must be given reasonable choices about when work is done^[56] Many landlords offer an appointment system.

Damage caused during repair work

Private Sector

No statutory duty but possibly common law liability^[57].

Social Sector

Right to reinstatement or compensation for damage to house or property in connection with inspections, repairs or improvements or entry^[58].

Right of appeal

Private Sector

Right to apply to the Tribunal for determination whether the landlord has complied with the RS ^[59] (and local authority has discretionary power to make third party applications on behalf of tenants)^[60].

Social Sector

Right of complaint to landlord and escalation to Scottish Public Services Ombudsman,^[61] in cases of significant performance failure can report to the Scottish Housing Regulator^[62].

Enforcement

Private Sector

Right to apply to the Tribunal (Housing and Property Chamber) for a Repairing Standard Enforcement Order,^[63] Rent Relief Order^[64]. The matter may be referred to the local authority to carry out work^[65]. A failure to comply with a repairing standard enforcement order is a statutory offence ^[66].

Social Sector

There are no formal enforcement powers for complaints or the Ombudsman, but the tenant has the right to carry out repairs if the landlord fails to do them,^[67] and the Regulator has regulatory intervention powers in cases of serious performance failure^[68].

These are important differences and we know from our work with stakeholders that one area of concern for private sector tenants in particular can be where landlords do not make important repairs in a timely manner, for example repairs to heating systems or roof maintenance, that can cause hardship.

In the social sector the early national response to the COVID-19 pandemic had an immediate impact on social landlords’ ability to undertake both responsive repairs and planned maintenance to tenants’ homes. As a direct consequence of the pandemic, landlords undertook around 20% fewer repairs during 2020/21. Tenant satisfaction with repairs and maintenance reduced slightly during 2020/21 to 90% and performance on repairs completed right first time remained at 92%^[69]. However, in some individual cases tenants feel there is room for improvement.

Consultation Question: What is the best way to ensure that landlords undertake essential repairs in a timely fashion?

Other tenancies

There are a number of situations where tenancies or occupancy agreements fall out with the main private and social rented sectors and can be complex. For example, there are different standards and rights associated with agricultural tenancies and pitch agreements for residential mobile homes or Gypsy/Traveller sites which are not tenancies as such, but agreements under the Residential Mobile Homes Act 1983. Separate standards also apply, for example model standards to mobile home sites and minimum standards to Gypsy/Traveller sites. Residential mobile homes may also be rented as a main home.

The number of people living in this type of accommodation is relatively small but they may also be more vulnerable, for example due to age, income or lack of choice in the local market. As non-housing accommodation is out with the mainstream mechanisms for improvement across the rented sector, there is potential for standards to fall behind, resulting in inequalities and undermining the idea that outcomes should be the same irrespective of tenure. Our commitment to a single housing standard will bring all accommodation types into line, making it easier to ensure that standards keep pace across all types of housing and accommodation.

Registration Systems in the Private Rented Sector

The existing statutory housing registration systems were brought in to improve levels of service and professionalism in the private rented sector and to provide additional protection for tenants through strengthening the regulation of the industry.

There are currently three statutory housing registration systems that support the private rented sector specifically. These systems place requirements on any individual or business carrying out specific activities related to the private rental of residential property. The systems cover the registration of:

• Private landlords, as required under the Antisocial Behaviour etc. (Scotland) Act 2004
• Houses in Multiple Occupation (HMO’s), as required under Part 5 of the Housing (Scotland) Act 2006
• Letting Agents, as required under Part 4 of the Housing (Scotland) Act 2014

The registration systems focus on ensuring that any individual or business that is registered has been assessed as being fit and proper and meets the specific requirements that have been laid out.

Under both the landlord and letting agent registration systems, anyone who considers that their landlord or letting agent has not met the requirements can apply, free of charge, directly to the Tribunal to have their case considered. The Tribunal can issue Enforcement Orders that give a direction in terms of the actions the landlord or letting agent must take to remedy the situation.

Since introduction, these systems have been subject to incremental changes that have expanded the range of considerations and requirements that form part of the assessment. In particular, landlord registration has been strengthened, through the introduction of additional requirements as part of the fit and proper person test and an increased penalty for operating as an unregistered landlord. The powers available to local authorities have also been strengthened, for example introducing powers to obtain information, including criminal record certificates, in specified circumstances.

The options available to support compliance vary across the regimes. Landlord registration is delivered by local authorities and they have powers to refuse landlords entry to, or remove landlords from, the register, as well as a range of discretionary powers that they can use to encourage compliance and target breaches, such as issuing rent penalty notices. However, it remains a self-declaration process so there is scope for dishonesty and where a landlord may confirm they meet all responsibilities when in fact they do not.

HMO licensing is also delivered by local authorities that are able to place conditions on the licence to ensure that required standards are met and the property is suitable for use. These sit alongside wider powers local authorities have, for example in relation to environmental health, addressing antisocial behaviour and noise.

The letting agent register is delivered by Scottish Ministers who have powers to refuse applications if the agent is not considered to be a fit and proper person. Operating as an unregistered letting agent is a criminal offence that can be reported to Police Scotland although stakeholders (both landlords and tenants) have concerns that few, if any, prosecutions happen in practice.

Action: We will undertake a review of the existing registration regimes to identify lessons and opportunities for strengthening them.

As part of work to address standards in the private rented sector, including establishing a new regulator and improving quality and levels of professional service, it is important that we understand and evaluate the strengths and weaknesses of the current systems. Therefore, we intend to undertake a review of those regimes to identify where they could be strengthened.

We will work with local authority partners and the rented sector more widely to understand how the existing requirements are operating and how well the existing mechanisms and penalties are working. This work will also aim to identify opportunities to make these existing requirements more effective and encourage compliance with those requirements.

This scope will include looking at where additional requirements may be appropriate to improve understanding of these regulatory regimes and help drive up the standards of service to tenants such as through qualifications and training or whether it would be beneficial to incorporate some requirements that are currently included within Codes of Practice, for instance, into primary legislation.

We will consider whether additional sanctions for non-compliance with requirements, such as financial penalties, could make a contribution to driving up standards. This would be in addition to the current criminal offences, where there are concerns that few prosecutions happen in practice. This could, for example, include the introduction of new fines for landlords and letting agents who fail to comply with requirements in relation to the information that should be included in adverts for rental properties. We will also look at the potential benefit of expanding the scope for use of existing penalties, such as Rental Penalty Notices which local authorities can issue to landlords who fail to meet requirements.

Consultation Question: What do you think are the strengths and weaknesses of the current registration systems and what could be improved to help drive up standards of management?

Tackling low quality rented homes

A new housing standard for Scotland

The Scottish Government manifesto commits to the introduction of a new Housing Standard, to be set in law by 2025. This will cover all homes, rented and owner occupied, new and existing, including agricultural properties, mobile homes and tied accommodation and will go beyond a minimum standard to include aspects such as repairing and safety standards, minimum space standards, digital connectivity, future proofing of homes and the energy efficiency and heating standards committed to within the Heat in Buildings Strategy^[70].

The vision articulated in Housing to 2040 is a shift away from the existing Tolerable Standard towards the underlying principle that good quality housing is a human right, that all tenures across new and existing homes of all types will be subject to the same common high standards with appropriate ways of enforcement, compliance and redress and affordability is balanced with quality improvement.

We aim to ensure that there will be no margins of tolerance, no exemptions and no “acceptable levels” of sub-standard homes in urban, rural or island communities, deprived communities or in tenements. This will mean our existing homes will keep pace with new homes with no one left behind.

Action: The Scottish Government will publish a consultation on the principles underlying a new housing standard. Following the analysis and review of the responses to the consultation, we propose to publish a draft standard in 2023 and introduce legislation in 2024/25, for a phased implementation of the new housing standard from 2025 to 2030. This will incorporate energy efficiency standards set out in the Heat in Buildings Strategy.

It is essential that property owners accept responsibility for their share of the cost of work needed to look after their property and to preserve it as a sustainable asset for the future. This is especially true for landlords who are charging tenants money for a property. As with other regulated businesses, minimum standards are necessary to ensure people can always enjoy a safe, warm and secure home.

However, we also recognise that for some communities and types of property and tenancy there may be significant challenges both with the costs and accessibility. For example, we recognise that complex situations and interdependencies exist with some rural or tied tenancies and this may mean it takes longer to achieve a higher standard but we also know that these are some of the homes most in need of improved standards.

Therefore, we will also develop a new help-to-improve policy approach, working with stakeholders to design new support for repairs and improvement which work alongside support for energy efficiency and zero emissions heating systems delivered under the Heat in Buildings Strategy, allowing us to take a whole-house approach where possible.

Energy Efficiency and Zero Emissions heating in the Rented Sector

The Scottish Government’s Heat in Buildings Strategy^[71], published in October 2021, builds on the policies and actions set out in the Climate Change Plan Update and sets out a pathway to zero emissions buildings by 2045. It outlines the steps we will take to reduce greenhouse gas emissions from Scotland’s homes, workplaces and community buildings and to ensure that we remove poor energy performance as a driver of fuel poverty.

As many tenants across the rented sector are already on low incomes the positive impact of improvements to the warmth of their homes is likely to have wider benefits to those families, including reducing fuel bills and improving health outcomes, in addition to the environmental benefits.

Social sector

The Energy Efficiency Standard for Social Housing (EESSH) has helped to improve the energy efficiency of the social housing stock in Scotland. Energy efficiency measures installed in all types of housing, continue to help reduce energy consumption and remove energy efficiency as a driver for fuel poverty. EESSH will reduce GHG emissions and contribute towards the Scottish Government’s ambitious climate change emissions reductions targets. This supports the Housing to 2040 ambition for everyone to have a safe, good quality and affordable home.

The first EESSH milestone is based on minimum Energy Performance Certificate (EPC) Energy Efficiency (EE) ratings which vary depending on the type of property and the fuel used to heat it (broadly EPC Band C or D). The Scottish Housing Regulator (SHR), who has responsibility for monitoring social landlord’s performance with EESSH, reports that 89% of social rented homes met the 2020 milestone. We suspect that Covid-19 affected some further projects that landlords planned to carry out to meet the first milestone during 2020.

In June 2019, Ministers agreed the new EESSH2 milestone for all social housing to meet, or be treated as meeting, EPC Band B (Energy Efficiency rating), or be as energy efficient as practically possible, by the end of December 2032 and within the limits of cost, technology and necessary consent.

In Housing to 2040, Ministers committed to bring forward the review of EESSH2 from 2025 to 2023. The Zero Emissions Social Housing Task Force (ZEST), an independent stakeholder group set up to consider and provide practical recommendations to Ministers on what is required to achieve a just transition towards the Scottish Government’s ambitious net zero heating targets, published its report in August 2021.

The ZEST Report recommends that in order to help the Scottish Government and landlords work together to plan ahead with certainty, and to ensure there is a just transition, we should bring forward our review of EESSH2, currently planned for 2023, and issue interim guidance for landlords. In addition it recommends that there should be a “Fabric First” approach, as an essential first step on the road to net zero. We recognise the value of this to support the effective use of innovative technology and renewable energy sources, and also to make potentially more expensive fuel sources more affordable. Along with the other recommendations in the report, we are considering these proposals carefully and issue a response in due course.

Private sector

The Heat in Buildings (HiB) Strategy reiterated the role that the private rented sector has to play and the ways in which our commitments, as set out in the HiB Strategy, can help make the heating costs for those living in such homes more affordable while improving the energy performance of the buildings in question.

We have proposed to underpin this by introducing new mandatory standards for energy efficiency and zero emissions heating for all homes during this term of Parliament, including the private rented sector. These standards will help provide certainty, build confidence in the supply chain and reduce the costs of the transition.

We confirmed in our HiB Strategy that we are no longer intending to introduce a minimum energy efficiency standard for the private rented sector to be achieved by 2025; this recognised and responded to the pressures facing the sector as a result of the pandemic. Instead, we will introduce regulations in 2025 which require all private rented properties to reach a minimum standard equivalent to EPC C, where technically feasible and cost-effective. This is in line with the direction provided by the Climate Change Committee. We have said that it will apply at change of tenancy from 2025, with a backstop date of 2028 for all remaining existing private rented sector properties.

These new standards will be introduced fairly and in a way that considers the health and wellbeing of Scotland’s people, recognising the role of improved energy efficiency as a means of reducing fuel poverty. We also recognise that building owners will want certainty and sufficient notice concerning the way in which these standards will be framed and applied. That’s why we have made clear our intention to design the standards in a way that recognises the challenges and costs involved, and only requires changes that are technically feasible and cost effective. We will be providing more information on these aspects and what they mean as part of a detailed consultation during 2022.

At the same time we will bring forward legislation which will require the installation of zero or very near zero emissions heating in existing buildings. This legislation will support our commitment to phasing out the need to install new or replacement fossil fuel boilers in off-gas properties from 2025, and in on-gas areas from 2030, with all buildings needing to meet this standard no later than 2045. In creating this legislation we will bear in mind the need to balance the rights of landlords and tenants and the limits of the devolution settlement.

We will support people to switch to low-carbon heating, so we can all play a part in tackling the climate emergency. Our support will help people to convert their heating systems to zero emissions ones, targeting that help at those least able to pay. This includes stepping up our investment to accelerate deployment of heat and energy efficiency measures and to support those least able to pay, allocating at least £1.8bn over the next 5 years.

Consultation Question: What are the key challenges for landlords in meeting all the housing standard requirements and timescales and what support could be put in place to help landlords overcome barriers?

Disability and the Rented Sector

Housing to 2040 sets out action we will take so that our homes support those with long-term conditions and disabilities and everyone, who can and wants to, is enabled to live independently in a home of their own. This means homes in the rented sector need to become increasingly accessible for people with disabilities. We recognise that accessing appropriate, warm homes for people with accessibility requirements and complex health needs can be challenging and ensuring people in the rented sector can source a suitably accessible home or adapt their current home, as their needs change, is vital.

Since the integration of health and social care, Integration Joint Boards (IJBs) have been responsible for the planning and commissioning of adaptations services for people who require such support. In practice, local authorities continue to deliver adaptations, through the Scheme of Assistance for home owners and private tenants, as well as directly to local authority owned properties. Registered Social Landlords largely operate out with these arrangements, providing adaptations for their own tenants.

The existing funding arrangements for adaptations are complex, tied to housing tenure and do not support ease or equality of access for everyone who needs an adaptation. We have already committed to undertaking a fundamental review of the adaptations system, seeking to streamline and accelerate the adaptations system, whilst also taking into account the needs of ethnic minority communities and other groups with protected characteristics. The review will develop recommendations on how best to improve the system so that it will be fit and capable of dealing with the increased demand that an ageing population will drive.

The Scottish Government is also undertaking a review of aids and equipment guidance and this will contribute to the adaptations review. In addition, we are considering the potential implications for the delivery of adaptations and other delegated housing services arising from the establishment of a new National Care Service and the replacement of IJBs by Community Health & Social Care Boards.

Consultation Question: What is your personal experience in securing necessary adaptations - either for yourself, or for your tenants - in rented accommodation?

A. What barriers did you face, if any?

B. Did this occur in the private or social rented sector?

Housing for Varying Needs offers guidance on good practice in the design of all homes in order to help them achieve a degree of flexibility, suit people of different abilities, be convenient to use and be fit for purpose. Specifically, new build homes which are delivered directly by Registered Social Landlords and local authorities with the aid of grant funding through the Affordable Housing Supply Programme, should meet, as a minimum, the “basic” design criteria outlined within Housing for Varying Needs. The design criteria indicated as “desirable” should also be included where possible. “Off the shelf” purchases of new build stock from developers should also aim to incorporate these standards.

The commitment to review the Housing for Varying Needs Design Guide, which is over 20 years old but still recognised as a good standard, began in April 2021 and is expected to take up to two years to complete. As well as influencing the design of homes delivered through the Affordable Housing Supply Programme, the review will also feed into the review of Building Standards (from 2025-26) to underpin a Scottish Accessible Homes Standard which all new homes must achieve.

We will increase the supply of accessible and adapted homes providing greater choice to tenants as well as homeowners. This will include establishing an inclusive programme of retrofitting social homes and the introduction of new building standards to underpin a Scottish Accessible Homes standard, which all new homes including those built by private builders must achieve. In the longer term these measures will also raise accessibility within private rented stock.

Wherever possible all new affordable homes are designed to be flexible to meet people’s needs as they change over time, including people with disabilities. We have issued guidance for local authorities to support the delivery of more wheelchair-accessible housing, and councils are required to report annually on targets for how many accessible homes delivered across all tenures.

Driving up Standards of Management

Enhancing the role of the Scottish Housing Regulator

The social sector is regulated by the Scottish Housing Regulator (SHR), a Non-Ministerial Department, established under the Housing (Scotland) Act 2010 to operate independently of Scottish Ministers and be accountable to Parliament. It has a single statutory objective: to safeguard and promote the interests of current and future tenants of social landlords, other users of social landlords’ services and those who may become homeless. Its main duties are to regulate the performance of the housing services of all social landlords, particularly monitoring and reporting on landlords’ performance against the standards and outcomes in the Scottish Social Housing Charter, and to regulate the financial health and governance of RSLs. The SHR has an annual budget of £5.1 million, it covers around 600,000 tenants who live in homes provided by social landlords.

Action: We will develop a greater improvement role for the Scottish Housing Regulator similar to that of Healthcare Improvement Scotland^[72]

Housing to 2040 sets out the importance of the Scottish Housing Regulator and commitment to continuous improvement across the social housing sector, including more consideration of how learning in the social sector can be applied across other tenures.

With that in mind, we intend to expand the regulator’s role to build on their current thematic studies improvement work and lessons learned from statutory interventions to further improve standards across the social housing sector. We would expect this work to lead to the production of recommended practice guidance for social landlords to improve practice and service standards.

A vision for cross-rented sector regulation – what we want to achieve

The Scottish Government and Scottish Green Party’s Shared Policy Programme sets out a commitment to “create a new housing regulator for the private rented sector to improve standards and enforce tenants’ rights.”

Existing approaches to regulation in the Private Rented Sector have relied on the Tribunal and enforcement of illegal activities by the police (for example failure of a landlord to register). In addition to acting as the legal decision maker, for example in cases where a landlord is seeking repossession of a property, the Tribunal also provides a route of redress where it is considered that requirements have not been met, with affected individuals able to apply directly to the Tribunal to have their case considered.

There is much to learn from the existing social housing regulator but we recognise that it would be extremely challenging and probably undesirable to simply apply the type of regulation undertaken by the Scottish Housing Regulator to the private rented sector given the high number of diverse landlords in the sector where communication and regulatory approaches will need to be very different.

Our vision for regulation is that defined outcomes and standards will apply across the rented sector as a whole, whilst recognising that different approaches may be needed to achieve these outcomes given the significant differences in scale, structure and the legislative basis within which the sectors operate. This is consistent with the overall values and aims of Housing to 2040.

This means setting out clear outcomes and standards that landlords in both the private and social rented sector would be assessed against, for example implementing in the private rented sector something similar to the Scottish Social Housing Charter, helping to better empower all tenants who will also need to understand those standards.

Vision for Regulation: Regulation should seek tenure neutral outcomes for tenants in both sectors, empowering tenants through routes to redress failures and supporting good standards across the rented sector.

Underlying principles:

• Development of a private rented sector regulator will build on the strengths, experience and learning from the Scottish Housing Regulator (SHR) and existing approaches.
• Private rented sector regulation will be based on clearly defined standards of quality, affordability and fairness that reflect the aim of tenure neutral outcomes.
• The approach to regulation will be developed taking account of evidence, views of stakeholders and value for money.
• The approach to regulation will reflect the overall ambitions of the Rented Sector Strategy as a whole.

Consultation Question: Do you consider the vision and principles for the private rented sector Regulator to be the right ones? Are there any additional principles that you think are important? Please explain your answer.

Timeline towards establishment of a regulator for the private rented sector

At this stage we are consulting only on the vision and principles to underpin regulation but a full and detailed consultation on specific proposals for a private rented sector regulator will be undertaken later in the parliament. This is because we are considering all options and there are a number of operational models that could be adopted. These options also need to consider the overall structure of regulation in the rented sector, including the existing Scottish Housing Regulator. All options will be examined in terms of technical feasibility, efficiency and value for money.

There are also a wide range of issues that will require detailed consideration, for example: what are the priorities for tenants? What can be learnt from the existing Scottish Housing Regulator and where might it fit into a broader rented sector regulatory approach? How should the existing regulatory systems be incorporated? Primary legislation will also be required to establish a new regulator so a further consultation will examine these details.

Action: Given the range and complexity of the issues to be considered as part of establishing a Regulator, we propose bringing together a range of stakeholders and experts to inform development of the options.

Throughout the policy development work we want tenant participation to be at the heart of the decision making process. The expert group will be established in early 2022 and its recommendations, along with wider feasibility, cost and delivery studies and a further consultation on detailed proposals, will inform the legislation needed. We expect to introduce such legislation later in this Parliament.

Conclusion

Establishing and maintaining good standards of homes and services now will safeguard our properties for future generations and it is right that property owners maintain these assets for the years to come.

Through their rents, tenants pay for and deserve a professional service and minimum standard for their homes that supports positive health and life outcomes, without being pushed into fuel poverty because heating bills are much higher than they need to be.

We must be able to ensure that people’s rights are not just available in law but also in practice with easy routes to redress and dispute resolution and a new regulator will support that aim.