Private Rented Sector Stakeholder Engagement Group minutes: August 2023

 

Attendees and apologies

• Anna Gardiner (SLE)
• Aoife Deery (CAS)
• Callum Chomczuk (CIH)
• Caroline Elgar (SAL)
• David Melhuish (SPF)
• Emma Saunders (Living Rent)
• Gordon Maloney (Living Rent)
• Rhiannon Sims (Crisis Scotland)
• Ronnell Reffell (UK Finance)
• Scottish Government officials

Items and actions

Welcome

The Chair welcomed attendees to the fourth meeting of the Stakeholder Engagement Group, and introduced the Scottish Government’s new Project Lead for Private Rented Sector Data Collection Strategy, who was attending the meeting.

Actions and minutes from previous meeting

Minutes from the previous meeting were issued prior to this meeting and were agreed.

Feedback from members on Emerging Proposals

The Chair noted written feedback received from CAS asking for more information on:

• Whether there will be a baseline data gathering exercise.

Work is ongoing to consider what data is available and what it does and doesn’t demonstrate, both in terms of potential rent control measures and also in terms of the work on the longer-term PRS Data Collection Strategy. The Scottish Government is actively considering how to engage further with stakeholders on this matter going forwards.

• Potential thinking on routes of redress in cases of noncompliance with rent control measures.

Potential routes of redress in cases of noncompliance are also very much under consideration.

Members were invited to rise any further feedback or queries on the emerging proposals for rent control which were set out at the meeting on 8 June 2023. The following matters were raised by members and discussed:

• Will there be consideration of tenancies where rent is below market value – will there be plans for re-setting those rents under future rent control proposals?

This is an issue which the Scottish Government is very aware of and considering.

• Will improvements between tenancies be taken into account?

The design of Rent Pressure Zones under the Private Housing (Tenancies) (Scotland) Act 2016 included measures to take account of improvements, and the Scottish Government would anticipate any future system having similar safeguards, recognising that it is important not to disincentivise improvements.

• Any model of rent control should penalise landlords who refuse to resolve disrepair.
• New regulations on Energy Performance Certificate ratings are due to come in soon – incoming regulations need to be considered as part of the design of rent controls.

The Scottish Government will be considering how proposed rent control measures fits with the wider structure of housing regulation; there are currently measures to tackle disrepair under the repairing standard.

• Open market rents are already increasingly unaffordable for tenants.

The Scottish Government is considering where restricting rent increases might be the right step to stabilise the upward trajectory of rents within the wider economic and supply context.

• It is important that any rent control system doesn’t deter landlords from agreeing to temporary reductions in rent to help tenants who are in financial difficulty.

The Scottish Government is aware of the importance of ensuring this is not disincentivised.

Update on wider stakeholder engagement

Officials gave an update on other recent engagement with stakeholders besides the work of the Stakeholder Group.

Officials have met with Scottish Property Federation and investors, and also with Living Rent, to further discuss views on the proposed future rent control. Officials also continue to meet with local authorities to seek their views. Emerging themes from these discussions included:

• stakeholders are keen to understand details of the rent control proposals
• questions around data collection
• a request for a clear strategy for the PRS and its role to provide housing in Scotland

Investment

David Melhuish updated the group on SPF and investors’ recent meeting with the Scottish Government:

• investors emphasised a need for investment in Build to Rent homes in Scotland, due to the need for more homes across all tenures
• investors have raised concerns that uncertainty about future rent control and the details of the proposals could discourage some investors from investing in Scotland.
• members’ attention was drawn to SPF’s recently published report on The Future of Scotland's Residential Rental Market

The following points were made by members during discussion of these issues:

• Build to Rent developments could potentially increase the imbalance between landlords and tenants, as the influence of a single landlord letting multiple similar properties in the same area could have an escalatory impact on local market rents
• concerns about investor discomfort should not be given undue influence
• Build to Rent investors are seeking to provide a different service, and that some already commit to capping rents
• some investors may continue to invest in Scotland once they know what the regulatory landscape will be, but it is likely that some others will choose not to do so
• social landlords have similar concerns about delivery of mid-market rent properties if rent control measures are brought in
• Build to Rent is a key tool to help solve the supply problem in Scotland, and so should be encouraged

Tenant concerns

Emma Saunders updated the group on Living Rent’s recent meeting with the Scottish Government:

• Living Rent are supportive of proposals for rent control to apply between tenancies
• they are conscious that care is needed around the interaction between rent controls and property quality, improvements and energy efficiency measures
• they also raised the issue of enforcement and how this is resourced to ensure compliance in the sector

Upcoming stakeholder engagement questionnaire

• the Scottish Government will shortly be producing a questionnaire seeking views on options for future reform in the PRS, including proposed rent control measures
• the intention is for this to stand alone, with enough information for respondents to answer questions, although there will also be an accompanying paper setting out more detail if needed
• the timescales for this are still to be confirmed, but officials anticipate that this is likely to be published within the next six weeks
• the Scottish Government would be grateful for Group Members’ assistance in disseminating this to their members so it can reach a wider audience

Future meetings/future of the group

• this meeting is the last of the meetings which were originally scheduled.
• there is still work to do in the space of PRS reform, and the Scottish Government considers that the Group is a useful forum and that it would be helpful for it to continue. Group members generally agreed this point
• officials will circulate a list of possible dates for future meetings, and will consider any adjustments which may be needed to the Terms of Reference for the Group

Any other business

Update on the Cost of Living (Tenant Protection) (Scotland) Act 2022

Officials provided an update on the Cost of Living (Tenant Protection) (Scotland) Act 2022:

• draft regulations were laid on 1 June 2023 with an accompanying Statement of Reasons, seeking a further, and final, extension of the emergency measures to 31 March 2024
• the Local Government, Housing and Planning Committee will be taking evidence from the Minister on this in September
• the statutory reporting duty remains in force, although some of the previously scheduled reports were superseded by previous Statements of Reasons, and the next report to Parliament is due by the end of 14 October 2023
• a formal Call for Evidence is not planned ahead of the next report, but the Scottish Government would welcome any feedback members wish to provide

Members were invited to share any further comments or questions on this.

• a concern was raised about the potential for steep rent increases once the emergency rent cap measures are expired, particularly as landlords are aware of the commitment to future rent controls
• the Scottish Government set out that there are provisions in the emergency legislation which allow for temporary changes to the rent adjudication system as part of the transition out of the emergency rent cap, and consideration is currently being given to how these could be used
• these measures are intended to be used to transition out of the emergency rent controls, subject to the agreement of the Scottish Parliament, and their use would need to be justified, proportionate, and regularly reviewed
• officials are happy to discuss this issue further with members and receive feedback on this

No further business was raised.

Actions

• officials to circulate a list of proposed dates for future meetings, and to consider any adjustments which may be needed to the Terms of Reference for the Group
• group members are encouraged to provide any further feedback on the measures in the Cost of Living (Tenant Protection) (Scotland) Act 2022 ahead of the next report, which is due by the end of 14 October 2023