Private Rented Sector Stakeholder Engagement Group minutes: September 2024

Attendees and apologies

Attendees

• Anna Gardiner (SLE)
• Aoife Deery (CAS)
• Ashley Campbell (CIH)
• Caroline Elgar (SAL)
• David Melhuish (SPF)
• Emma Saunders (Living Rent)
• Gordon Maloney (Living Rent)
• Rhuaraidh Fleming (Crisis Scotland)
• Ronnell Reffell (UK Finance)
• Timothy Douglas (Propertymark)
• Scottish Government officials

Apologies

• Callum Chomczuk (CIH)

Items and actions

Welcome

The Chair welcomed attendees to the eleventh meeting of the PRS Stakeholder Engagement Group.

Actions and minutes from previous meeting

The minute from the previous meeting was issued prior to this meeting, and members were invited to contact officials with any amendments.

Officials confirmed that the Business and Regulatory Impact Assessment (‘BRIA’) for the Housing (Scotland) Bill (‘the Bill’) is being prepared for publication, and it is anticipated that this will be published shortly. Officials will circulate the link to members when the BRIA is published.

Discussion on the commitment in Programme for Government to set out the form of the rent cap

In the recent Programme for Government, the First Minister committed to bring forward amendments to the Bill that will clearly set out how rent increases will be capped in areas where rent controls apply, in a way that provides certainty for tenants while also encouraging investment.

Whilst the timing of the Bill is a matter for the Scottish Parliament, the Scottish Government is anticipating that stage two of the Bill will likely take place early in 2025, assuming stage one is completed by the end of 2024.

The details of the proposed amendment have not yet been decided. Consideration is being given to setting out a formula for the rent cap in the Bill, and the Scottish Government is considering existing metrics which already exist as indicators of cost increases, including the Consumer Prices Index (‘CPI’).

Questions were invited from members:

• Will the Scottish Government bring forward amendments at stage 2 of the Housing (Scotland) Bill to exempt categories of property from rent control?

The commitment in the Programme for Government is to bring forward an amendment that will clearly set out on the face of the Bill how rent increases will be capped in areas where rent controls apply.

• When will more detail on the proposals be available?

We understand that the Local Government, Housing and Planning Committee is also keen to understand details of the proposals ahead of their report. Exact timing will depend on when the work to develop detailed proposals is complete. 

• Will any proposed amendments be published ahead of stage 2 of the Bill, to help the sector to understand what is proposed ahead of time?

Officials will look into whether this can be done.

• What stage is the work on data collection at, and will the Landlord Register be used for this?

The data collection project is progressing, and a number of options are under consideration. The final approach will be for Ministers to decide once the work is complete.

It is important to develop a cost-effective way to collect data which is deliverable for all partners, and it will take time to get this right.

Local authority assessments will be critical, and the Scottish Government acknowledges the importance of data collection.

Officials are also in discussion with local authorities regarding how the assessment process will be carried out, and how they will use the powers they have in the Bill.

• Will work on data collection inform amendments to the Bill, or further regulations?

The Scottish Government is giving consideration as to whether there may be a need for minor amendments around data collection, but are not anticipating changes to the Landlord Registration system at this time.

Various options for data collection are under consideration. Some would not need legislative changes, others might need primary legislation or amendments.

Whilst some options could use the Landlord Registration system in future, this would need legislative changes, which would not take place in the current Bill.

• Have local authorities expressed any concerns about their resourcing capabilities?

Local authorities are concerned about their resources, as they would be with any new legislative duty coming in (and noting that the duties in relation to rent control are not the only new duties on local authorities in the Bill). The Scottish Government would always seek discussions with local authorities about resourcing for any new duty.

• Has there been any feedback from local authorities about the potential broadness of application of rent control areas, which could be a small area, or a street, or a whole local authority area?

Local authorities are keen to understand how to discharge the new obligations in the Bill, and it is important to ensure that the assessment process will be clear and understood (through supporting guidance, for example). Local authorities are keen to see an assessment process which they can deliver.

• Will the Scottish Government address the issue of agricultural holdings where the landlord may not be the owner of the property with respect to the duties on landlords to provide information requested by local authorities?

The Scottish Government is considering how best to resolve this – possibly by developing an amendment to the Bill.

• Noting the Programme for Government commitment to set out more detail of the rent cap on the face of the Bill, will the Scottish Government bring other amendments to include more detail on the face of the Bill?

The Commitment in the Programme for Government is to include details of the rent cap on the face of the Bill, and this is the main substantial amendment planned for Part 1 of the Bill.

The Scottish Government has continued to discuss the Bill with the sector since it was introduced, and there are a few other minor amendments are being considered stemming from these discussions, but these would only be to add clarity and transparency to measures already in the Bill.

There are also a number of spaces in Part 1 of the Bill where delegated powers allow Scottish Ministers to bring forward regulations at a later time.

The Scottish Government does not plan to bring forward amendments to include more detail in these areas at this point, but will continue to discuss the Bill with stakeholders.

• Is there any flexibility in the rent cap for local authorities to take account of quality and energy efficiency of properties?

The decision-maker for rent control as proposed in the Bill will be Scottish Ministers, rather than local authorities.

The details of the amendment to set out the rent cap on the face of the legislation is still to be decided, but it is anticipated that this will likely set out the form that the rent cap could take, rather than a list of variables.

• Would there be one rent cap covering wherever rent controls were designated?

The rent cap would be designated on the basis of the detail which will be on the face of the Bill; this will give more certainty about the impact in terms of rent increases in an area where rent control is applied.

• Is there any indication as to when stage 3 of the Parliamentary process will take place, or when the legislation might have Royal Assent?

Officials are anticipating that the Bill process could be complete before the end of the Parliamentary year, but the timing of the Bill process is a decision for the Scottish Parliament, and there is the potential for timescales to be longer.

• Is the Scottish Government able to give any timescales for implementation of the Bill, or any associated secondary legislation?

Most secondary legislation will be subject to consultation requirements, and this will likely have an impact on timescales.

• If the rent cap is included on the face of the Bill, would this be fixed and unchanging across the years? If the cap is linked to inflation, would it track CPI, for example?

If the rent cap was linked to CPI, it would likely track CPI.

There would likely also be a future-proofing power for Scottish Ministers to amend the cap in future, in order to align with wider economic circumstances if necessary, but this would likely be subject to consultation and require secondary legislation.

• It is vital to have clarity around how data is to be collected and whether tenants would have access to this. Will tenants be able to see data on previous rents, and will there be a database for this?

There will be an obligation on landlords to provide some information in advertisements and to tenants at the start of a tenancy.

The data which local authorities will used for their assessments will be looking at conditions with respect to rent in their area. As part of this, local authorities will be able to ask landlords to provide certain information, and there will be a penalty for not supplying this information.

Alongside this, the Scottish Government is carrying out separate work exploring how existing data on the PRS can be bolstered, but this is a separate workstream and is at a different stage to the work on the Bill.

• How will data about the PRS be verified?

Verification is something the data project is also considering.

• Consideration needs to be given to cases where private water supplies are treated as part of a tenant’s rent (as opposed to cases where a tenant will pay for water as part of their council tax payment). Could this be handled through the model tenancy agreement?

The Scottish Government is considering how utilities and other costs included in rent are handled, and what the options are for bringing clarity to this issue.

• Mid-market Rent (‘MMR’) providers will be seeking an amendment to place an exemption for MMR on the face of the Bill to combat uncertainty.

Scottish Ministers are considering protection for affordable housing, if tenants are protected in other ways with respect to their rents.

As the legislation is currently drafted, this would require secondary legislation; this is in order to future-proof the Bill.

Exact mechanisms are still under consideration, and discussions with the sector and with MMR providers continues.

A number of issues would need to be resolved, including the need to guard against discrimination, and considerations of when an exemption would be reasonable and proportionate.  

However, Ministers understand the uncertainty in the sector and are keen to find a solution.

Any other business

There were no further questions or matters for discussion.

Officials are happy to meet with members to discuss the Bill further, or to bring any issues raised to the wider Group, if appropriate.

Actions

• members to let officials know of any amendments required to the minutes of the meeting of 08 August 2024
• officials to circulate the link to the BRIA once this is published
• members to contact officials if they wish to discuss the Bill further