Rented Sector Reforms: Fairer Scotland Duty Assessment

Stage 1 – planning

What is the aim of your policy/strategy/plan?

The overall policy objective of the rented sector reform measures in the Bill (covering Parts 1 to 4 – with the exception of Registration of Lettings Agents etc - and some of Part 5) is to take forward legislative changes that will contribute to achieving our vision for housing and deliver some of the reforms outlined in Housing to 2040 and our New Deal for Tenants: Draft Strategy Consultation^[1] with a view to:

• improve affordability by introducing a framework for an effective national system of rent controls in the private rented sector (“PRS”), that takes account of local circumstances in relation to rent levels;
• improve the renting experience through the creation of new rights for tenants to request and not be unreasonably refused permission to make changes to personalise their home and to keep pets; and
• enhance and strengthen certain aspects of the of the current regulatory framework ensuring they work for both tenants and landlords and balances their respective rights.

New housing legislation is required to support this aim. Good quality, affordable and well-regulated housing will generate benefits that can help tackle poverty (including for families with children), promote equality, support wellbeing, tackle homelessness and support sustainable communities where people can prosper. This will contribute to the National Outcomes for Children and Young People, Communities, Poverty and Human Rights.

This assessment considers the following twelve areas of rental reform being progressed though the Housing (Scotland) Bill.

Part 1 (Chapters 1 and 2) – Powers for Scottish Ministers to introduce rent control areas

Introduce a legislative framework to support the implementation of an effective national system of private sector rent controls that takes account of local circumstances in relation to rent levels. The intention is that, where a rent control area is introduced, there will be a limit on the amount by which private rents can be increased within that area. This will provide tenants with stability in terms of rent levels, helping to support efforts to reduce poverty and improve outcomes for low income tenants and their families.

Part 1 (Chapter 3) – Frequency of rent increases

Modify current requirements to ensure that the rent payable under a private residential tenancy may not be increased during the first 12 months of the tenancy in areas not subject to rent control.

These measures are intended to provide tenants with the security of knowing that the rent they have agreed to at the start of the tenancy will not increase during the first 12 months.

Part 1 (Chapter 3) – Capping of rent increases on referral or appeal

Introduce changes to the current rent adjudication procedures for those with a private residential tenancy under the Private Housing (Tenancies) (Scotland) Act 2016 (“the 2016 Act”), and for those with an Assured Tenancy under the Housing (Scotland) Act 1988 to remove the ability of the Rent Officer or First-tier Tribunal for Scotland (Housing and Property Chamber) (“the Tribunal”) to determine a rent increase above that requested by the landlord.

This aims to remove the risk that the rent could be set higher than the rent increase proposed by the landlord, addressing concerns that the current process may act as a disincentive to tenants from making use of their right to refer a rent increase for independent adjudication.

Part 2, Evictions – duties to consider delay

Introduce a specific requirement on both the Tribunal and the Scottish Courts that, where an eviction order/decree is granted, they must consider whether there should be a delay to the enforcement of that eviction order/decree.

Under the changes, the Tribunal/Court would be required to always consider whether a delay to enforcement should take place based on the circumstances of the case, except in limited circumstances. For example, the personal circumstances of the tenant or where wider seasonal pressures (periods of religious significance, exam periods for families with school age children/students or where more time is required to access suitable alternative accommodation) which make immediate eviction unreasonable.

This is intended to reduce, as far as possible, the negative impact of eviction at a time of greater stress resulting from additional pressures or individual circumstances; and ensure that all the circumstances of a case are considered and that the rights of tenants are appropriately balanced against the rights of landlords to recover the let property.

Part 2, Evictions – damages for unlawful eviction

Introduce measures that make permanent similar measures to the temporary reforms on how damages for unlawful eviction can be awarded, that were previously in place under the temporary Cost of Living (Tenant Protection) (Scotland) Act 2022 (“2022 Act”), to change how unlawful eviction damages can be awarded. This measure would remove the requirement for a professional valuation report for determining the level of damages and replace it with a multiplication of monthly rent between three and 36 months.

The provision will help to ensure tenants are suitably compensated where an unlawful eviction occurs and is intended to help to deter landlords from carrying out an unlawful eviction as the risk of challenge and financial penalty will be higher.

Part 3, Private residential tenancy and Scottish secure tenancies – Keeping Pets

Introduce changes that would amend the existing tenancy frameworks under the 2016 Act and the Housing (Scotland) Act 2001 so that private and social tenants would have the right to request, and not unreasonably be refused, permission to keep a pet. This would no longer allow landlords to issue a blanket ban on pets.

This aims to improve the renting experience for private and social housing tenants by giving them more control over having a pet, supporting their mental health and wellbeing; and appropriately balance the strengthened rights for tenants with sufficient protections for landlords.

Part 3, Private residential tenancy – Making changes to let property

Introduce changes that would amend the existing tenancy framework under the 2016 Act so that tenants with a private residential tenancy would be able to make certain minor modifications without consent, to be defined by regulations (e.g. putting up pictures and posters), and the right to request certain other modifications, to be defined by regulations (e.g. painting walls, putting up shelves) that could not unreasonably be refused.

This aims to improve the renting experience for private tenants with a private residential tenancy by giving them more control over personalising their home, supporting better mental health and wellbeing; and seeks to appropriately balance the strengthened rights for tenants with sufficient protections for landlords.

Part 4, Unclaimed tenancy deposits

Introduce changes to the how the private sector Tenancy Deposit Schemes operate by amending the Housing (Scotland) Act 2006 to enable unclaimed tenancy deposit funds to be put to good use for the benefit of tenants living in the PRS.

Part 4, Ending joint tenancies

Introduce a change to the process by which a joint tenancy is ended under the private residential tenancy. The proposed changes would mean that where there was no mutual agreement between joint tenants to end the tenancy, one joint tenant could end the tenancy for all but only after providing other joint tenants with two months’ notice before they can issue the standard 28 day notice to the landlord to end the tenancy.

This aim is to ensure no joint tenant can be indefinitely held to a rental contract against their wishes; and ensures a fair process for all joint tenants where one joint tenant wishes to leave the tenancy.

Part 4, Social landlords - delivery of notices etc.

A minor technical amendment that will benefit landlords and tenants by adding two new and additional options for giving notice of a rent increase, namely by a registered post service and by being sent to the person using electronic communications (i.e. email or a secure tenant management platform). This will ensure that tenants are able to receive valid notice of rent using modern communication methods.

Part 4 – Converting older tenancies

Create a regulation-making power which would enable a date to be set on which tenancies under the Housing (Scotland) Act 1988 (“1988 Act”) would convert to private residential tenancies under the 2016 Act. Exercise of this power would be subject to consultation.

If used, this power would enable tenants with tenancies under the 1988 Act to benefit from the protections under the 2016 Act, along with the proposed protections in the Bill, and reduce complexity and confusion in the sector.

Part 5 - Social landlords pre-action requirement where domestic abuse is a factor

Introduce changes to the social housing pre-action requirements to require social housing landlords to specifically consider the effect of domestic abuse in the accrual of rent arrears. Where domestic abuse financial control has had an impact on the arrears, landlords will be required to fully consider further actions that could assist the victim-survivor before eviction action for rent arrears can be taken into court.

Further information about the background, rationale and policy intention behind the Bill as a whole and the individual measures are set out in the Policy Memorandum which accompanies the Bill. The Bill, Policy Memorandum and other accompanying documents are available from the Scottish Parliament website^[2].

Who will it affect?

The particular groups and sectors across Scotland affected will include, but are not restricted to:

• tenants in the private and social rented sectors
• students living in the mainstream private rented sector
• private and social landlords
• residential investors (including build to rent providers)
• letting agents
• Scottish Courts and Tribunals Service (“SCTS”)
• Scottish Housing Regulator
• Sheriff Officers
• Rent Service Scotland
• Organisations that provide representation and support on housing and homelessness issues
• local authorities

What is your timeframe for completing the Fairer Scotland Duty assessment?

The Fairer Scotland Duty Assessment was taken forward in support of the preparation of the measures brought forward in the Bill. As confirmed in the Programme for Government published in September 2023, the Scottish Government committed to the introduction of a Year 3 Housing Bill in the Parliamentary year 2023-24. The Bill^[3] was therefore introduced to Parliament on 26 March 2024.

Who else will be involved in the assessment and what roles will they play?

Housing Legislation and Reform Unit, relevant policy officials across Better Homes Division, Scottish Government Legal Directorate and Communities Analysis Division analysts (social researchers, statisticians and economists).

Officials have a range of experience in relevant housing areas and were involved in the extensive consultation undertaken as part of the New Deal for Tenants: Draft Rented Sector Strategy Consultation, Landlord and Tenant Engagement Questionnaire and external stakeholder engagement.