Rented Sector Reforms: Fairer Scotland Duty Assessment

Stage 2 – evidence

Rented sector characteristics

There has been considerable growth in the size of the PRS in Scotland during the last two decades. According to the Scottish Household Survey (“SHS”) 2022^[4], the number of PRS properties in Scotland increased from 120,000 in 1999 to a peak of 370,000 in 2016, while the number of properties registered on the Scottish Landlord Register (“SLR”) also shows long-term growth, from 156,000 when the register was established in 2007 to a peak of 362,000 in January 2017.

More recent estimates from the SHS suggest somewhat of a fall from the peak of 370,000, although the 2022 estimate of 320,000 may be slightly low due to some tenure bias in the survey. Data from the SLR also show some decrease from the peak of 362,000 to 340,000 in December 2020; however, the level of registrations has remained stable around that level in December 2021 and December 2022^[5]. In March 2024, the SLR reported 346,816 properties registered.

While the SHS and SLR data show the size of the sector is somewhat below its peak, it remains significantly larger than it was in the early 2000s.

In terms of the social rented sector, social housing dwelling stock administrative data published by the Scottish Government^[6] and the Scottish Housing Regulator^[7] indicates that the percentage of dwellings in the social rented sector was stable (at 24%) from 2017 to 2022, and that the number increased from 593,835 in 2017 to 600,083 in 2019 and 618,559 in 2022 (matching the growth in total dwelling stock).

• Over three in five (65%) were flats.
• The majority were in urban areas (54% in large urban areas and 29% in other urban areas).
• Nearly six in 10 (58%) of adults had lived at their address for two years or less.
• Just over half rented direct from a landlord (55%) as opposed to through a letting agent, falling to 44% of households in which the respondent had been living at that address for under a year.
• Almost eight in 10 paid a deposit when they started to rent their property (79%), rising to almost nine in 10 (88%) for households in which the respondent had been living at that address for under a year.
• Four in 10 (40%) of households stated that they manage well financially, with 4% reporting to have had difficulty paying the rent in the last 12 months.

• Almost half (49%) of local authority properties and over six in 10 (62%) of housing association properties were flats.
• Over four in 10 (43%) of local authority properties and over half (53%) of housing association homes were in the 20% most deprived areas.
• Around six in 10 adults were not in employment (57% for local authority households and 56% for housing association households). The proportion of adults in social rented properties who were unemployed and seeking work was 7%.
• 24% of social rented households stated that they manage well financially, a figure lower than all other tenures. 7% reported to have had difficulty paying the rent in the last 12 months.
• Almost six in 10 adults stated that they would prefer to remain in social rented accommodation (58%). Around a third (34%) would most like to live in owner occupier accommodation.

According to the Scottish Surveys Core Questions 2022^[8], just over half (52.3%) of adult respondents in the PRS recorded their ethnicity as ‘White: Scottish’, lower than all other tenures, and 16.5% recorded their ethnicity as White: British, and 2.5% as White: Polish. 6.8% recorded their ethnicity as White 'Other' ^[9] and 15.6% recorded their ethnicity as Asian ^[10], figures which are both higher than other tenures. All other ethnic groups ^[11] make up 6.1% of the PRS.

In the social rented sector, the Scottish Surveys Core Questions indicate that the majority (79.6%) of adult respondents in the social rented sector recorded their ethnicity as ‘White: Scottish’, and 7.3% recorded their ethnicity as White: British, and 1.9% as White: Polish. 2.2 % recorded their ethnicity as White 'Other'^[12] and 3.2% recorded their ethnicity as Asian^[13]. All other ethnic groups make up 5.7% of the social rented sector^[14].

The Scottish Surveys Core Questions 2022 also found that the proportion of adults in social rented properties who have limiting long-term physical or mental health conditions was 46.0%, higher than all other tenures. The proportion of adults in the PRS who have a limiting long-term physical or mental health condition was 23.2%. The proportion was 28.6% for those who own outright, and 15.9% for those who own with a mortgage.

The rented sector and socio-economic disadvantage

We know the rented sector provides a home for a diverse group of people and understanding the needs and different experiences of tenants is crucial in helping deliver our policy aims. While some people in the PRS are living in deprived areas, the evidence shows that this is less common than in the social rented sector. The SHS 2022^[15] estimates that 47% of social rented households were in the 20% most deprived Scottish Index of Multiple Deprivation (“SIMD”) areas, compared to only 2% in the 20% least deprived areas. PRS households were distributed more evenly, with 20% of households in the 20% most deprived areas and 16% in the least deprived, as shown in the following table.

The rented sectors have a larger share of households on lower incomes than households who own with a mortgage – according to the SHS 2022, 53% of social rented and 31% of private rented households have a net income of £20,000 or less, compared with 10% of households owning with a mortgage. The share for households who own outright (35%) is somewhat higher than for private rented but below the share for social rented households.

Furthermore, households in the rented sectors spend a greater proportion of their income on housing costs^[16] than both owner occupier tenures. The average (median) share is similar for households who rent socially (22.5% in 2022-23) and privately (22.4%), which is significantly higher than for households owning with a mortgage (6.5%) and owning outright (2.2%). The fact that the shares are similar for the social and rented sectors even though social renters tend to be on lower incomes than private renters reflects that on average private rents are much higher than social rents^[17].

Because the income profile of households in different tenures differs appreciably, it is also useful to look at the share of housing costs for different income levels. Private rented households whose income falls in the lowest quintile of the Scottish income distribution spend on average over half their income (51% in the period 2020 to 2023) on housing costs, which is higher than the social rented sector (37%) and owned outright (5%)^[18]. For the second income quintile, the shares are 29% for private rented and 24% for social rented households, as compared with 10% for households who own with a mortgage and 3% for households who own outright.

As a result, the rented sectors also have higher proportions of people who are in relative poverty after housing costs: for the period 2020 to 2023, 44% of people living in a social rented household and 34% living in a private rented household were in relative poverty after housing costs, compared to 14% in a household who own outright and 8% in a household who own with a mortgage^[19]. The rented sectors also have higher proportions of children who are in relative poverty after housing costs: for the period 2019 to 2022, 53% of children living in a social rented household and 35% living in a private rented household were in relative poverty after housing costs, compared to 9% living in a household owning with a mortgage^[20].

Rented households are more likely to be financially vulnerable than those in other tenures: data covering the period 2018 to 2020 (the most recently published statistics for this measure) show that 63% of social rented households and 40% of private rented households in Scotland were estimated to be financially vulnerable, with savings which would cover less than one month of income at the poverty line, compared to 24% of households owning with a mortgage and 9% of households owning outright^[21].

The experience of affordability within the PRS is likely to be very different for more deprived and less deprived tenants. Over the period 2017 to 2020, PRS households in the lowest quintile of the SIMD were paying an average of almost half (47%) of their household income on housing costs, compared to only 17% for PRS households in the highest quintile^[22].

Recent YouGov polling from the Public Insight Monitor (March 2024)^[23] shows that when asked how they and their household were managing financially, a combined 36% of all renters said that they were either not managing very well, having some financial difficulties or were in deep financial trouble. The corresponding figures for those who owned with a mortgage and owned outright were a combined 20% and 11%. Those in the PRS were also more likely to express concern over paying rent/mortgage^[24] in the next 2-3 months compared to all tenures as a whole (27% for private renters compared to 12% all tenures in March 2024).

Further research by the UK Collaborative Centre for Housing Evidence, this time funded by the Joseph Rowntree Foundation (“JRF”)^[25], in partnership with the Scottish Government, aimed to understand the experience of private sector tenants, and particularly those on low incomes. The research involved an evidence review, qualitative interviews with low-income renters, a bespoke survey of renters in Scotland, and co-production to bring together renters, stakeholders and policymakers to make recommendations for sector change. The research found there was a nuanced picture of the experiences of private renters in Scotland. While there were many renters who do have a positive experience of the PRS, there are those renters who do not. The findings of this study demonstrate the challenges and difficulties faced by different groups, especially lower-income renters.

The survey component of the study^[26] identified the complex issues around affordability in the PRS. Nearly one third of renters surveyed (30%) reported that they found it either fairly difficult or very difficult to afford their current rent, while almost half (49%) found it fairly easy to afford their rent with a further 14% found it very easy.

There was further analysis to explore the responses by income, benefit status, disability, gender, and whether children are present in the household. The survey found that renters are more likely to find affording their current rent difficult if they are on a low-income, claim Universal Credit, have a disability, or have children.

Specifically, it was found that:

• 41% of low-income renters found it difficult to afford their current rent, in comparison to 26% of middle-income and 15% high-income renters.
• Over a quarter of renters (28%) whose rent is covered in full by earnings found it difficult to afford their rent, rising to 44%, for renters whose rent is covered in full or in part by Universal Credit or Housing Benefit.
• Just over a quarter of renters (26%) who do not have a disability or long-term health condition found it difficult to afford their current rent, rising to 40% for those renters with a disability or long-term health condition.
• A very slightly higher proportion of female renters (32%) found it difficult to afford their current rent in comparison to male renters (29%).
• Just under three in 10 renting households without children (29%) found it difficult to afford their current rent, rising to 37% of renting households with children.

The analysis from this study identifies that the impacts of renting and the current housing situation on mental health are not felt evenly. Renters on low incomes, whose rent is covered in part or in full by Universal Credit, have a disability or health condition were more likely to report that their current housing situation leaves them feeling stressed and anxious, and affects their mental and physical health. A summary of the report detailed renters’ priorities for the future of the sector, which included:

• for the Scottish Government to take action to improve affordability and fairness in the PRS;
• an improvement in property conditions, responsiveness to repairs, and greater professionalism and accountability of housing providers;
• improved access to low-cost, high-quality homes across all tenures; and
• improved and more accessible sources of information, so all those in the PRS can better understand their rights and responsibilities.

RentBetter Research^[27] into the impacts of changes to the PRS in Scotland commissioned by Nationwide found that difficulty in securing a private rented home was disproportionately experienced in urban and pressured markets, by single people, single parents, those on lower incomes, disabled people, those claiming some form of housing allowance, black and minority ethnic tenants and more recent renters.

Subsequent RentBetter research^[28] also suggested that tenant awareness of the Tribunal system was low and those respondents who had experience of the system found it intimidating, particularly low income tenants. They recommended targeted awareness raising and support, which should therefore be considered in implementation of the measures to address these findings.

A consultation^[29] carried out in early 2022 invited views on a range of proposals for delivering A New Deal for Tenants, which aims to ensure all tenants, whether living in private or social rented homes, can access secure, stable tenancies, with affordable choices, whilst also benefiting from good quality of homes and professional levels of service and rights. A number of these proposals are being progressed further as part of this Bill. Analysis of the consultation was published in August 2022^[30]. Analysis of responses highlighted the following in relation to income inequalities:

• in terms of particular barriers people with protected characteristics face in the rented sector, some respondents commented that the principal barrier is being able to afford the rent;
• in relation to groups that may be particularly disadvantaged by higher rental costs in the PRS, there was reference to women, young and single parents, and those from ethnic minorities; and
• it was reported that disabled people not only face barriers associated with affordability and housing-related benefits, but also in relation to the accessibility of the housing stock.

However, it is important to note that the views put forward in the consultation by individuals and organisations may not necessarily be representative of wider sentiment. Findings in relation to affordability barriers specific to those with protected characteristics are explored more fully in the Equalities Impact Assessment of the rent control measures^[31].

Citizens Advice Scotland (“CAS”) published a report on illegal evictions^[32] in April 2023 which found that those living in the most deprived SIMD quintile were most likely to seek advice on illegal evictions. Clients who received advice on illegal evictions also received advice on benefits, legal proceedings, debt, finance and charitable support.

We have also discussed the potential housing reforms as part of an engagement strategy, including with Scottish Association of Landlords, Propertymark, Scottish Land and Estates, UK Finance, Scottish Property Federation, Living Rent, Generation Rent, Shelter Scotland, CAS and wider groups such as Chartered Institute of Housing, Scottish Women’s Aid and Age Scotland.

In September 2023, the Scottish Government launched an engagement questionnaire asking private and social rented sector landlords and tenants a series of closed questions on rental sector reform to inform development of legislation to deliver A New Deal for Tenants through a Housing Bill. Alongside the questionnaire^[33], key stakeholders were invited to take part in a series of discussion groups on the same topics to gather additional qualitative information: two discussion groups were consequently held. The questionnaire was accompanied by a paper outlining additional detail of the current proposals to help inform respondents^[34]. In total 6,650 questionnaire responses were received and the largest respondent groups were PRS landlords, accounting for 44% of respondents, and PRS tenants, accounting for 29% of respondents. Other points to note are that:

• 48% of all respondents came from the four groups with a landlord perspective (private landlord, private landlord organisation, social rented sector landlord and social rented sector landlord organisation).
• 33% of all respondents came from the four groups with a tenant perspective (PRS tenant and tenant organisation, and social rented sector tenant and tenant organisation).

The analysis report for the questionnaire has been published^[35], as has a report with analysis of email responses received in relation to the matters covered in the questionnaire^[36].

What does the evidence suggest about possible impacts of the policy, as planned, on those inequalities of outcome?

Part 1 (Chapters 1, 2 and 3) - Powers for Scottish Ministers to introduce rent control areas and changes to Frequency of rent increases

The rent control framework which has been proposed in the Bill, which will apply to rent increases both within and between tenancies in an area which has been designated as a rent control area, is designed to help stabilise rents in areas where market rents have been increasing steeply. This will support households in the PRS including those who are on low incomes to have stability, supporting efforts to reduce poverty and to improve outcomes for low-income tenants and their families.

However, in designing the rent control system, it is important to minimise any unintended consequences, including reductions in the supply and quality of the private rented stock in the long run, as well as spillover from rent control to non-control areas, e.g. in the form of higher market rents in non-controlled areas. Authors of the RentBetter study have suggested, based on their findings from waves 1 and 2 of their research, that reduced supply and access to the PRS may have a disproportionate impact on lower income and other demand groups in housing need, compared to the general population. They recommend strong and targeted enforcement of policies to mitigate negative market impacts for the lower end of the market^[37].

Little robust data is available on the demographic characteristics of Scottish private landlords as a group. One survey by Shelter and YouGov in 2016^[38] sampling from across the UK found that their respondents were approximately 45% female and tended to be older and more affluent than the general population, as well as less likely to have children living in the home with them; however it is not known whether this sample is representative of Scottish landlords more widely and the proportion of the overall sample drawn from Scotland is small.

Broadly speaking, there is evidence from sector engagement and recent studies that some private landlords and landlord organisations have concerns about the potential impacts of rent control and other regulations on their rental profits and willingness to remain in the market, but the limited available evidence does not suggest that PRS landlords themselves are likely to have higher than average levels of deprivation.

Published in 2022, a study of landlord behaviour in the PRS gathered landlord perspectives on four key measures proposed in A New Deal for Tenants, including their views on rent controls. A majority of landlords responding to the survey (54%) viewed the proposed implementation of a national system of rent controls as having either a ‘negative’ or a ‘very negative’ impact. Indeed, twice as many landlords were likely to view the proposal for rent controls as having a very negative impact (22%) as opposed to a very positive impact (10%)^[39].

Analysis of the landlord and tenant engagement questionnaire indicated that between the two options, 59% of those answering thought that rent control should be universally applied across Scotland and 41% that it should be introduced on a local basis where assessment shows there is a need. Private and social tenants tended to favour the universal approach, and private landlords and landlord organisations generally supported rent control being introduced on a local basis. Where restrictions on rent increases are being applied, 58% of those answering thought they should apply to both sitting tenants and in between tenancies, while the remaining 42% thought they should apply to sitting tenants only. PRS and social rented sector tenants tended to favour restrictions applying to both sitting tenants and in-between tenancies, while private landlords and landlord organisations in particular supported restrictions for sitting tenants only.

However, a clear majority, 80% of those answering the question, agreed that, if rent controls in a rent control area apply both within and between tenancies, the first rent increase in a tenancy should be possible at any point after the start of the tenancy, provided that at least 12 months has passed since the rent was last increased during the previous tenancy.

Scotland has had some form of rent control in the past, for example the Rent (Scotland) Act 1984. In addition, the 2016 Act enables a local authority to apply to the Scottish Ministers to ask that all or part of the authority’s area be designated as a Rent Pressure Zone. We have also looked at other countries’ experiences such as Sweden, as well as more localised rent control measures in cities such as Berlin, and had discussions with officials from the Republic of Ireland^[40]. We have engaged with academic experts on the Scottish housing sector, who have carried out a large scale review of international evidence on rent controls, producing numerous outputs including a final report^[41] which we have considered. A policy briefing paper written specifically for the Scottish Government, “Rent control: principles, practicalities and international experience”^[42], has also informed the policy. The Scottish Parliament’s Cross-Party Group on Housing has also published a report on rent control^[43], aimed at better understanding and exploring the potential approaches to delivering rent control for Scotland.

The approach to rent control being taken forward in the Bill reflects the lessons from this evidence, by building in a significant degree of flexibility to the framework to ensure that there are no material unintended outcomes. Assessments will take place at a local level allowing local conditions to be taken into account when deciding whether to designate a rent control area, and rent control areas will expire after a maximum of five years and a new assessment will have to be undertaken before the area can be redesignated. The rent cap will apply only to increases, allowing the initial rent for any property being let for the first time to be set in line with market forces. Furthermore, Scottish Ministers will have powers to exempt certain properties and landlords from rent control or to increase rents above the level of the cap in certain circumstances.

The proposed rent control measures are intended to stabilise the rent levels and avoid the potential for rents to continue to rise more steeply between tenancies, by restricting rent increases in areas where this is necessary and proportionate for the purpose of protecting the social and economic interests of tenants in those areas. They will be balanced by protections in the Bill which safeguard the interests of landlords where appropriate. Conditions in relation to rent vary across Scotland and ensuring that local circumstances are taken into account, reflecting these geographical variations, ensures that rent controls are applied only where it is justified and proportionate to do so.

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

Anecdotal evidence gained from telephone enquiries to Rent Service Scotland indicates that some tenants do not submit an application to Rent Service Scotland due to concerns the process may increase their rent.

Capping of rent increases on referral or appeal would benefit tenants as it would help to remove a barrier for tenants who might wish to challenge a rent increase, but fear that the level of rent determined could be higher than that proposed by the landlord. This may be particularly beneficial for tenants on lower incomes as the RentBetter study found that those who reported having less confidence to raise a dispute with their landlord tended to be those with less financial power, including those on lower incomes and in part-time work, or younger, inexperienced renters^[44].

Part 2, Evictions: duties to consider delay

As previously mentioned, evidence from the RentBetter^[45] study suggests that PRS tenant awareness of the Tribunal system is, in general, low and those who had engaged with the system in the past found it to be intimidating, particularly low income tenants. Targeted awareness raising to support implementation of the measures would be helpful in responding to these findings.

There is a growing international evidence base that demonstrates the link between evictions and negative impacts on mental and physical health and wellbeing for tenants^{[46] [47] [48] [49] [50]} and evidence from a 2017 JRF report on England and Wales^[51] found that the experiences of eviction were particularly stressful for low income tenants, who reported struggling to find new housing because of a perception by potential landlords that they were ‘undesirable’ tenants. However, evidence has shown that even the threat of evictions (perceived risk of housing precarity) can impact on tenant health and wellbeing^[52].

While there are existing strong protections in Scotland to ensure that tenants are protected from unfair evictions, feedback from the New Deal for Tenants consultation suggests that concerns remain regarding the negative impact of an eviction on tenants, particularly during certain times of year. For example, responses to the New Deal for Tenants consultation^[53] discussed concerns about evictions taking place over the winter period where households often face increased financial pressures and stress and homes are less available, or during exam periods for students. However responses also noted that there should be a focus on eviction prevention throughout the year.

The introduction of measures to require the Tribunal or Court to specifically consider whether enforcement should be delayed at any time of year, where it would be reasonable to do so in the circumstances, will help to add another layer of protection to people on low incomes. This could also help to reduce the negative impact of an eviction during times of financial pressure by taking into account the impact of the timing of an enforcement on the tenant and the landlord. Prescribing factors that can be taken into account when the Tribunal or Court are considering delaying the enforcement of an eviction order/decree eviction will help to balance the rights of both tenants and landlords.

The analysis of the landlord and tenant questionnaire suggested a majority (59% of those answering the question) either strongly agreed or agreed that, in the private sector, the Tribunal should be required to consider whether it is reasonable to delay the enforcement of an eviction at any time of year. This rose to 98% of private tenants. However, 67% of private landlords either disagreed or strongly disagreed.

In relation to greater protections during the eviction process in the social rented sector, a majority (69%) either strongly agreed or agreed that, in the social sector, the court should be required to consider whether it is reasonable to delay the enforcement of an eviction at any time of year. This rose to 100% of social rented sector tenants. However, a small majority of social rented sector landlords, 54% of those answering the question, either disagreed or strongly disagreed.

Part 2, Evictions: damages for unlawful eviction

The evidence from our consultation^[54] and engagement with stakeholders suggests that reforming the way unlawful damages are calculated would remove current barriers to tenants who experience an unlawful eviction. It would help to make it easier and more attractive for tenants to challenge an unlawful eviction and receive compensation where an unlawful eviction is found to have occurred.

While there is limited data on the type of households that are more likely to experience an unlawful eviction, a CAS report^[55] suggests that, based on their experience of advice provision, those who live in more deprived areas may be more likely to be at risk of being unlawfully evicted. The proposed changes that remove the requirement for a professional valuation to determine the level of damages will remove the current financial barrier tenants face when progressing a legal case for damages for unlawful eviction.

Part 3, Private residential tenancy and Scottish secure tenancies: Keeping pets

Evidence^{[56] [57] [58] [59] [60]}suggests there may be some positive impact to private tenants for their mental health and wellbeing if more tenants are able to have a pet. A UK Collaborative Centre for Housing Evidence report published in 2022^[61] highlighting that one-fifth of renters (19%) had faced challenges finding a landlord or letting agent that allowed pets. The research found that some renters were made to pay higher rent and/or have additional cleaning and damage clauses added into their contract.

A 2024 evidence review looking at pets in the PRS found international evidence to suggest that additional barriers and costs associated with keeping a pet in the PRS were not evenly distributed, with low income households among the groups identified as being most severely impacted. The review also stated that, in relation to UK housing law, “without robust legislation to prevent a landlord from including a ‘no pets’ covenant in a tenancy agreement, Rook (2018) argues that people on low incomes (or those unable to afford their own home) with pets remain subject to the whim of the property owner which specifically implicates class”^[62].

As previously mentioned, the RentBetter project found that those who reported having less confidence to raise a dispute with their landlord tended to be those with less financial power, including those on lower incomes and in part-time work, or younger, inexperienced renters^[63]. As with personalisation, targeted awareness raising and support will therefore be considered in implementation of the measures to address these findings.

Also, as with personalisation, if an additional deposit were prescribed as a reasonable consent condition, and is requested by the landlord to cover the potential additional damage related to keeping a pet, this could prevent some lower income tenants from experiencing the full benefits of the changes. The measures in the Bill propose using secondary legislation to consult further on reasonable consent conditions and there would be the opportunity to set limits on additional supplementary deposits and guidance could make clear an expectation that the level of supplementary deposit should not be excessive and should relate to the potential additional level of damages that may be caused.

The analysis of the landlord and tenant engagement questionnaire indicated a majority of respondents, 63% of those answering the question, agreed that private tenants should have a right to request to keep a pet and should not be unreasonably refused. A substantial majority of private tenants supported the introduction of the right, while a majority of private landlords did not.

With respect to the social rented sector, a majority (76%) of those respondents who answered the question agreed that social housing tenants should have a right to request to keep a pet and not be unreasonably refused. While 100% of social rented sector tenants supported the introduction of the right, a small majority of social rented sector landlords did not.

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

Evidence^{[64] [65] [66]}suggests that the ability to have more control over one’s home may have a positive impact on the mental health and wellbeing of private tenants.

Survey findings^[67] published in 2022 on private renters’ experiences have provided some insight on the proportion of renters who feel their landlord would be open to them personalising the property (e.g. putting up pictures, changing curtains, painting a room). This found 45% of respondents strongly agreed that their landlord would be open to them personalising the let property, 35% tend to agree and 13% tended to disagree and 7% strongly disagreed.

It also found that of the renters surveyed 44% strongly agreed they feel at home in the property, 40% tend to agree, 10% tend to disagree and 5% strongly disagree. However, the research notes that ‘home’ is a complex concept with different meanings to different people.

The survey also asked about what renters find important in the PRS. 62% of those who responded identified being able to make the property a home by being able to decorate and keep pets as important.

An evidence review^[68] on the role of private landlords in making a rented house a home published in 2022 highlights evidence that allowing personalisation of a rented home offers tenants more stability, security of tenure and increases the likelihood that tenants will look after the property. It also highlights that where personalisation is not allowed, tenants lack autonomy and control has a negative impact on a tenants ability to feel safe, secure and settled in their rented home.

Evidence from a survey of tenants conducted as part of the RentBetter project found that those who reported having less confidence to raise a dispute with their landlord tended to be those with less financial power, including those on lower incomes and in part-time work, or younger, inexperienced renters^[69]. Targeted awareness raising and support should therefore be considered in implementation of the measures to address these findings.

Previously mentioned research into the priorities for low income tenants also highlighted some of the difficulties private renters often face in personalising their home by redecorating and/or upgrading the property – for example, in cases where landlords did not allow drilling holes in the wall and/or painting the property^[70].

Evidence from a recent survey of UK private landlord behaviour noted that some landlords view their rental properties more as their own assets and others more as renters’ homes. Where landlords viewed properties as a home for their tenant, this was associated with greater comfort with personalisation, and some landlords discussed personalisation as being mutually beneficial because it may increase the likelihood that tenants would look after the home and encourage tenancy sustainment^[71].

However, should an additional supplementary deposit for personalisation be prescribed as a reasonable consent condition, and be requested by the landlord, this could result in some lower income tenants facing difficulty in experiencing the full benefits of the changes. As set out in the section on keeping pets, the measures in the Bill propose using secondary legislation to consult further on reasonable consent conditions and there would be the opportunity to set limits on additional supplementary deposits and guidance could make clear an expectation that the level of supplementary deposit should not be excessive and should relate to the potential additional level of damages that may be caused.

The analysis of the landlord and tenant questionnaire indicated that a majority of respondents, 75% of those answering the question, agreed that some small changes (for example putting up pictures and posters) should not require consent. While a substantial majority of private and social rented sector tenants agreed with the proposal, private and social landlords were evenly divided on this issue. A majority of respondents, 70% of those answering the question, also agreed that other bigger changes can be requested and not unreasonably refused. Although a substantial majority of private and social rented sector tenants agreed, a majority (62%)of private landlords disagreed.

Part 4, Unclaimed tenancy deposits

The proposed intervention would ensure private tenants benefit from the use of unclaimed funds. The Bill sets limits on the use of funds ensuring they can only be used for the benefit of PRS tenants. For example, funds may be used to address barriers to the PRS or to provide support for private tenants to exercise their rights. The use of this money may particularly help support those on lower incomes who may be more at risk of experiencing problems and disadvantage in accessing and exercising their rights.

Analysis of the landlord and tenant questionnaire asked respondents about five potential uses for any unclaimed deposits that have been transferred to the Scottish Government. Overall, respondents were most likely to strongly agree that any unclaimed funds should be used on the prevention of homelessness from the PRS.

A majority also strongly agreed or agreed with providing advice, information and assistance to private tenants and with assisting private tenants to exercise their rights.

Part 4, Ending Joint tenancies

The evidence from stakeholder engagement suggests that this provision will benefit tenants, especially victims of domestic abuse, as the current law can lead to tenancies being used as a means of financial control. As there is a high risk of domestic abuse victims becoming homeless and experiencing the associated challenges and impacts, including reduced health and wellbeing outcomes and increased financial instability^[72], reforming the process to end joint tenancies will mean one joint tenant would no longer be effectively tied-in indefinitely to a tenancy by the other joint tenant(s) even where they no longer live in the rented property. Other joint tenants’ interests would be protected as the exiting tenant would be required to give them notice of the intention to end the tenancy, ensuring they have time to consider their options.

The analysis of the landlord and tenant engagement questionnaire indicted that a substantial majority (87%) of respondents answering the question agreed that the notice period which the departing joint tenant must give to the other joint tenants should be two months. A clear majority in all groups agreed with the proposal, although at a lower level for private landlord and private landlord organisations, at 76% and 74% respectively.

Part 4, Social landlords: delivery of notices etc.

This minor technical amendment 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

This measure would create a regulation-making power which would enable a date to be set on which tenancies under the 1988 Act would convert to private residential tenancy under the 2016 Act. If used, this 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 would also reduce complexity and confusion in the sector. Exercise of this power would be subject to a consultation first and this will allow for a more detailed assessment of any potential impacts.

The analysis of the landlord and tenant engagement questionnaire indicated that a majority (71%) of respondents answering the question thought that consideration should be given to setting a future date by which remaining assured and short assured tenancies should be phased out. Support was strongest amongst private and social tenants, with 98% of both thinking that consideration should be given to setting a future date. A smaller majority of private landlords, private landlord organisations and social landlord organisations supported the move, at 58%, 58% and 57% respectively, while social landlords were evenly divided on this issue.

Part 5, Social landlords pre-action requirement where domestic abuse is a factor in rent arrears

The evidence suggests that this will benefit tenants who are victims of domestic abuse. The Improving Housing Outcomes for Women and Children Experiencing Domestic Abuse report^[73] explains that financial abuse is a significant element of coercive control in domestic abuse. Research^[74] from 2009 suggested that, at the time, 89% of the women in their sample experienced financial abuse as part of domestic abuse. A report by Refuge^[75] into different forms of economic abuse and its impact on women and children experiencing domestic abuse demonstrates how victims may develop rent arrears as a result of financial abuse by their partner.

The high risk of domestic abuse victims becoming homeless and the challenges and impacts homelessness can bring including reduced health and wellbeing outcomes and increased financial instability is explained in a domestic abuse briefing report by Crisis^[76]. Placing a duty on social landlords to comply with a new pre-action requirement where domestic abuse is a factor in the accrual of rent arrears will strengthen the existing protection for victim-survivors and their children and help to prevent their homelessness.

Is there any evidence that suggests alternative approaches to the policy?

We have considered different approaches as part of developing proposals to achieve the aims of the New Deal for Tenants. This includes considering non-legislative measures.

There are a range of existing regulatory requirements in place that safeguard both tenants and landlords’ rights in the social and private rented sectors and Scottish Ministers could pursue non-regulatory action, for example, further awareness raising in terms of existing rights or the provision of additional support for advice and enforcement of existing regulations. However, only pursuing non-regulatory action would not deliver the improvements in affordability or strengthened tenants’ rights that the measures in the Bill are seeking to achieve and would have a lesser effect on inequalities of outcomes caused by socio-economic disadvantage.

The Scottish Government does not believe non-regulatory action alone is sufficient and we already take steps to raise awareness of rights and support enforcement. For example, a number of awareness activities and campaigns have been carried out since introduction of the 2016 Act. Most recently a Renters Rights’ campaign^[77] ran in March 2024, coinciding with the emergency 2022 Act coming to an end, which aimed to drive up awareness of existing rights and the rent adjudication changes that came into force from 1 April 2024. We also worked with Young Scot to deliver an awareness raising campaign targeted directly at young people renting a home in Scotland, creating a hub of information and advice for those seeking advice^[78].

Evidence gathered as part of developing Housing to 2040, the New Deal for Tenants: Draft Strategy Consultation and in relation to responding to the cost crisis and subsequent monitoring of the 2022 Act, has identified a number of areas where further regulatory reform in the private and social rented sectors is required to address affordability and fairness and strengthen and enhance existing approaches. These outcomes cannot be achieved without further primary and secondary legislation. For example, additional measures to control rents in the private sector cannot be achieved without primary legislation. Similarly, changes to how unlawful eviction damages are calculated also requires amendment to existing primary legislation within the Housing (Scotland) Act 1987. A non-regulatory option would see the current legislative process for awarding civil damages for an unlawful eviction remaining the same.

We have considered pursuing non-regulatory action by amending the Scottish Government’s model Private Residential Tenancy agreement to include additional terms to keep a pet or to personalise a let property. Amending the Scottish Government’s model tenancy agreement would not deliver the additional rights to keep a pet or to personalise a let property being sought for all private tenants. There is no requirement for a private landlord to make use of the Scottish Government’s model tenancy agreement, so not all tenants with a private residential tenancy would be afforded the new rights.

Therefore, further non-regulatory action will not achieve the required outcome or deliver Ministerial commitments in the areas included in the Bill.

International approaches

The proposed measures in the Bill have been informed by the New Deal For Tenants consultation and subsequent stakeholder engagement and review of evidence. As part of our review we have considered approaches taken at UK Government level and internationally to achieve similar aims.

The UK Government Levelling Up Department was progressing their own ‘Renters Reform Bill’ which had some similarities. For example, the proposed UK measures would also have allowed tenants to request to keep a pet and not be unreasonably refused. However, it was not proposed that there would be rent control measures introduced by the Bill.

The UK Collaborative Centre for Housing Evidence conducted a review of the evidence base on rent control measures^[79]. The review, along with other international evidence^[80], has been taken into consideration when developing our approach to rent control, and has enhanced our understanding of international approaches to rent controls. This evidence looks at studies into how rent controls have been applied in different countries, but notes that different housing markets operate differently.

Proposals for rent controls have been developed in light of the Scottish context.

The Scottish Government is clear that the mechanisms in the Bill to stabilise rents must ensure a balanced approach that provides appropriate protection for the property rights of landlords. For this reason, informed by the international experience with rent controls, the Bill proposes various protections which can safeguard the interests of landlords where appropriate. These include that Scottish Ministers will have the power to provide for circumstances where a rent increase above the rent cap could be allowed and will also have the power to specify types of property or other circumstances relating to the tenant or landlord where the restrictions on rent increases would not apply. The detail of any safeguards would be set out in secondary legislation and, to ensure transparency, Scottish Ministers would first be required to consult on proposals.

We have also considered evidence from Victoria State in Australia where similar reforms on pets and personalisation were implemented in 2018. There are some key differences, for example rather than a tenant having a right to request a pet that cannot be unreasonable refused, landlords must apply to prevent a tenant from keeping a pet rather than a tenant making an application. We have engaged with officials from the Victorian Government to further understand their approach.

What key evidence gaps are there?

We are aware of limitations on data in relation to rent in the PRS. Housing to 2040 contains a commitment to put in place mechanisms to improve data collection on the Scottish PRS to help us to identify areas suffering from unreasonable rents. Work is underway in this area.

We are also aware that it can be more difficult to reach tenants as part of our consultation strategies than other stakeholder groups. Housing to 2040 makes clear the Scottish Government’s intention to ‘put tenant participation at the heart of developing’ a new Rented Sector Strategy and commits to establishing a Private Rented Sector Tenant Participation Panel. Work to develop the panel is underway.

We will continue to engage with key stakeholders on discussions on the proposed rented sector reform measures in the Bill. The engagement so far has supported policy development of the measures that have been brought forward in the Bill. The recent landlord and tenant engagement survey also provided useful evidence on detailed decisions on how the measures in the Bill can be taken forward.

We have also worked in partnership with the JRF and YouGov on a research project^[81] with predominantly low income tenants in the PRS which included a bespoke survey, qualitative data collection, an evidence review, and a participatory component. As part of this we worked with a focus group to gather evidence on tenants’ experiences of the PRS. We found a nuanced picture of experience in the PRS in Scotland and the experience that we gained of engaging directly with private tenants will help inform the work of a future tenant participation panel. The JRF research indicated that there was a lack of awareness among Scottish renters regarding their rights and it is key that any future reform is clearly communicated and renters are empowered to act upon their rights. In addition, we have engaged with researchers from the University of Huddersfield on their research for Battersea on pet ownership in the PRS. They carried out a mixed methods English-based study about the costs and benefits of pets in the PRS^[82]. We are also continuing to engage directly with the RentBetter research as they take forward their work to evaluate changes in the Scottish PRS.

Data on PRS tenancy types is not generally centrally recorded, although it is possible to use information on the age of existing tenancies, gathered as part of the SHS, to make a rough estimate of the number of legacy tenancies under the 1988 Act which may still exist. However, it is not possible to break down where in Scotland these remaining tenancies are situated, or the circumstances of the tenants living in these tenancies. There is a requirement on Scottish Ministers to consult further on the proposal to convert tenancies under the 1988 Act to private residential tenancies under the 2016 Act before laying the regulations, and this will allow for a more detailed assessment of any potential impacts.

How could you involve communities of interest in this process?

There was extensive consultation on these potential proposals as part of the New Deal for Tenants consultation as well as tenant centred focus groups lead by the Tenant Information Service and Tenant Participation Advisory Service on the potential proposal on rented sector reform, including consultation responses from these tenant focused groups. This has been followed up by the establishment of a PRS Stakeholder group made up of key stakeholders in the sector, and a landlord and tenant engagement survey. We also followed up with a programme of individual meetings with groups representing a range of stakeholder interest including tenants and landlords. We will continue to engage as widely as we can as the Bill goes forward.