Chamber and committees

On that particular point, I cannot give a commitment at this stage until we have discussions on that with Revenue Scotland. I appreciate that you may or may not want to move amendment 468.

Amendment 469 would introduce an enabling power that would allow the Scottish ministers to apply different ADS rates for different reasons, such as according to the number of properties that are already held by a taxpayer. Likewise, amendment 493 would introduce an enabling power that would allow a different ADS rate to apply to companies that purchase residential properties in Scotland. Amendment 544 seeks to impose an additional amount of surcharge on properties in rent control areas unless the Scottish ministers disapply the surcharge for any such area.

Decisions on the rates and bands for additional dwelling supplement and land and buildings transaction tax are taken centrally as part of the Scottish budget process. Any new surcharge would increase administrative complexity and might reduce revenues as a result of efforts to avoid the surcharge.

Amendment 545 seeks to allow the Scottish ministers to set a specific separate rate of ADS for property transactions in national parks, as designated under the National Parks (Scotland) Act 2000. Members will be aware that ADS is set at a flat rate of 8 per cent in addition to the core residential rates of LBTT, and is charged consistently across all types of relevant transactions. Amendments 469, 493, 544 and 545 would allow for a significant divergence from existing arrangements of long-standing policy and would thus require a thorough consultation to ensure that such amendments have the intended effect. I ask the member not to move those amendments.

Amendment 546 would enable the Scottish ministers to set a specific separate rate of ADS for property transactions that are made by individuals who are not ordinarily resident in Scotland, where the property purchased is not intended to be that individual’s only or main residence. Consultation and engagement with Revenue Scotland would be essential here to allow us to fully consider potential administrative challenges and compliance risks, including access to necessary data and the inherent complexity of establishing ordinary residence for tax purposes. I ask the member not to move amendment 546.

Amendment 547 would require the Scottish ministers to introduce for the 2026-27 year an additional residential LBTT for properties with a chargeable consideration of £1 million or more. Members will be aware that decisions on the rates and bands of LBTT are taken as part of the Scottish budget process. Further, given the small number of transactions that take place at that price point, the proposal would likely generate limited additional revenue. I therefore ask the member not to move amendment 547.

Amendments 193 and 194 would remove the requirement for a local authority to obtain ministerial consent to transfer amounts from the general fund to the housing revenue account to support social housing provision, while ensuring that any such transfers are recorded in the housing revenue account. I support those amendments as they align with the Verity house agreement in giving local authorities greater financial autonomy over how to fund social housing.

Amendments 459 to 461 would require the Scottish ministers to levy a non-domestic rate supplement on short-term lets that are suitable for providing housing on a temporary or permanent basis or require the Scottish ministers to remove reliefs.

Amendment 459 would require the Scottish ministers to levy a higher non-domestic rate on such properties and would also prevent the amount of rates charged from being remitted or reduced. The properties would not be able to receive any relief, such as small business bonus scheme relief, business growth accelerator relief, fresh start relief or local reliefs the council might wish to offer.

Amendment 460 would only require the Scottish ministers to levy a non-domestic rate supplement on such properties. Amendment 461 would only require the Scottish ministers to provide that the rates charged are not remitted or reduced.

I understand Mr Greer’s concerns, particularly those around the contribution of self-catering accommodation to local taxes. However, the classification of such accommodation has already been significantly tightened to prevent tax and rates avoidance in relation to second homes in recent years, following a recommendation from the independent Barclay review of non-domestic rates. Since April 2022, owners must evidence an intention to let for 140 days and actual letting for 70 days a year.

The Scottish ministers already have powers to adjust reliefs and apply supplements, and the amendments would constrain that flexibility. For instance, the Scottish ministers could no longer choose to provide transitional relief to the self-catering accommodation sector following a revaluation, no matter how high the increases in rateable value might be, or offer relief to support the sector during a pandemic.

Although I accept that many self-catering properties receive 100 per cent relief, and I understand concerns about their role in the housing market, I do not believe that the amendments offer a nuanced or proportionate solution. They risk being a blunt tool that would not take into account the varied landscape of the businesses that operate in the sector.

There are a number of points. First, we have discussed the matter with local authorities and, for them, having the flexibility to submit the report in advance of the deadline is key. In relation to the point that you raised, it is relevant to note that communication around the dates is up to each individual local authority.

Secondly, our getting all the reports in at the same time might impact on the speed at which we deal with them. I take on board your points, but we have spoken to local authorities about flexibility around submitting the reports in advance.

I will pick up the member’s points and touch on those issues when I come to speak.

Local authorities have asked for flexibility on that particular point. We would encourage local authorities to be as timeous as they possibly can be, but some of their feedback was about giving them the flexibility rather than setting a specific date.

All the reports coming in on the exact same date would obviously impact on the speed at which rent control areas could be designated. We are asking local authorities to be as timeous as possible, but they asked for flexibility on that point.

I can make a number of points on that. On short-term lets, there has to be a balance. I appreciate Rachael Hamilton’s point on that. There must be a balance between the housing provision that is required for people and for the needs of tourism. In my experience, that varies across Scotland.

As I said, the best approach is to introduce tailored local measures, including licensing schemes. The Scottish Government also has the ability to look at control areas for short-term lets, which would be a matter for individual local authorities. I think that that is the best way to take forward what we are supporting, as local authorities know their individual circumstances.

Noting that the next revaluation is on 1 April 2026, I am open to discussing with the member how the targeting of the small business bonus scheme could be improved. I would want to ensure that business and other stakeholders can comment on any specific proposals for change, including via the consultative non-domestic rates sub-group, which was set up under the new deal for business.

Amendment 550 would modify a sunset provision so that the power to establish an infrastructure levy in section 54 of the Planning (Scotland) Act 2019 will not lapse in July 2026 in so far as it may be exercised in relation to housing developments.

The Scottish Government consulted last year on introducing an infrastructure levy. The responses made clear that neither the development industry nor local government strongly supported it. There were widespread concerns about the complexity and uncertainty that the levy could introduce, and the limited funds that it would likely raise. We therefore decided to stop that work and allow the powers to lapse.

Retaining the power to establish an infrastructure levy in relation to housing developments would create additional uncertainty in the market, potentially limiting investment and the provision of much-needed housing. I would therefore ask the member not to move the amendment.

In summary, I support amendments 191, 193, 194 and 543 in the name of Ross Greer. I oppose all other amendments in the group. If any of those other amendments are pressed, I would urge members of the committee not to support them.

It is important to ensure that overseas students have the ability to come to Scotland.

Again, that is a valid point and I am happy to engage further on it. We reacted to the flexibility that local authorities asked for, but I am happy to engage on that point.

I will keep going, convener. Amendments 81, 82, 83 and 84, in the name of Meghan Gallacher, reduce the local authority assessment period from five years down to four years, three years, two years or one year, respectively. Although I recognise her desire to ensure frequent assessments of rent conditions, those amendments would result in assessments being conducted more frequently than is necessary and would increase the workload on and costs to local authorities. The bill sets out that any designation of a rent control area will apply for five years. That is intended to allow a sufficient period for rent levels to stabilise and provide certainty for landlords and tenants. The five-yearly assessment process supports that approach.

The bill provides a number of checks and balances to ensure the continuing proportionality of rent control. The Scottish ministers will be under a duty to keep the operation of rent control areas under review to ensure that they remain proportionate. That will include a duty to revoke regulations earlier if they are no longer proportionate. Local authorities will be able to carry out an interim assessment of rent conditions in their area where they consider that there has been a significant change in circumstances. There are also powers for the Scottish ministers to direct a local authority to undertake such an interim assessment. Those provisions will ensure that rent controls remain in place only where they have been demonstrated to be necessary in connection with the purpose of protecting the social and economic interests of tenants in those areas. I therefore urge Meghan Gallacher not to move those amendments.

Amendment 480, in the name of Carol Mochan, would change the powers in the bill that enable ministers to change the period in which local authorities must submit reports on their assessment of local rent conditions. The amendment would prevent ministers from extending the period between each local authority report beyond five years. I recognise the importance of ensuring that local authority assessments are undertaken at regular intervals, and I am committed to such assessments being made every five years. However, allowing for the time period to be adjusted in unforeseen circumstances is considered to be essential. I believe that amendment 480 is unnecessarily restrictive, so I urge Carol Mochan not to move it.

Amendment 206, in the name of Rachael Hamilton, would require local authorities to specify areas that were recommended for designation as a rent control area by referring to the street or ward. That would be in addition to the requirement to delineate the area of the plan. Requiring both could cause confusion when a recommended area included only part of a street or ward. I recognise the importance of ensuring that rent control areas are clearly defined, but the powers in the bill already allow for that. For that reason, I urge Rachael Hamilton not to move amendment 206.

Amendment 90, in the name of Meghan Gallacher, would require the Scottish ministers to consult

“persons who appear to them to understand the impact of rent increases on rural areas”

before issuing guidance to local authorities on carrying out assessments of rent conditions. That would be in addition to the existing broad requirement to consult local authorities and representatives of landlord and tenant interests. I have concerns that the amendment would require ministers to consult every person who appeared to them to understand the impact of rent increases on rural areas, which would not appear to be beneficial or necessary. The term “understand the impact” is also entirely subjective.

However, as I mentioned, I am happy to engage with Ms Gallacher on the issue. I have had discussions with SLE in that regard, and I can pick up those points with her. I recognise the importance of the underlying principle behind amendment 90, and I am committed to engaging with the sector as the bill progresses. However, I cannot support amendment 90 at this stage, so I urge Meghan Gallacher not to move it.

Amendments 279 and 280, in my name, allow for the consultation requirements in relation to guidance on local authority assessments of rent conditions and local authority reports, respectively, to be met through consultation before the requirements come into force. Consulting before the requirements come into force will support the issuing of guidance as soon as possible. I therefore encourage members to support my amendments 279 and 280.

Amendment 142, in the name of Edward Mountain, would oblige the Scottish ministers to issue guidance to local authorities about reports that were prepared following their assessments of local rent conditions. I am clear that there is a need to provide guidance to local authorities and, although I believe that the power in the bill is sufficient, I will support amendment 142. However, I will look to amend the duty at stage 3 to allow time for consultation before any such guidance is issued.

Amendment 143, in the name of Edward Mountain, would require the Scottish ministers to include in guidance to local authorities eligible reasons why a local authority could make recommendations about rent control when reporting their assessment of rent conditions. The assessment process is intended to ensure that local authorities can consider conditions that are relevant in their area and reach their own conclusions about the need for rent control. Having an exhaustive list of reasons for recommending rent control would be restrictive and might not support consideration of local factors. Although I cannot support amendment 143, I offer to work with Edward Mountain ahead of stage 3 so that I fully understand the intent behind his amendment, with a view to informing the guidance, which we all recognise is important. On that basis, I urge Edward Mountain not to move amendment 143.

Collectively, amendments 144 to 146, in the name of Maggie Chapman, would remove the Scottish ministers’ discretion in the rent control process when a local authority recommended that all or part of an area should be designated as a rent control area. Ministers would have a duty to designate a rent control area if that was the recommendation of a local authority, even if ministers considered that the rent control area was not supported by evidence or that rent control was not necessary or proportionate. I understand Maggie Chapman’s desire to ensure that local authority recommendations are given due consideration, but I cannot support those amendments, because I believe that the Scottish ministers’ duty to consider the necessity and proportionality of rent control measures should apply to every decision about whether to designate an area as a rent control area. Therefore, I encourage Maggie Chapman not to move amendments 144 to 146.

Amendments 94 to 97, in the name of Meghan Gallacher, would reduce the period for which, under regulations, an area was designated as a rent control area from five years down to four years, three years, two years or one year, respectively. The overarching purpose of the rent control measures is to stabilise rents in areas where market rents have been increasing particularly steeply. We consider that reducing the length of time in which a rent control area could be in place would reduce the overall effectiveness of the measures in meeting that purpose.

One of the important things in all those issues is engagement with the PBSA sector. I appreciate that one of the key things right the way through the bill was consultation. I mentioned that the PBSA review group has engaged with us on the specific amendments, and I would like to engage further with the PBSA sector and work together with members on that particular issue. It is important that we listen to the views of the sector. It is up to us, as individual members, or as the Government, to respond to that, and we can do that on a very early basis.

I ask members not to move their amendments in this group at this stage, given the offer of meeting the PBSA review group, but they will have the ability to lodge amendments at stage 3.

The PBSA review group has discussed the issue and is trying to take it forward. I think that the issue could be explored again. The fact that discussions are taking place in the PBSA review group opens the opportunity for Maggie Chapman and me to introduce amendments at stage 3, after those discussions have been held.

Amendments 537 and 556, in the name of Pam Duncan-Glancy, would provide ministers with an enabling power to make affirmative regulations to set out requirements that

“student funding has equal status to other forms of income.”

I do not think that additional regulations in that area would work in practice.