Chamber and committees

It is nice to be back with the committee again. I am pleased to be here to present the Cost of Living (Tenant Protection) (Scotland) Act 2022 (Amendment of Expiry Date) Regulations 2023.

As colleagues know, the 2022 emergency act came into force on 28 October last year and, since then, has provided additional protection for tenants in what remain challenging economic times. The act originally ran to 31 March 2023 and has been extended once, until the end of this current month.

In June, I published a statement of reasons for the second proposed extension of the emergency act. As part of that report, and in line with the requirements of the act, I set out the intention for the measures in the act to be extended for a further, and final, six months to 31 March 2024.

The report provides updated data and economic analysis that shows that the challenging economic position has not yet fundamentally changed and that many households in the private rented sector in particular continue to struggle. For example, according to recent YouGov polling for the Scottish Government, in August 2023, levels of concern in relation to paying rent were twice as high in the private rented sector, at 27 per cent, compared to those in relation to paying rent or mortgages across all tenures as a whole, at 12 per cent. That has not improved since the polling in March 2023.

It was recently announced that the energy price cap will reduce, but it is reducing from a very high level, and the positive impact on fuel poverty rates is offset by the UK Government’s decision to withdraw the energy bills support scheme, under which £400 was paid to all households last winter.

Meanwhile, the freezing of local housing allowance rates by the UK Government for the third consecutive year is yet another reason why those in lower-income households in the private rented sector who access local housing allowance will find it more difficult to afford rental properties.

The picture has changed somewhat since a year ago, but circumstances remain very difficult for many tenants, and many households that are on low and modest incomes continue to feel the strain of cost of living pressures. For those reasons, the regulations seek to extend the application of part 1 of the Cost of Living (Tenant Protection) (Scotland) Act 2022 in its current form—including the rent cap measures for the private rented sector, the eviction moratorium provisions across all rented sectors that the act covers, and other important protections—until 31 March 2024 at the latest.

In reaching that position, I have reflected on the views that stakeholders and partners have expressed and I have sought to find the right balance, under the statutory duty, to ensure that the provisions do not remain in place for longer than is necessary in connection with the cost crisis. I also recognise the on-going impacts that the cost crisis is having on some private landlords. The private sector rent cap is set at 3 per cent, but there is a safeguard for landlords, who can alternatively opt to apply to rent service Scotland for a rent increase of up to 6 per cent if their defined, prescribed property costs have increased within a specified period. I know that some landlords are using that safeguard—1,031 of them had submitted such an application to rent service Scotland as of 1 September.

I turn to our proposed continuation of the eviction moratorium provisions. Tenants in the private and social rented sectors, and those who live in student accommodation, will continue to benefit from the additional time to find alternative accommodation that the six-month pause in the enforcement of eviction action provides. In addition, they are protected from private landlords seeking to end a tenancy in order to raise rents above the cap, and the provisions reduce unlawful evictions by increasing the level of damages that are payable.

As with the rent cap, the eviction moratorium provisions include a number of safeguards for landlords. Those recognise that there are circumstances when enforcement of an eviction order or decree should proceed to protect communities—for example, in instances of serious antisocial behaviour—and to strike an appropriate balance between the protection of tenants and the rights of landlords.

In summary, the latest evidence shows that the cost crisis is still very much with us. It is crucial that we continue the remaining protections in the 2022 act beyond 30 September. If the committee agrees to recommend approval, it will remain the case that, for this final period, I will continue to keep the measures under review, to consider their on-going necessity and proportionality and to advise the Parliament through regular reporting—the next report is due to be laid no later than 14 October.

I thank the committee for its continued interest in the issue and for its scrutiny of the regulations. I am happy to answer any questions that members have.

Absolutely. The increase in intra-tenancy rents is significant. It is significant both down south and here, partly because of economic circumstances and partly because of the unregulated nature of those rental increases. For me, that reinforces the need to continue to make progress on the development of the new housing bill and a rent control system for Scotland that will be fully effective, rather than our relying on emergency legislation that can protect only people in tenancies. The 2022 act, as emergency legislation, was only ever going to be able to do that. It was also only ever going to be temporary, as it has to be subject to the continual test of necessity and proportionality.

It is very clear that the affordability issues in the private rented sector more generally require longer-term reform, which the Scottish Government is committed to.

I do not expect the new-build heat standard to impact on the number of planning applications. That concern might be slightly misplaced.

Clearly, developers need to be at the point of making applications that they know will command confidence and comply with the building standards. Many are already doing that. As I have said, many forward-thinking housing developers are already making that a default expectation in their new developments. Antonia Georgieva will come in on some of the planning issues and NPF4.

To move slightly beyond the new-build heat standard, local authorities are expected to play a larger role in the energy system more generally. The Heat Networks (Scotland) Act 2021, which was passed at the tail end of the most recent parliamentary session and which is now being implemented, places a requirement on local authorities to develop their local heat and energy efficiency strategies. That tool will be important in identifying, for example, places in which heat networks will be the most likely solution for zero-emissions heating, and the nature of building stock when it comes to the requirement for investment in energy efficiency.

Local authorities and social housing providers could have a linchpin role in becoming the lead organisations in new heat networks. There is a huge opportunity for local authorities to undertake that work. Some were already well advanced in that before the legal requirement was placed on them, but all are now in the final stages of completing their local heat and energy efficiency strategy, which gives them a real opportunity to learn lessons from countries such as Denmark, which advise us closely on a lot of this, where local authorities have had and still have a leading role not just in energy reduction but in decarbonisation, which gives them huge opportunities

Principally, we would be talking about heat pumps and connection to heat networks. There are other electrical systems, too; for example, some people might choose to use smart electric storage.

The regulations are technology neutral. We expect that heat pumps will play a substantial role in complying with the new-build heat standard as well as wider retrofit for the rest of the housing stock.

I would take some convincing that, for a new build, the only way to move away from fossil fuels would be to install, from the outset, a bioenergy system that itself produced direct carbon emissions. There would be other options for complying with the new-build heat standard. Installing a bioenergy system would not be consistent with the Climate Change Committee’s recommendation.

Yes. As I said earlier, last year’s updates to the regulations made improvements with regard to energy; this set is about the heating systems that will be installed. We are also working, in line with the commitment in the Bute house agreement, on developing a Passivhaus-equivalent standard for Scotland. That is supported by Labour colleagues such as Alex Rowley, who has done work in that area.

As I have said, some of the people to whom I have spoken who are the happiest with their energy bills are those living in Passivhaus-standard or near-Passivhaus-standard homes, because it is the energy that they are not using that is the most beneficial to them. If we can achieve something equivalent to that in Scotland, which I believe that we can—although I should say that a lot of homes will still need some kind of system; they will certainly need a heating system for hot water—people will still have something that reduces the draw on energy and therefore reduces their bills very substantially.

Again, the legislation is about a direction of travel and a transition with regard to heat that has many different aspects. The new-build heat standard is one aspect, and it will complement and be complemented by the work that we intend to take forward on a Passivhaus-equivalent standard for Scotland.

I will ask Antonia Georgieva to build on the comments that she made on SME support.

It is worth separating out the rent cap provisions from the eviction moratorium provisions. With the social housing sector—local authority and housing association housing—we reached a different approach on the rent cap. We agreed that approach, taking account of the sector’s concerns and its different nature, such as the way in which rental income is reinvested for public purposes, whether that is for services for tenants, retrofit to improve energy performance or investment in new build. We recognised a range of differences in the way that the private and the social rented sectors operate, and we found that the best solution was to work with the social rented sector to agree a voluntary limit on average rent rises across Scotland.

We removed social housing from the fixed absolute rent cap and agreed the voluntary approach. For an average size of property, that amounted to a close monetary equivalence between the increased rent cap after it raised from zero and the voluntary agreement that was reached with the social housing sector. My view is that that has achieved a level of stability for tenants in a way that has been agreed mutually with the sector.

Some of the sector’s concerns might be more focused on the eviction moratorium rather than on rent. We believe that, in the current climate, it remains important for people to have the additional time available to them if they are faced with the prospect of eviction. Safeguards remain for social landlords that need to evict someone—for example, that can happen in cases of severe or serious antisocial behaviour. For the most part, social landlords, whether they are local authorities or housing associations, have been very responsible landlords and have never wanted to move to eviction as their first recourse. They seek to achieve better outcomes for their tenants. They have had pre-eviction protocols in place for substantially longer than they have been a requirement in the private rented sector.

Therefore, I believe that we still have the right balance when it comes to protection for tenants who might face the prospect of eviction in some circumstances, and protection for landlords, whether in the social sector or the private sector, who, in rare circumstances, have a legitimate need to pursue an eviction order.

The programme for government includes a commitment to introduce the housing bill to deliver the new deal for tenants, which will include the introduction of long-term rent controls and other tenants’ rights, as well as new prevention of homelessness duties. I hope that members and stakeholders will take confidence from the inclusion of that commitment in the programme for government. The precise date of introduction of a new bill is always a slightly moveable feast, but we have the commitment to take that work forward and are continuing to work with a range of stakeholders to ensure that we shape that bill as effectively as possible.

I share the concern about the matter, although I am not sure that I would use the word “loophole”. The situation is a consequence of the fact that the emergency legislation could take only temporary steps and that it was not possible to use it for a fundamental restructuring of, or major surgery on, private residential tenancy. The current legislation gives the landlord the right to decide not to agree to continue an existing tenancy when one joint tenant leaves.

The intention, of course, behind designing the PRT in that way—this is going back a good number of years—was to avoid a situation in which others were made homeless because one person chose to leave a joint tenancy. I do not think that it was the wrong decision to take that approach, but we need to recognise that one of the consequences was that the emergency legislation was not able to address that particular circumstance. Once again, I come back to the point that it highlights the need for us to make good on the longer-term commitments, including the new housing legislation and the new deal for tenants. As part of our work on developing that, we are looking at joint tenancy issues, including the existing approach to ending joint tenancies.