Chamber and committees

If Rachael Hamilton is keen to press amendment 214, I ask that we pause and use the opportunity between stages 2 and 3 to discuss with the Scottish Association of Landlords the additional administrative burden on landlords. It is the burden on landlords that I am particularly concerned about. I see Rachael Hamilton’s point about what the amendment is trying to achieve, but I am concerned about the administrative burden on each individual landlord.

Amendment 214, in the name of Rachael Hamilton, requires that rent increase notices for private residential tenancies for properties that are outwith a rent control area should set out the reasons for a proposed rent increase. I am not convinced that that would be a clear benefit for tenants, and I am very concerned about the increased administrative burden on all landlords. Therefore, I cannot support amendment 214 and I urge Rachael Hamilton not to press it.

Amendments 501 and 500, in the name of Mark Griffin, would create exceptions to the requirement that private rents should not be raised in the first 12 months of a tenancy outwith a rent control area or for an exempt property in a rent control area. The bill contains a power that allows for exemptions to be set out in regulations, which we have discussed in earlier groups, and those will be part of the live consultation for those who will be impacted.

Although I understand Mark Griffin’s intentions with respect to social housing providers, an approach that sets out any exception to the requirement that rent is not increased during the first 12 months of a tenancy should be set out in regulations. I appreciate that the issue is a concern of the Scottish Federation of Housing Associations in particular, and I reassure Mark Griffin that we will engage with it and other interested parties on that as we move forward with implementation. The development of the regulations that I mentioned will allow us the opportunity to engage with everyone, including the SFHA, to ensure that any exceptions are reasonable and that we strike the right balance. I am afraid that amendments 501 and 500 do not allow for that, so I cannot support them and I urge Mr Griffin not to move them.

Amendment 229, in the name of Maggie Chapman, would apply certain restrictions on between-tenancy rent increases to properties outwith a rent control area or exempt properties in a rent control area. The amendment would prevent landlords in those properties from setting an increased rent between tenancies if the rent for the property had increased in the previous tenancy within the past 12 months. I consider that restricting rent increases between tenancies is appropriate in areas where rent control has been deemed necessary. However, I do not consider that that would be a proportionate approach in places where rent controls have not been deemed necessary. Therefore, I cannot support the amendment, and I urge Ms Chapman not to move it.

Amendments 258 and 266, also in the name of Maggie Chapman, would mean that rent for private residential tenancies for properties that are outwith rent control areas and exempt properties in rent control areas could not be increased unless the property met minimum standards that were specified by Scottish ministers in regulations. Although I agree with Ms Chapman about the importance of all properties in the private rented sector complying with required standards, there are already standards and enforcement measures in place in relation to rented properties. Creating something additional to the existing repairing standard is unnecessary and would risk causing confusion for landlords and tenants. However, there is a discussion to be had on quality and repair in a later group, and I look forward to discussing those amendments.

I appreciate the challenge that Meghan Gallacher raises. She mentioned the on-going discussion and consultation on EPC standards, which is an important piece of work. I also recognise the challenge around some of those issues, particularly in rural and island areas.

Amendment 451, in the name of Maggie Chapman, would require the rent officer or the First-tier Tribunal, when making a determination of an open market rent as part of a rent adjudication, to have regard to information that is collected under amendments 449 and 450, which were debated previously. Amendment 449 would enable information to be requested from a landlord or tenant by a local authority for the purposes of providing data to support the determination of an open market rent under the Private Housing Tenancies (Scotland) Act 2016. Amendment 450 is an alternative to amendment 449, which would oblige the local authority to exercise the power.

It is not clear that that information is needed by rent officers or the First-tier Tribunal, as they already make determinations of open market rent without access to it. It is also not clear from the amendments how such a process could operate or how often information would need to be collected for that purpose. It would not only place an additional burden on local authorities, but place them in the awkward position of supporting rent officers and the FTT in the adjudication of rent, which is a role that they do not currently fulfil. I cannot therefore support amendment 451.

For those reasons, I ask Rachael Hamilton not to press amendment 214, and Mark Griffin and Maggie Chapman not to move their amendments in the group. If they are pressed and moved, I ask members of the committee to oppose them.

I accept that there is a point to be made. That is similar to some of the discussions that we have had in previous groups on exemptions or reasons to increase rents above the cap. That is exactly why this area is in the consultation. I appreciate that landlords are concerned that they might, for example, be put off investing money to make major improvements to properties if those improvements were not to be recognised. I take that issue very seriously. I am keen to see what happens in the consultation—I am sure that that point will come through, based on the discussions that I have already had with landlords’ representatives.

However, I am clear that the circumstances in which it would be appropriate for there to be increases above the cap should be set out through regulations and that that process should be supported by our on-going consultation. Therefore, I cannot support Willie Rennie’s amendments 29 to 46.

Rachael Hamilton’s amendments 216 and 217, and the consequential amendment 227, would enable the Scottish ministers to prescribe circumstances in which the restrictions on the setting of the initial rent in a previously let property in a rent control area could be removed. The bill will already provide powers for the Scottish ministers to create exemptions from the rent control or to set circumstances in which the rent cap can be exceeded. Those powers will address the issue that Ms Hamilton’s amendments seek to cover. Therefore, I cannot support those amendments.

Due to the on-going consultation and the regulations that the Government has committed to make in short order, I urge Willie Rennie not to press amendment 29 or to move his other amendments, and I ask Rachael Hamilton not to move her amendments. If that is not the case, I urge members not to support them.

Amendments 29 to 31, along with amendments 34 to 46, in the name of Willie Rennie, would collectively remove the restrictions on rent increases between tenancies and the means by which a tenant could enforce those restrictions.

The overarching purpose of the rent control measures is to protect the social and economic interests of tenants by stabilising rents in areas where market rents have been increasing particularly steeply. Allowing unrestricted rent increases between tenancies would undermine that purpose and would reduce the protection that rent controls can offer for tenants.

Allowing unrestricted rent increases between tenancies could also lead to a two-tier market, with a difference between tenants who move tenancies and those who stay in tenancies for longer periods of time. Tenants might remain in a tenancy for longer than they would otherwise have done, even when that tenancy does not meet their needs, because their existing rent is more affordable than open market rents for new tenancies in the same area. There is a risk that that could reduce people’s ability to access suitable rented homes and could reduce the ability of tenants to move if their circumstances change. It could also make it harder for prospective tenants to obtain a lease for a rental property in a rent control area.

I understand Willie Rennie’s concerns and recognise that some landlords are concerned about restrictions between tenancies, particularly in circumstances in which the landlord has not increased the rent during a tenancy, has made significant improvements to the let property or is facing increased costs in offering the property for let. That is why the bill already includes provisions for ministers to make regulations allowing for properties to be excluded from rent control or for rents to be increased above the cap. I hope that the fact that our consultation on the potential use of those provisions has been published reassures Mr Rennie and landlords that we are considering the most appropriate way to approach the issues. However, removing the restrictions on pre-tenancy rent increases is not an approach that I can support.

Mr Rennie’s amendments 32 and 33 would change the terms under which a property that is let under a tenancy is to be considered the same as a property that was let under a previous tenancy. Those amendments would provide that the question of whether a property is the same must include consideration of the extent to which the property has been decorated or renovated since the end of the previous tenancy. That could allow a landlord to raise the rent between tenancies without restriction if they have undertaken very minor redecoration or renovation to the property between tenancies, which would not be in keeping with the aim of rent control.

As I have said, the bill already includes provisions for ministers to set out circumstances in which rents may be increased above the cap. An area that is being consulted on is the use of those powers when a landlord has made significant improvements to the let property, either during an existing tenancy or between tenants.

Much as I am tempted to get into an economic thesis on a Tuesday morning, I will refrain, but that is an important point. While we have talked about the specifics, it is also important to ensure that, in general, we provide as much certainty as we can to investors, because I recognise that not only the actions of Government, but the perceptions around that, are very important. It is important for the Scottish Government to encourage investment into Scotland and to encourage further private investment in housing; that is an important part of tackling the housing emergency.

Dealing with those aspects that you mention to ensure that we take into account what happens in the wider sector is exceptionally important, and that is why we are keen to give as much clarity as possible.

To return to my comments, CPI plus 1 per cent is in line with what some stakeholders in the sector have been calling for. Stakeholders, including the Scottish Property Federation and the Association for Rental Living, welcomed the clarity that was provided by our statement in October last year, in which we confirmed the form of the rent cap that we are proposing through these amendments.

As it is not only the policy intention of rent control to reduce rents, if the total percentage determined under the formula is less than 0 per cent, the rent cap would be set instead at 0 per cent. As the form of the rent cap will be set out in the bill, several consequential or clarifying amendments are required. Amendments 281 to 301 and amendments 334 to 353 are necessary now that we are proposing to set out the form of the cap in the bill itself; they will ensure that all relevant sections of the bill interact appropriately with the new provisions that we have set out. Amendment 327 will make a minor technical adjustment to the wording of section 18.

I turn to the other amendments in the group. Amendments 47 to 50, in the name of Ben Macpherson, would let landlords in rent control areas who have not increased the rent for their property in the preceding 24 months set the initial rent for a new tenancy at the open market rate. I understand the intention behind those amendments, but I am clear that the circumstances in which rent can be raised above the rent cap should be set out in regulations, informed by consultation with those who are affected, as I mentioned earlier.

Amendment 77, in the name of Graham Simpson, would provide that regulations that are made under the power that would be created by amendment 48, in the name of Ben Macpherson, would be subject to the affirmative procedure. Amendments 61 to 64, 78 and 79, in the name of Graham Simpson, would create a process by which a landlord in a rent control area could increase the initial rent for a tenancy to open market rent where the final rent in the preceding tenancy was more than 10 per cent below open market rent.

Daniel Johnson’s amendments 61A, 61B, 63A, 64A, 64B and 64C would amend Graham Simpson’s amendments so that the process can be used by landlords only when the previous rent was no less than 10 per cent below open market rent.

Again, I understand very clearly that the intent behind the amendments is to recognise situations in which landlords have not increased rents such that they have fallen behind market levels. However, the amendments would enable some landlords to increase the rent regardless of whether there had been a rent increase in the preceding 12 months, and that would be inconsistent with the aim of limiting rent increases for a property in rent control areas to once per year. Therefore, I cannot support the amendments, but I can confirm that issues with regard to landlords charging below market rent have been included for consideration in the consultation that was published recently.

The debate on the group has been really useful. It has brought to light once again the necessity of robust data and the fact that such data is required for the bill to be effective. I thank members for lodging their amendments and for the discussion that we have had.

Some members have suggested that they are interested in taking part in the discussions that will happen over the summer. I assure Carol Mochan, Maggie Chapman, Meghan Gallacher, Emma Roddick and anyone else who I have forgotten about that they are invited to take part in those discussions, and I thank them for their continuing interest.

Today, I have heard clearly once again that, despite the Government lodging a number of amendments after listening to the concerns that were set out in the committee’s stage 1 report, people still have concerns. It is important that we have further detailed discussions and that we do so in a way that ensures that the views of local government colleagues and landlords are heard. We seem to be in collective agreement that we want the legislation to work for tenants, councils and landlords and to ensure that we can collect robust data in a cost-effective manner, recognising the burdens that we will be placing on landlords. I will continue to focus on that area over the summer.

I will address a couple of points of detail. As I mentioned earlier, we are already moving to collect more data on advertised rents at local authority level. The powers that we propose in the amendments that are before the committee today will allow the Government to supplement that with information about in-tenancy rents. It is important that we engage with local authorities and, as I said, members as we move through the practicalities of that, because members are quite right to point to the need for information about rents not only as advertised but as a tenancy is continuing.

On the level of fines, the maximum penalty of £1,000 is in line with level 3 of the offences, penalties and powers of enforcement guidance and it is the normal maximum penalty for obstructing a person who is performing a statutory duty. That is why that level is designated in the bill and is what the Government is proposing. If that detail and reasoning still leaves members with concerns, I am happy to continue discussions on the matter, but that is the basis for the £1,000 figure.

I will leave it there, convener. I look forward to the discussions, if members wish to take part in them.

Good morning. The amendments in this group relate to the amount by which landlords can increase rent, where a rent control area is in force, and include Government amendments in the name of Paul McLennan to set out the form of the rent cap in the bill. The amendments also touch on concerns about the impact of rent controls on the circumstances of individual landlords and where it might be appropriate to allow additional increases above the level of the cap. I recognise those concerns, and I continue to engage with landlord representative organisations and others in the sector.

Section 14 of the bill includes a power for Scottish ministers to make regulations that allow for rents to be increased above the level of the rent cap in specified cases. The aim is to ensure that, where appropriate, the individual circumstances of landlords who might be disproportionately impacted by rent control can be taken into account. I fully agree on the importance of providing clarity to the sector as soon as possible about how that will be accomplished, and I recognise that some stakeholders would prefer that that detail was set out in primary legislation. However, it is essential that decisions on that are informed by consultation, to ensure that the potential impact of the use of that power is fully understood and that measures are developed in a way that is fair, robust against challenge and can be clearly set out in legislation.

I have listened to the calls for clarity from tenants, landlords and investors about the implementation of rent control, which is why the Scottish Government has recently published a consultation to support the consideration of how the regulation-making powers could be used. That will ensure that the impact of any decisions on the use of those powers is fully understood and that any measures are framed in a way that is clear and proportionate. Bringing forward the consultation to a point before the time when it might have been anticipated—for example after the bill had completed its passage through the Parliament—will allow us to provide the clarity that is being sought as soon as possible and will support us to bring forward any secondary legislation at the earliest opportunity following royal assent.

I want to make it clear that I am completely convinced of the need to use powers in the bill to exempt, where appropriate, certain categories of property from rent control and to allow rent increases above the level of the cap in certain circumstances. That is important to ensure that we continue to encourage investment in Scotland and in housing. However, that must be supported by consultation that ensures that the impact of any such measures is fully understood and that our actions do not create any unintended consequences, taking into account the views of everyone with an interest.

I give the absolute assurance that the consultation is due to close soon and that we anticipate it to be one of the absolute priorities of the Government to move forward with the analysis of the consultation responses and the regulations thereafter. I absolutely wish to reiterate the importance of moving at pace on this matter, which is why we brought the timescale for the consultation forward. The consultation has happened at this point to ensure that we provide clarity as soon as we possibly can. I absolutely accept that that is integral to encouraging investment in housing.

May I just come in on that point?