Chamber and committees

I appreciate where Maggie Chapman is coming from on the issue. I thank her for lodging the amendments to allow us to have the debate about how we can clearly set out what the rent cap is.

I go back to the points that I have already made about the importance of having something that takes other income into account, although I appreciate what Ms Chapman says about the likelihood of wages being the primary source of income for many renters. It is also important to have something that is understood by renters, landlords and investors. We need to be able to provide that insurance to all those interested parties. The clarity that the use of the CPI can provide is exceptionally important. I also believe that the CPI is the most appropriate method, for the reasons that I have set out.

I just wanted to make sure that I could get in before Meghan Gallacher finishes winding up.

I am unable to find in my weighty folder the specific date on which the consultation closes, but I think that it is in July—

In some ways, that depends on when stage 3 is. I have also heard very understandable calls from the sector for us to move through the bill process at pace. We are still in the early stages of stage 2, so you will forgive me if I do not try to estimate when we will complete the bill process. However, I am mindful of the need to look at how quickly we can get that done, and I give the reassurance that, regardless of how we are working with regard to stages 2 and 3, we will be working at the same time on the analysis, so that, as soon as the consultation closes, we will get the analysis done and the regulations drafted. Therefore, regardless of when the bill process is complete, we are working to get that done as soon as possible.

To return to my earlier point, taking account of the views of those with an interest to understand the impact of any measures is why our consultation has asked some specific questions about possible exemptions for mid-market rent and build-to-rent properties. We have also asked questions about landlords who charge rents below market rates and who make improvements to the property. There are also opportunities for landlords who do not see their circumstances reflected in the specific questions in the consultation to give their views and for tenants to give their opinions on how the proposals will impact them. To that end, amendment 302, in Paul McLennan’s name, sets out that the requirement in the bill on Scottish ministers to consult before laying regulations specifying properties that might be subject to a modified rent cap may be met by consultation carried out before the relevant section comes into force. That will support bringing forward any necessary regulations as soon as possible after the legislation comes into force, as I mentioned in my responses to the interventions.

Amendment 332, in Paul McLennan’s name, sets out the form of the rent cap. Providing a formula for the rent cap in the bill—the percentage change in the consumer prices index plus 1 percentage point, up to a maximum increase of 6 per cent—is an approach that will provide protection for tenants who are at the highest risk of the most significant rent increases. Setting a ceiling of 6 per cent can help to protect renters against large increases in rents at times when inflation spikes. Including a ceiling means that a greater share of the risk of future extreme economic events that cause a spike in inflation will lie with investors or landlords, who are arguably better placed than renters to cope with the impact that such events can have in the short term. However, the cap will also provide clarity for landlords and investors on rent increases in rent control areas.

CPI is a comprehensive measure of the trends in goods and services purchased by consumers in the United Kingdom economy. Costs relating to running a home are included in the index—for example, costs relating to maintaining a dwelling as well as the items within a dwelling. Linking the rent cap to CPI is, therefore, a reflection of the cost to landlords of offering a property for rent.

Allowing some margin over inflation, such as the 1 percentage point that we are proposing, will give investors some assurance that, over the long term, any periods in which growth is below inflation may be balanced out with periods in which rents may grow a little above inflation.

Through the housing investment task force, we have worked directly with investors and developers to understand how we can bring forward a system of rent control that both works for tenants and supports continued investment in private rented housing.

Thank you for your assistance, Mr Simpson. I am very keen to move expeditiously with the discussions in short order afterwards.

I appreciate that Maggie Chapman is frustrated by the gap, but I go back to the point that I made about the arrangements being transitional. It was important that we supported people through the transition out of the rent cap, but that measure was intended to be temporary and exercisable only on or in anticipation of the expiry of the rent cap measure in the Cost of Living (Tenant Protection) (Scotland) Act 2022, and, through regulations that were approved by Parliament, they could apply for a 12-month period. Therefore, I go back to the fact that they were not designed to be a bridging mechanism to longer-term rent controls.

The existing mechanism for adjudicating rent increases under the Private Housing (Tenancies) (Scotland) Act 2016, which is based on open market rent, will continue to operate as intended, protecting tenants from unreasonable rent increases.

I cannot support amendments 186, 196 and 199 and urge Maggie Chapman not to move them. If they are moved, I urge members not to support them.

Amendments 424 to 426, in the name of Maggie Chapman, would provide for the introduction of special rent control areas. In those areas, a rent cap could be set for up to one year, which would be below the level of the rent cap that would apply under my amendment 332. Maggie Chapman’s amendments would enable the rent cap in a special rent control area to be set at 0 per cent, or even a negative figure, requiring landlords to reduce rents.

Although I recognise that Maggie Chapman has concerns with the fixed rent cap being proposed in my amendment 332, I consider that it is necessary to provide clarity for landlords, tenants and investors on the impact of rent control in those areas where it will apply. The amendments would remove that clarity and would reintroduce the uncertainty that landlords and investors have called on the Scottish Government to address.

For those reasons, I urge Maggie Chapman not to move amendments 424 to 426. If they are pressed, I encourage members not to vote for them.

I absolutely see where Maggie Chapman is coming from. I think that we will come back to the issue when discussing other parts of the bill. This is about trying to ensure that we make the bill as nuanced as possible. The Government is determined to provide clarity to tenants, landlords and investors on many aspects, so I would be happy to discuss the issue with Maggie Chapman in the run-up to stage 3. However, in all those discussions, my underlying principle will be our need to provide clarity to investors. I would be hugely reluctant to do anything that would detract from that clarity, which the Government is seeking to bring through its stage 2 amendments.

I am not aware of such analysis having been undertaken to a point at which I could speak to it today, but I would be happy to have that discussion with Ms Chapman following stage 2. I appreciate that this is an area that she has been concerned about for some time, and we would be happy to carry on those conversations. For the avoidance of doubt, it is unlikely that Ms Chapman will change my mind on the Government’s position, because we believe that clarity is important. However, I am happy to work with her to see whether we can bring forward some analysis to have that discussion before stage 3.

Amendments 332G and 332H, and consequential amendment 410, would allow the rent cap to be set at a negative percentage in certain circumstances, which would reduce the existing rent of a property. The purpose of rent control has been set out as to stabilise rents in areas where they are rising steeply; the measures are not intended to allow for a reduction in existing rents. I do not consider that providing for an automatic requirement for rent reductions in certain economic circumstances in that way would allow for rent control to operate in a proportionate way.

Further amendments in Paul McLennan’s name in this group are consequential or clarifying amendments. Those include amendments 333 to 353, which make required drafting changes to section 19.

Amendment 393 would amend section 52 to remove reference to section 13(1) from the list of powers that are subject to the affirmative procedure. That is in consequence of Meghan Gallacher’s amendment 107, which would remove section 13 of the bill. We support amendment 107, as the Government’s amendment 329, which was considered with group 7, will move that power from the bill into the Private Housing (Tenancies) (Scotland) Act 2016, in consequence of amendment 332, which specifies the rent cap in the 2016 act.

Amendment 398 would amend the schedule to the bill and is consequential on amendment 329.

Amendments 401 and 402 are consequential amendments to the schedule to the bill. They provide for regulations that are made under various sections to be subject to the affirmative procedure.

Finally—the committee will be pleased to know—amendment 406, which also seeks to amend the schedule, is consequential on amendments 107 and 329.

In summary, I urge members to support Paul McLennan’s amendments in the group, and I ask Katy Clark, Edward Mountain, Rachael Hamilton, Ben Macpherson, Graham Simpson, Daniel Johnson and Maggie Chapman not to move their amendments in the group. If they move them, I urge members of the committee not to support any of them, for the reasons that I have given.

I move amendment 281.

I am afraid so, but I can also point to some technical challenges. Wage growth is not, as I mentioned earlier, a direct measure of changes in household income, but there are other complexities with regard to the measures in question. For example, the data from the annual survey of hours and earnings is published only once a year, with a significant lag. Although average weekly earnings data is published on a monthly basis, the headline measure, which includes bonus payments, can be very volatile. Moreover, it is not a measure of rates of pay, as it can be affected by changes in the composition of workforces, such as the proportions of the workforce that work full time and part time.

Although we might disagree, I hope that that at least reassures Maggie Chapman that the issue has been looked at, and, as I have said, I am happy to carry on those discussions ahead of stage 3. I have to say, though, that it might be one of those areas where we will not be able to persuade each other on that point.

As for the points that have been raised by Ben Macpherson, Graham Simpson, Daniel Johnson and others, I think that, again, everyone is trying to get to the same place. We are trying to help landlords who help tenants, and we are endeavouring to provide clarity to the sector.

Graham Simpson challenged me—he wants clarity ahead of stage 3. I cannot say when stage 3 will happen, but I again reassure him that we will expedite work in this area. When I look at our work on the bill, and as we go through this process, I feel that one of my integral responsibilities is for the Government, and other parties, to provide clarity and certainty to investors. I will do everything that I can do on the issue. Moreover, I heard what he had to say about the meeting with the PBSA review group, and we will work on that matter.

With regard to Daniel Johnson’s comments about what he wishes to see at stage 3, I do not want to repeat myself, but we do have a live consultation at the moment. If he believes that more reassurance is needed before we get to stage 3, I am happy to have those discussions with him to see what can be done. Again, though, I caveat that by saying that I do not want to pre-empt the consultation or do anything that would get us into difficulties as a result of our putting something in the bill that we have not consulted on.

I will leave it there, convener.

I ask for the committee’s forbearance, because my speaking notes for this group are quite long—I apologise in advance for that—as they cover a number of amendments from a number of members. It is important that I try to set out in detail the work that has been done on the amendments and the fact that we are keen to work with members as we move forward.

The measures that are set out in sections 15, 16 and 17 of the bill will provide local authorities with the power to request certain data from landlords where the local authority considers that that could provide it with relevant information in connection with its duties under part 1 of the bill. Those provisions support the local authority to undertake its function of assessing rent conditions in its area.

Having heard the issues that have been raised by stakeholders, we share the view that amendments are required at stage 2 to further strengthen the data collection powers in the bill. I thank all members who have lodged amendments on the issue. We have given them careful consideration, and I look forward to the discussion that we will have.

However, the Government has lodged its own set of alternative amendments, which we think strike the correct balance in allowing for information to be collected in a practical and cost-effective way. In designing those amendments, we have given consideration to the committee’s stage 1 report, which noted that

“local data will be vital to determining whether rent control areas are required”,

as well as identifying the need for a

“national approach to data collection”.

Our set of amendments will give the Scottish ministers powers to collect data from landlords that will facilitate partnership working and data sharing between local authorities and the Scottish Government. That will allow greater flexibility for national and local-level data collection to be delivered in the most practical and cost-effective fashion.

Looking forward, we are committed to working closely with our local authority partners as they put the assessment process into operation. I have listened closely to their concerns about the resource implications of the assessment process and the collection of information, and that has influenced the amendments that we have lodged. Our further engagement will include how the Government can best support the collection of the information that is needed to enable a robust assessment of rent conditions in all 32 local authority areas.

Although we have concerns about the implications of some of the amendments that have been lodged, it is clear that there is consensus across all parties on the need for robust data. In that spirit, I take the opportunity to invite members who have lodged amendments on data collection to join our planned engagement with local authorities over the coming months, during which we will begin to set out options and plans to put processes for local authority assessments into operation. That will allow members to fully understand the potential impacts that some of the proposed amendments would have on local authorities, with a view to working with our local government partners and the Scottish Government on any further amendments that may be needed ahead of stage 3. My door remains open to members for further discussion on the issue.

I turn to how the Scottish Government sees the partnership approach being put into practice. We already publish statistics on advertised rent levels by broad rental market area. We are also taking steps to supplement that to provide data at local authority level, which will provide a solid starting point for the local authority assessment process and aid our understanding of rent levels. All of that will be underpinned by guidance for local authorities, which we are committed to co-authoring alongside members of our local authority working group on rent control. As well as ensuring that there is a consistent approach across Scotland, that will provide for the local flexibility that we all know will be crucial.

Further Government amendments in the group include amendments that will expand the list of information that local authorities and the Scottish ministers can request from landlords regarding their property. We propose consequential amendments to sections 16 and 17 so that the Scottish ministers, as well as local authorities, will be able to apply to the First-tier Tribunal for Scotland for an order requiring up to £1,000 to be paid by a landlord who has failed to give information or has deliberately given false or misleading information. We also propose amendments that will provide for information sharing and co-operation between local authorities and the Scottish ministers to assist with the exercise of their respective rent control functions under the bill and to provide ministers with the powers to publish aggregated statistics.

I turn to the amendments relating to the potential to collect rental data through the landlord register. The landlord register does not currently operate as a register of properties; the information that is requested to assess compliance with legislative requirements is in relation to a landlord’s portfolio. I have significant concerns about amendments that would commit us to change the function of the landlord register to enable us to collect rental data from every landlord. Those amendments would place significant additional legal obligations on landlords and would impose new obligations on local authorities as the operators of the landlord register. Moreover, a redevelopment of the register itself would likely come at considerable cost.

I recognise, though, that clear systems and processes will be required to facilitate the collection of data from landlords in the most efficient and cost-effective way. My officials will consider that in partnership with local authorities.

I consider that the measures that are included in the bill, along with amendments 303 to 322 in Paul McLennan’s name, will enable effective partnership working with local authorities, which will provide for the collection of the necessary data to support rent controls in a more practical and cost-effective way.

I turn to those amendments in Paul McLennan’s name. Amendments 303 and 304 will allow the Scottish ministers, in addition to local authorities, to request information from landlords and tenants. That will help to facilitate effective partnership working between local authorities and the Scottish Government, which will be crucial in ensuring that we collect the right data in a practical and cost-effective way to support our long-term aspirations for rent control. Amendment 315 is a consequential amendment to reflect those changes.

Amendments 305, 306 and 308 are technical amendments to ensure that, if part of the house is subject to a tenancy or occupancy arrangement, information can be sought about each tenancy or occupancy arrangement.

Amendment 307 allows for the collection of information about the “frequency of rent payable”.

Amendment 309 sets out that information may be requested about

“whether the rent payable includes payment of any costs associated with the house and, if it does, the amount of each such cost and the matter to which it relates,”

as understanding whether the rent is inclusive of bills such as council tax and utilities bills is relevant to the rental value.

Amendment 310 allows for the collection of information about the date of the most recent rent increase and the amount and frequency of the rent that was payable immediately before that rent increase took effect.

Amendment 311 allows for information to be requested on the number of bedrooms, public rooms, kitchens, bathrooms and other rooms.

Amendment 312 allows for information to be requested on

“whether the house (or part of it) is fully furnished, partially furnished or unfurnished by the landlord”.

Amendment 313 allows for information to be requested on whether the house, or part of it, is subject to a sub-tenancy or other occupancy arrangement where the landlord is someone other than the person registered on the landlord register.

Collectively, that information will help to build up a picture of the rent that is charged for different types of property, which will support the assessment of rent conditions in local authority areas.

Amendment 314 provides that only one request can be made by a local authority or the Scottish ministers for the same information from the same person in one 12-month period. That is to protect landlords from having to respond to duplicate requests.

Amendments 316 to 318 make changes to section 15 of the bill to clarify the purpose for which information might be requested by a local authority or by the Scottish ministers and the frequency of requests. Those amendments will ensure that information can be collected outwith the local authority assessment and reporting cycles, as that might be necessary to robustly analyse trends in rental data.

I absolutely take Maggie Chapman’s point. That is not the intent behind the amendment, which is to prevent the need to do what she has mentioned.

I will ensure that I look at that as part of our work for stage 3, to examine whether there are any unintended consequences. The intent behind the amendment is to avoid duplication and to save landlords unnecessary bureaucracy. It is not to give a way out, should any person try to find one. I will come back to the member on that in the build-up to stage 3, to make sure that there are no issues there.