- Asked by: Donald Cameron, MSP for Highlands and Islands, Scottish Conservative and Unionist Party
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Date lodged: Wednesday, 15 February 2023
Submitting member has a registered interest.
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Current Status:
Answered by Patrick Harvie on 14 March 2023
To ask the Scottish Government for what reason it is allowing social landlords and private landlords different percentage rent uplifts.
The Cost of Living (Tenant Protection) (Scotland) Act 2022 is a response to the impact of the cost crisis on those living in the rented sector. The Scottish Government has made clear provisions in the Act must be expired or suspended if they are no longer considered necessary and proportionate in connection with the cost of living.
As set out in our first report to Parliament on the operation of the Act, the social sector rent cap expiry follows the development of an agreed approach on rent setting for 2023-24, taken forward on a voluntary basis, with social housing landlords. Social housing landlords are “not for profit” organisations and all rental income is used to support the delivery of housing and associated services for tenants. Under the Scottish Government’s Social Housing Charter, social landlords are required to set rents and service charges in consultation with their tenants so that a balance is struck between the level of services provided, the cost of the services and how far current and prospective tenants and service users can afford them.
The private rented sector has a high quantity and range of landlords, as well as a very different statutory regime governing its rent increase process. It was therefore not feasible to replicate the Task Group that formed in respect of the social rented sector, where all landlords could be effectively represented by membership bodies.
Whereas social sector rent setting practice involves rents being set annually and in consultation with tenants, with further rent increases typically not taking place either inter- or intra-tenancy, the latest data shows high levels of recent private sector rental growth.
The Scottish Government Private Rent Statistics (primarily based on advertised rents) show a 6.2% annual increase in average 2 bedroom monthly rents across Scotland in the year to end September 2022, while data from letting agents (which relates to new let rents only) show high growth: Rightmove reporting an annual increase of 13.0% and Citylets an increase of 8.3% in Q3 2022 in Scotland, and Zoopla reporting an increase of 11.4% for Scotland in October 2022.
In light of the updated economic analysis recently undertaken – and as set out in the recently published Statement of Reasons – the Scottish Government is of the view that it would be proportionate to raise the rent cap in the private rented sector to allow within-tenancy rent increases of up to 3%.
The voluntary approach to rent setting taken by landlords in the social sector is intended to equate to an approximate average rental increase of less than £5 a week (or less than £22 per month) across the country. As rents in the private rented sector are generally significantly higher than those in the social rented sector, allowing a maximum rent increase of 3% for rents in the private rented sector equates to a similar average rent increase for tenants in two-bedroom properties (the most common property size in the private rented sector). There will be variation around these averages, with higher increases for three-bedroom and four-bedroom properties and lower increases for one-bedroom properties.
The Scottish Government considers that this will give a measure of parity to landlords in the private and social sectors in monetary terms, while continuing to protect tenants from unaffordable rent increases during the cost crisis. The increase to the rent cap will mitigate against a disproportionate impact on private landlords who may also be experiencing increased costs due to the cost crisis, allowing them to maintain their properties and meet other expenses. We are also proposing that private landlords could, alternatively, opt to apply to Rent Service Scotland for a rent increase of up to 6% if they have had an increase in their defined, prescribed property costs within a specific period.