Seòmar agus comataidhean

We will keep under surveillance the engagement that people have with the awareness-raising campaign—a great deal of it is online, so we can monitor the levels of engagement and exposure—and, as we move into the temporary measures, we will also monitor the use of the adjudication protections.

I do not think that it would be reasonable to say that there is a final, set-in-stone decision on how much awareness raising should take place. We have committed to the spend to ensure that there is an awareness-raising campaign as we move out of the temporary rent cap and into the slightly longer-term but still temporary rent adjudication changes. Any such change will increase the level of complexity that people are dealing with and increase some confusion. As a regional MSP, I am aware that my inbox contains correspondence from tenants and landlords who do not know what their rights are as we approach the end of the period.

We need to make sure that we continue to engage with tenants and landlords and provide that information both through direct channels and through working with a range of organisations and advice agencies at a local level. One of the organisations that I visited recently when I launched the campaign was Citizens Advice Scotland, which has a critical role to play as a trusted voice in the local community. Similar organisations the length and breadth of the country will play a really powerful role, too.

This is a hugely important question that we have been conscious of all through the process. It was very clear that the rent cap had to be temporary; that is the nature of emergency legislation, and I think that that was well understood across Parliament and by external stakeholders when we passed the act itself. Having the ability to modify an existing mechanism—that is, the rent adjudication mechanism—offered the clearest opportunity for an off-ramp from the temporary rent cap, if I can put it that way.

However, it does place the onus on tenants to challenge, and we need them to be aware that, even as we move out of the emergency legislation, Scotland has the strongest package of tenants’ rights and protections of any part of the United Kingdom. We are seeing on-going debates down south over whether no-fault evictions will eventually be banned or whether the proposals will be changed before they are put to the vote, but that is something that we already did a number of years ago.

The grounds on which evictions can be pursued are very clearly and explicitly laid out, and the level of protection that tenants have is very strong. We need to remind not only tenants but landlords of those rights and responsibilities, which is why the awareness-raising campaign is so important and why we will continue to engage with the organisations that provide advice. MSPs, MPs, councillors and other elected representatives can play a really important role in disseminating that information to concerned constituents, ensuring that community organisations that they are in touch with have access to that information and pointing people to online tools such as the rent calculator.

We have worked with colleagues to understand what they expect in terms of the burdens on them of processing rent adjudication requests. The process has not been taking place in the normal way during the period when the emergency legislation has applied, but it will resume now, regardless of whether we are applying an altered adjudication process. However, I would take a little bit of persuading that the numbers are going to be markedly different purely on the ground that we are adding that third comparator.

You might have heard from constituents who are concerned about the rent increase notices that some landlords have issued prematurely, ahead of the rent cap ending—I certainly have. At the moment, we can reassure them that the rent cap is still in place and that those rent increase notices still need to comply with it, but clearly a number of rent increase notices will begin to be issued when the rent cap ends, regardless of whether we take forward the power on a modified adjudication framework with the third comparator figure. It is really important that we have that third comparator figure, but, regardless of whether we use that power, there will obviously be a resumption of rent adjudication requests, and rent service Scotland and the First-tier Tribunal will need to be ready to deal with that. We will, therefore, continue to engage with them to understand how that is playing out in practice. As I said to Mark Griffin, there is a shared desire to ensure that requests are dealt with in a timely way.

The evidence that the rent adjudication process can operate effectively with the current data is that it operated effectively before the emergency legislation was in place. We are returning to a system that had already been in operation for a number of years. We are adding a comparator that will ensure that we avoid the very steep rent increases that might have taken place in some parts of the country in the absence of that additional comparator. We are essentially restarting a process that has already been embedded.

We will get into the longer-term debate about how to structure a permanent system of rent controls for Scotland once the housing bill has been introduced and the committee scrutinises it. One of the questions that we will need to address is how much additional data needs to be collected in order for a new system—a system that is not yet in place—to operate effectively. That will be an important question for the committee to get into at that point. It is very clearly not the case that we need additional data in order to operate the rent adjudication process, because we had been doing so prior to the emergency legislation.

We will certainly welcome feedback from a range of voices, not only on the awareness-raising work that we are doing in the immediate term but on the operation of the temporary measures once they are in force. We will continue to keep a close eye on these matters.

A landlord has to give a full three months’ notice of a rent increase, and the rent must not have changed when that notice is issued. Tenants who wish to make a challenge can initiate that within the first 21 days of that period.

Rent service Scotland aims to respond to adjudication requests within 40 days. Obviously, there is a degree of independence from Government in the process, but we will continue to monitor the service’s ability to respond to requests in a timely manner. It is required to do so within 12 weeks, but it aims for 40 days. If we are able to maintain that level of service, the understandable concern that Mark Griffin raises is less likely to materialise.

The circumstances will be different between not only parts of the country geographically, but individual tenancies.

For example, we can think about a tenant who left a private rented home, for whatever reason, while the rent cap has been in place under the 2022 act. If there has been a turnover of tenancy, the new tenancy might well have been reset according to open-market rent and be at the upper end of that. In such a circumstance, there might be very little gap between the rent that is currently being paid and the open-market rent. However, there might be a very big gap for the same property with the same landlord, if there had not been a turnover of tenancy and that landlord, prior to the cost of living crisis, had done their best to keep rent rises low for a number of years, because they wanted to hang on to a good tenant and sustain the tenancy. The circumstances will be different.

In relation to the earlier questions about data, it is very clear that we do not have granular, detailed data about the level of rents that are being paid. We have much more information about the rents that are being advertised. That is a matter to keep under careful watch as the rent adjudication process resumes and Scotland moves out of the temporary rent cap measures. However, at the moment, we do not have the level of detail about the rents that are being paid, as opposed to the rents that are being advertised, which would give a definitive answer to the question.

A range of views are expressed on the potential impact of the temporary legislation on the wider PRS market. It is very clear that new rent increases, as advertised, have been rising in a worryingly strong way in many parts of the UK. A few days ago, the BBC ran a story that showed that Glasgow and Edinburgh are at the upper end of that. Glasgow was a fraction of a per cent above Bolton and Manchester; Edinburgh was a bit below Manchester and London.

If the temporary legislation is the factor that is driving the increase in new rents being set, I would expect to see a big gap between areas in Scotland and areas in the rest of the UK, but we do not see that. We do see a range of experiences in different parts of Scotland. Cities, as well as towns that are within commuting distance of cities, have been seeing big increases in advertised rents throughout the UK. That is a worry and we will have to consider it as we look at the permanent changes to legislation with the new housing bill.

I do not think that the situation could be used as a justification for not using the power to add an additional comparator as we return to the rent adjudication process. That additional comparator enables us to provide some protection against a cliff edge for tenants as we move out of the temporary legislation. The evidence from around the UK of rent rises for new tenancies reinforces the desire to ensure that that cliff edge is not experienced and that annual in-tenancy rent increases do not, suddenly, in a single step, return to that open-market condition.

In relation to the previous issue, I refer Mr Briggs to the business and regulatory impact assessment, which was published alongside the regulations, and looks at the number of properties that are likely to be affected. The assessment models some of the possible impacts and explores the level of rent that landlords would forgo and tenants would save.

I am sorry that the Scottish Association of Landlords has chosen to use such language. I do not believe that the Scottish Government uses “anti-landlord rhetoric”—I would not acknowlegde that. During the debates on the Cost of Living (Tenant Protection) (Scotland) Bill and in relation to the development of the consultation on the wider rented sector strategy, the new deal for tenants and the development of the new housing bill, we have said very clearly that we want a private rented sector that has high standards and that is part of a housing system in which all people have their human right to adequate housing realised, and that responsible landlords have nothing to fear from regulation. Our approach is about raising the standards in places where we do not see responsible practice taking place.

We are all conscious that, within the private rented sector, there is a range of practice, a range of affordability and a range of protection of and respect for tenants’ rights. We want to encourage the best, and we want to ensure that, where standards are not as they should be, they will be raised up.

Good, responsible landlords have nothing to fear from a proportionate approach to regulation. Across many other European countries, the provision of a decent level of regulation and protection for tenants is entirely consistent with a viable private rented sector, and I think that, in fact, that is the experience in Scotland, too. Over the decades, there have been gradual increases and improvements in regulation of the private rented sector and protection for tenants at the same time as a dramatic increase in the scale and size of the private rented sector. Indeed, even during the operation of the Cost of Living (Tenant Protection) (Scotland) Act 2022 and the rent cap, the number of properties that are registered under the landlord register has gone up slightly.

I recognise that the Scottish Association of Landlords has conducted a survey of a small number of tenants, from which it appears to be extrapolating as though it proves something on the wider picture; I do not think that the data that we have demonstrates that.

Thank you, convener, and good morning to committee colleagues. I am pleased to be at the meeting to present three sets of regulations that will support the expiry of part 1 of the Cost of Living (Tenant Protection) (Scotland) Act 2022 on 31 March 2024 and introduce some important measures that will continue to support tenants from 1 April 2024.

As colleagues know, the emergency act came into force on 28 October 2022. Since then, it has continued to provide extra protection for tenants during very challenging economic times, including through the provision of a cap on in-tenancy rent increases and a moratorium on the enforcement of evictions. However, the measures in part 1 of the act were able to provide only temporary support during the worst of the cost crisis, and the legislation as approved by the Parliament in October 2022 clearly sets out that it could not be extended beyond 31 March this year. In order to support part 1 of the emergency act coming to an end, we have laid the three instruments that the committee is considering.

The Cost of Living (Tenant Protection) (Scotland) Act 2022 (Saving Provisions) Regulations 2024 is a negative instrument that is intended to facilitate the transition away from the emergency measures by saving certain provisions as they relate to processes that commenced prior to 1 April 2024. For the rent cap, certain schedule 1 provisions would be saved for rent increase notices that have been served before 1 April, as well as any subsequent referrals, applications or appeals in relation to them. For the temporary eviction grounds, the regulations will mean that any eviction notice that has been served on the basis of those provisions prior to 1 April may proceed or be appealed. Similarly, provisions will be saved for any action for unlawful eviction that was raised before 1 April and any subsequent appeal. Those provisions will be familiar to members from other time-limited legislation that we have passed previously. In effect, they mean that any action that was started before the expiry date will not have to be restarted just because the source legislation has expired.

The draft Cost of Living (Tenant Protection) (Scotland) Act 2022 (Expiry of Section 10: Extension) Regulations 2024 is an affirmative instrument that is technical in nature and it links to the third set of regulations, which I will turn to shortly. The regulations will modify the emergency act in order to change the time when section 10 and, by consequence, schedule 3 of the act will expire. Instead of expiring at the end of 31 March 2024, as part 1 of the act will, section 10 and schedule 3 will expire a year later, at the end of 31 March 2025. In line with the act’s requirements, the Scottish Government has laid a statement of reasons to accompany the draft regulations.

The third set of regulations has probably engaged the most interest across rented sector stakeholders. The draft Rent Adjudication (Temporary Modifications) (Scotland) Regulations 2024 will change how rents in relation to private residential tenancies and statutory assured tenancies are determined on referral by a tenant to a rent officer or the First-tier Tribunal for Scotland. The process of adjudication has been in place since 2017. Although it was suspended during the period of the rent cap, it has now resumed in a modified form. The proposed changes to the adjudication process are intended to smooth the transition away from the rent cap and to protect tenants from steep rent increases, which some tenants would experience if, in a single step, there were to be a move back to open market rent from rent levels that have been suppressed during the period for which the emergency act has been in force.

The legislation requires us to ensure that we reflect the interests of all parties in the rented sector. We recognise that landlords may have experienced rising costs, including from the need to improve and repair properties, which are usually recouped through rent. At the same time, although there have been some signs of improvement in the economic conditions for households in recent months, they follow a period of significant pressure such that, on average, households continue to face economic and financial conditions that are significantly more challenging than they were prior to the cost of living crisis. In particular, private rented sector households continue to report that they are, on average, under greater financial stress than the average for all households.

Once the rent cap expires, we would expect that many rent increases that are proposed by landlords may proceed as normal, with tenants agreeing to pay the proposed increase. However, it is reasonable to expect that there may be situations in which tenants wish to refer a proposed increase for adjudication. The emergency act provides Scottish ministers with the ability to temporarily modify the basis on which rent increases are adjudicated. The long-standing rent adjudication process allows for rent service Scotland or the First-tier Tribunal to make a determination on the proposed rent increase. That is based on a comparison with the rent for other properties in the area, which is known as the open market rent.

The amended adjudication proposal would see a third factor taken into account when a determination is made. Alongside the market rent and the rent that is being requested by the landlord, there will be an additional comparator. The final rent will be determined based on the lowest of the three figures and it may not be set at a rate above the rent that the landlord is requesting. The additional comparator will be based on the difference between the current rent and the open market rent, with the level of increase being determined on a sliding scale.

When the gap between the market rent and the current rent is less than 6 per cent, the comparator will not come into play, so the rent increase will be either the rent that is being sought by the landlord or the market rent, whichever is lower.

When the gap is between 6 per cent and 24 per cent, a sliding scale will apply, with an additional 0.3 per cent increase being allowed for each percentage point between the current rent and the market rent. The increase may not exceed 12 per cent of the overall rent. That will apply in all cases. The 12 per cent maximum would be reached only in cases in which market rents are 24 per cent or more higher than current rents.

That underlying formula is necessarily more complex than a simple rent cap, and we want to ensure that both landlords and tenants have clarity. That is why a simple online rent calculator forms part of our awareness-raising work. It was launched last Wednesday, well in advance of the changes taking place. Just as people do not need to understand everything about the underlying technology of the smartphone or the device on which they will use the calculator, they do not necessarily need to know exactly how the underlying formula works in order to use it effectively. The online calculator will allow tenants and landlords to see quickly how various rent scenarios would affect their situation. They do not need to follow the formula in detail. I am aware that members have also been made aware of the recent Scottish Parliament information centre blog on the ending of the emergency measures, which includes an online calculator that is similar to the one that the Scottish Government has provided. When sample numbers are put into the calculator, it will illustrate the potential impact of the proposed changes.

The transitional arrangements will amend the basis of rent adjudication for one year, from 1 April 2024 to 31 March 2025, but they may be extended for further periods of one year, if appropriate, with parliamentary approval. That would be based on an assessment of the circumstances at the time. As well as launching the online calculator to address the underlying complexity of the changes that we are proposing, we are running an awareness-raising campaign that is aimed at increasing awareness of tenants’ rights and empowering tenants to assert their rights if required. Our renters’ rights campaign launched last Wednesday and it will run for four weeks. We are keen to work with any tenant or landlord representative body to help to raise awareness of the changes and help people to understand how they will work in practice.

The regulations that the committee is considering are vital as they signal a move away from the emergency protections that were crucial in protecting and supporting tenants during the worst of the cost crisis, while also acknowledging that challenges remain and that it is right that we protect tenants as we move towards the pre-cost crisis position. They also come as we prepare the housing bill to be debated in Parliament. That bill will set out how we aim to regulate rents in the long term alongside a wider package of changes to increase tenants’ rights and prevent homelessness.

I thank the committee for its scrutiny of the instruments. I am happy to answer any questions.