Hansard

I begin by drawing attention to my entry in the register of interests. On behalf of Scottish Labour, I thank the Infrastructure and Capital Investment Committee for its stage 1 report, the Finance Committee and the Delegated Powers and Law Reform Committee for their scrutiny, and the various stakeholders and witnesses who have supported the process.

This debate is taking place in the context of the housing crisis facing Scotland. An independent report that was published last year by Shelter Scotland concluded that this country needs 12,000 new affordable homes every year if we are to meet housing need. Scottish Labour welcomes the bill, because it is clear that the private rented sector has a role to play in meeting housing need. However, it is important that renters get a fair deal. Figures from the Scottish Government show that, in 2014, around 14 per cent of households lived in private rented accommodation. That equates to roughly 330,000 households, 290,000 of which rent from a private landlord and 40,000 of which rent from family and friends.

Since 2001, the private rented sector has more than doubled in size, while the proportion of owner-occupied housing has declined slightly. That may have been caused partly by the economic downturn and the difficulty that potential home owners now experience in securing a mortgage, but there may be other factors—such as job insecurity or the need to move around to find work—that make renting a more attractive option for some people.

Younger households in Scotland are now more likely to live in the private rented sector than in any other tenure. The 2014 Scottish household survey reported that the percentage of households with a 16 to 34-year-old highest income householder that live in the PRS has increased substantially from 13 per cent in 1999 to 41 per cent in 2014, to the extent that that is now the most common tenure for those households. Compared with other tenures, private renting households are more likely to be single adults or households with two adults and just over a fifth of households in the PRS are families—a proportion that has been growing in recent years.

The figures also show us that around 94,000 housing benefit claimants live in the private sector. That is one fifth of the total number of people in receipt of housing benefit. Figures from 2014 show that the average weekly housing benefit award was around £64 a week in the social rented sector and around £89 a week in the private rented sector. That indicates the level of public funding that goes into rents in the private rented sector.

The private rented sector is often the only option for homeless people. In its evidence to the committee, Crisis recognised that the PRS

“can be a viable housing option, even for vulnerable people, with the right support and safeguards in place. At present, however, there are serious problems: the sector is not fit for purpose and there are long-standing issues around security, affordability, conditions and access.”

It went on to say:

“The provisions have the potential to significantly enhance security of tenure for tenants and put in place measures to protect tenants from excessive rent increases.”

In a 2013 paper calling for greater security for private tenants, Shelter Scotland argued that there was a need to review the procedure for rent increases,

“with consideration of starting with an initial market rent put up by an inflationary index or contractually agreed amounts ... at agreed points during the tenancy.”

During stages 2 and 3 of the Housing (Scotland) Bill in 2013, many amendments were lodged to introduce some form of rent control, but those were not agreed to. James Kelly MSP lodged an amendment that would have required the Scottish ministers to make regulations specifying the maximum amount that rents could be increased by at each review. In response, the Minister for Housing and Welfare, Margaret Burgess MSP, rejected the amendment, arguing that the matter had not been consulted on and that such measures would need

“full public consultation on the basis of clear proposals”.—[Official Report, 14 May 2014; c 3068.]

Since then, the Scottish Government has issued two consultation papers on proposals to reform the current private tenancy regime. The first consultation sought general views on rent levels and whether the Scottish Government should take some kind of action. The second consultation paper outlined the Government’s intention not to introduce general controls on rents but sought views on whether there was a need to introduce limits on rent levels for sitting tenants in hot-spot areas.

In the context of that consultation process, campaign groups have been expressing opposing views on rent regulation. The living rent campaign has been campaigning for some kind of rent regulation “to curb excessive rents.” It has argued:

“Decent, affordable housing is an essential human right, and policy around rents should reflect that fact. We believe that rents are generally too high, with Scottish tenants spending on average nearly a quarter of their income in rent. In Edinburgh the average tenant spends half of their income on rent. The number of Scottish households in poverty in the PRS has doubled in the last decade, and high rents are one of the main reasons for this situation.”

The living rent campaign points to practice in other countries that links rent charges to standards and housing quality. On the other hand, the PRS 4 Scotland campaign is concerned that the introduction of rent controls and the removal of the no-fault ground for repossession

“carry a significant risk of hindering investment in the sector, while dis-incentivising small and large landlords from participating and/or maintaining their properties to a high standard. The consequence of this will be a drying up of supply and a more limited choice for tenants, as well as depleting the quality of Scotland’s housing stock.”

The bill seeks to introduce a new tenancy for private tenants, replacing the existing assured and short assured tenancies. The new tenancy will apply to all future lets. In relation to rent increases, the bill proposes that rent reviews should take place no more than once in any 12-month period; tenants should receive 12 weeks’ notice in advance of a change in the rent; and, if a tenant considers that any proposed rent increase would take their rent beyond rents charged for comparable properties in the area, they will have the ability to refer the increase for adjudication to a rent officer at rent service Scotland.

No national rent controls will be introduced. As the policy memorandum to the bill states, national rent controls

“could jeopardise efforts to improve affordability through increasing supply by discouraging much-needed investment.”

Under the bill, local authorities will be able to apply to the Scottish ministers requesting that all or part of their area be designated as a rent pressure zone. In making their application, a local authority will be required to satisfy ministers that rent increases for sitting tenants in the area to be designated are rising excessively, causing hardship to sitting tenants in the area and having a detrimental effect on the broader housing system. Ministers will be able to make regulations that will designate a rent pressure zone and specify the percentage that should be used to calculate the rent cap.

Scottish Labour believes that every person in Scotland should have a safe, warm and affordable place to live in. We have argued for some time that the private rented sector in Scotland needs to work for everyone. Therefore, we welcome the Government’s bill, which works towards that. We will continue to look at the bill closely as it progresses through Parliament to ensure that the system that is in place for private tenancies in Scotland works for everyone.