Hansard

I appreciate that the full titles of the instruments are a bit of a mouthful. I am pleased to be at the committee to present on the Cost of Living (Tenant Protection) (Scotland) Act 2023 (Early Expiry and Suspension of Provisions) Regulations 2023—sorry, there was a typo in my brief; that was the 2022 act—and the draft Cost of Living (Tenant Protection) (Scotland) Act 2022 (Amendment of Expiry Dates and Rent Cap Modification) Regulations 2023. The convener and committee members will remember that the emergency act that we introduced last year had three key aims: to protect tenants, stabilising their housing costs by freezing rents; to reduce the impact of eviction and homelessness through a moratorium on evictions; and to avoid tenants being evicted from the rented sector by landlords who wanted to raise rents between tenancies during the temporary measures, reducing the number of unlawful evictions. The act came into force on 28 October. Since then, it has provided additional protection for tenants across the rented sector as we continue to live through these challenging and uncertain economic times. Last month, we published our first report on the operation of the emergency legislation, which covers the period from when it came into force in October until the end of December. In that report, in line with the act’s requirements, we set out our intended position for the social rented sector rent cap after March 2023. That is the main focus of one of the instruments that is before you. Scotland has led, and continues to lead, the way across the United Kingdom in the delivery of affordable housing, having delivered more than 115,000 affordable homes since 2007, and we have equally ambitious targets over the next decade. We also lead the way in the UK on our decision to end the right to buy in order to ensure that we retain social rented homes for people who are in the greatest need. Our commitment to affordable housing is second to none, which is why we have placed so much emphasis on enabling continued investment in the delivery of high-quality social housing. During the passage of the Cost of Living (Tenant Protection) (Scotland) Bill through the Parliament, concerns were raised by members from across the chamber about the impact that a continued zero per cent rent freeze could have on that investment; indeed, some members of the committee who are here today expressed those concerns. However, due to the unprecedented economic circumstances at the time, we felt that it was imperative that all tenants living in the rented sector be afforded the protection that the emergency measures provide. We agreed to work closely with social sector landlords and, by the time that the bill completed its passage through the Parliament, we had already established a short-life task and finish group to support that work. The group, which comprised a number of key social sector landlord representative groups including the Convention of Scottish Local Authorities, the Scottish Federation of Housing Associations and the Glasgow and West of Scotland Forum of Housing Associations, stressed the fine balance between affordability and investment, and stressed the need to set our social sector rents at levels that would ensure the continuation of essential work such as new build programmes and work towards energy efficiency and carbon neutral targets. The group reached an agreement that would result in increases of 6.4 per cent in respect of local authority social housing and 6.1 per cent for housing associations as an average across Scotland. It is important to note that the agreement of an average figure is essential to allow some degree of flexibility. The majority of rents will be increased at levels below the agreed 6.4 and 6.1 per cent figures, but there might be some landlords who will, for specific reasons, need to go beyond those levels. In the light of that agreement, the draft Cost of Living (Tenant Protection) (Scotland) Act 2022 (Amendment of Expiry Dates and Rent Cap Modification) Regulations 2023 and the Cost of Living (Tenant Protection) (Scotland) Act 2022 (Early Expiry and Suspension of Provisions) Regulations 2023 expired the rent cap for the social sector from 26 February, enabling social landlords to set rent levels that they judge, in the light of tenant feedback, to strike a balance on supporting repairs and maintenance, working towards meeting carbon neutral targets and continuing to provide the wide range of support that they offer every day to their tenants in times of such pressure. The regulations also make changes to the rent cap for the student accommodation sector. As laid out in the first report, feedback from stakeholders demonstrated that the rent cap was having no impact on the student accommodation sector, in contrast to the mainstream private rented sector. That was because the nature of the majority of contractual student tenancy agreements means that rents are set annually, tenancies typically last for the entire academic year and they rarely, if at all, allow for in-tenancy rent increases. In the light of that feedback, and in recognition that student accommodation tenancies are structured differently from other types of tenancies, we concluded that the rent cap should be suspended from 30 March, which is what the two sets of regulations seek to do. However, I make it clear that, by suspending the student accommodation rent cap instead of expiring it, ministers will continue to monitor the sector, and they have powers to revive the provisions if fresh evidence shows that there would be benefit from doing so to deliver a necessary and proportionate response to the cost of living. I turn now to the affirmative instrument that the committee is considering today. Soon after we published our first report to the Parliament, we laid the draft Cost of Living (Tenant Protection) (Scotland) Act 2022 (Amendment of Expiry Dates and Rent Cap Modification) Regulations 2023, along with a statement of reasons. In addition to the first report on the 2022 act, which was laid before the Parliament on 12 January, the statement of reasons sets out updated data and economic analysis that shows that the unprecedented economic position has not yet changed fundamentally and that many households in the private rented sector in particular continue to struggle. Yesterday’s announcement by the Office of Gas and Electricity Markets on energy price caps from April this year will bring no consolation, despite the decreases, as the UK Government measures mean that the average domestic energy bill will still increase from £2,500 to £3,000, at the same time as the £400 energy bill support scheme is ended, which will drive up fuel poverty to more than 50 per cent in the private rented sector. For that reason, the draft Cost of Living (Tenant Protection) (Scotland) Act 2022 (Amendment of Expiry Dates and Rent Cap Modification) Regulations 2023 seek to extend the rent cap measures for the private rented sector for a further six-month period to 30 September, as well as the eviction moratorium provisions across all rented sectors covered by the 2022 act, and the other important provisions in the act. On the continuation of the private sector rent cap measures, although the focus continues, of course, to be on protecting tenants, we recognise the on-going impacts that the cost crisis might be having on some private landlords. That is why the regulations propose that the rent cap be varied to allow for in-tenancy rent increases of up to 3 per cent. The voluntary approach to rent setting that is taken by landlords in the social sector is intended to equate to an approximate average rental increase of less than £5 per week across the country. As rents in the private rented sector are generally significantly higher, allowing for a maximum 3 per cent rent increase equates to a similar average rent increase for tenants in a two-bedroom property, which is the most common property size in the private rented sector. We consider that that gives a measure of parity in monetary terms while continuing to protect tenants from unaffordable rent increases. There is also a safeguard for private landlords, who can opt to apply to rent service Scotland for a rent increase of up to 6 per cent if they have an increase in their defined prescribed property costs within a specified period. On the proposed continuation of the eviction moratorium provisions, tenants in the private and social rented sectors as well as those living in student accommodation will continue to benefit from the additional time to find alternative accommodation that is provided by the six-month pause in the enforcement of eviction action. In addition, they are protected from private landlords seeking to end a tenancy to raise rents above the cap, and there is provision to reduce the number of unlawful evictions by increasing the level of damages payable. As with the rent cap, the eviction moratorium provisions include a number of safeguards for landlords and recognise that there are some circumstances in which enforcement of an eviction order or decree should be able to proceed—for example, it could be done to protect communities in instances of serious antisocial behaviour. The provisions strike the appropriate balance between the protection of tenants and the rights of landlords. In summary, we believe that the evidence that the cost crisis is still very much with us shows that it is crucial to continue beyond 30 March some of the protections that were brought in by the 2022 act. As promised during the bill’s passage through the Parliament, we have kept the measures under review and continue to consider their on-going necessity and proportionality. We have used our powers to make changes to the act where the evidence has shown that measures were required, and that is what the two sets of regulations that are before the committee seek to achieve. Thank you, convener, for giving me the time to introduce the measures. I thank the committee for its scrutiny and look forward to members’ questions.