Part Two: Affordable Rents
Chapter 4 of the consultation paper highlights the need for quality, affordable accommodation to support the right to an adequate home, and considers the range of factors that can influence affordability of rents. It states that Scottish Government ambitions to improve the quality and standard of rented homes will require investment and regulation of rents alongside measures to ensure the quality of properties.
A shared understanding of housing affordabilityQuestion 40 – What are the most important factors to be incorporated into a shared understanding of housing affordability (e.g. household size and composition, regional variations, housing standards, treatment of benefits)?
Around 510 non-campaign respondents made a comment at Question 40.
Many respondents highlighted the importance of affordable rents in enabling people to access housing, citing evidence of the scale of affordability pressures for social and private renters in particular. This included a view that the scale of these challenges is such that PRS policy and rent controls need to be part of a wider approach to improve affordability. Reference was made to issues such as low paid and insecure work, barriers of the benefits system, cost of living pressures, the costs associated with securing the necessary supply of new homes and achieving net zero targets.
There were also calls for a rights-based approach to affordability, to support a person’s right to an adequate home. This included some concern that affordability measures must not further limit tenure choices available to low income households, and a view that any agreed affordability standard should be at a level that enables people to live a fulfilling and dignified life. It was also suggested that housing affordability measures can help to empower tenants, for example by supporting comparisons between landlords, and that there should be a role for an agreed minimum income threshold in relation to housing affordability.
Comments on specific factors and measures that should inform a shared understanding of housing affordability most frequently focused on the experience of lower income households. This reflected a view that these households are particularly vulnerable to the negative impacts of housing affordability pressures, for example in terms of having limited affordable housing options and being at risk of homelessness.Measures of affordability
There were a number of comments that, while there is no single agreed measure of affordability, most existing measures are based on housing cost-to-income ratios, or residual incomes. Various studies evaluating the relative benefits of existing affordability measures were referenced.Residual income
Affordability measures based on residual income – whether a household’s residual income after living expenses is enough to meet their housing costs – were the most commonly supported. It was suggested that an “affordability index” could be developed on the basis of residual incomes of low and middle income households and that, as referenced above, this should involve use of a minimum income threshold. The Minimum Income Standard produced by the Joseph Rowntree Foundation was highlighted, and it was noted that the most recent Scottish Government definition of fuel poverty includes reference to a Minimum Income Standard.Housing cost to income ratios
Measures based on housing cost to income ratios were also supported, including because this type of measure has been relatively widely used to-date and the availability of existing datasets to support this approach. However, issues around the suitability of income ratio measures were also raised – for example, the extent to which affordability thresholds vary based on policy and geographical context. This was reflected in the range of specific thresholds cited. While most of those suggesting a specific threshold felt that that households should not be expected to spend more than 25-35% of their income on housing costs, concerns were raised around the discrepancy between renters and homeowners in the proportion of income spent on housing costs. For example, evidence was cited that housing costs are contributing to significant poverty levels for those who rent, especially private renters.
Any use of income ratios which assume that housing costs should account for a significantly larger proportion of tenants’ income, than for homeowners was questioned. For example, it was noted that an income ratio of 25-30% for renters would compare with homeowners spending an average of 8% of their income on housing costs, and there were concerns that a ratio of 30% or more would not be consistent with the statement in Housing 2040 that private renters should be able to save for the future. In this context, it was argued that any agreed affordability measures should be tested against evidence on households’ experiences of financial stress.
Other concerns raised in relation to use of income ratios as a measure of affordability included a view that income ratios do not recognise that other living costs affect renters and owners disproportionately. There were particular concerns around the ability of income ratios to take account of differences between households with or without children, and those with protected characteristics.Other factors
In addition to comments about the most appropriate type of affordability measure, non-campaign respondents also identified other factors and questions which they wished to see reflected in a shared understanding of housing affordability. These included a broad mix of potential affordability factors and sources or benchmarks for affordability measures, with a view that current approaches to affordability are too narrow in their understanding of the range of considerations affecting tenants. It was also argued that affordability measures must be sensitive to geographic variation in affordability pressures, and to potential for factors driving those pressures to change over time.
A number of non-campaign respondents also referred to the role of supply and demand in relation to private rents, and to geographical variation in rent levels. There was a call for the overall policy approach to rent affordability to recognise the interdependence of insufficient social housing supply and affordability pressures in the PRS. Also in relation to tenure, it was suggested that intermediate tenures should not be considered affordable housing for the purposes of policy and allocations. This reflected concerns that the link to average market rents can result in intermediate rents becoming unaffordable, for example due to scarcity of supply.
Specific rent affordability considerations suggested by respondents included:
- Ensuring that affordability measures are based on ‘total’ housing costs, including Council Tax, water charges, insurance, ground rents, service charges, and upfront housing costs such as tenancy deposits and furniture/white goods costs. Respondents also highlighted the importance of energy efficiency and running costs for housing affordability, for example suggesting that any affordability measures should reference EPC ratings and estimated fuel costs.
- Property characteristics such as type, size and energy efficiency.
- Property quality and condition, including suggestions for affordability measures to include minimum standards for housing quality. This reflected a view that poorer quality standards in the PRS (compared with social housing) are not consistent with higher rent levels.
- Property location, with respondents citing evidence of the extent of the geographic variation in PRS rents noted above. This included reference to potential for factors such as the prevalence of short-term lets to exacerbate local variation in private rents. Respondents also suggested that affordability measures should take account of geographic variation in other factors such as access to employment, household incomes and transport costs. For example, it was noted that households who are less able to move to access more affordable housing options are especially vulnerable to geographic variation in affordability pressures.
- Access to essential amenities and services such as affordable public transport, public services, childcare, etc. These were described as key factors in ensuring the approach to affordable rents addresses poverty and, in particular, child poverty.
- Household composition and size. Evidence highlighting single people on low incomes (with or without children) and families as being disproportionately affected by poverty and rent affordability pressures was referenced. Respondents also referred to challenges highlighted in the consultation paper (such as tenants being more likely to be on low income and to experience financial hardship) and to household characteristics with potential to impact economic circumstances and incomes (such as disabilities and health-related needs). In this context, it was suggested that equalities and human rights should be given particular prominence when considering housing affordability in the rented sector.
There was also reference to ‘subjective’ measures, such as household perceptions of affordability, self-reported rent payment problems, and housing stress.Benefits
A number of non-campaign respondents also suggested that a shared understanding of affordability should address how benefits should be considered by any affordability measures, in particular the relationship between affordability and Housing Benefit and Universal Credit. They cited a range of evidence illustrating the correlation between receipt of benefits and experience of affordability pressures including, for example, potential for social rent increases to have a greater impact on households in receipt of Universal Credit than those in receipt of Housing Benefit. Charges that are not covered by housing-related benefits – such as common maintenance charges – were also highlighted as having potential to add to affordability pressures on households in receipt of benefits. Respondents also sought clarity on whether the definition of affordability would reflect the ‘under 35 rule’ limiting benefits for single people under 35 to a shared accommodation rate.Costs for landlords
While most comments at Question 40 focused on affordability for tenants, other respondents – particularly from the ‘Private landlord, letting agent or their representative bodies’ group – wished to ensure that consideration of housing affordability takes account of costs for landlords. Primarily in relation to the affordability of providing private rented accommodation it was argued that landlords must have some incentive, in the form of profitability, to provide good quality rented accommodation. Respondents noted that the ability of landlords to secure a profit that reflects the effort and risk in providing rented accommodation can be affected by a range of factors, such as mortgage payments, maintenance and improvement costs, insurance and taxation.
It was also observed that such costs can vary over time, with a view that the cost of providing rental accommodation has increased significantly in recent decades as a result of increasing compliance and regulatory costs, rising maintenance costs, and house price inflation. Potential for further cost increases as a result of improvements required to meet minimum EPC requirements were also highlighted. It was suggested that achieving real change in the affordability of private rents in particular will require action to reduce these costs, and to increase housing supply.Question 41 – If we are successful in reaching a shared understanding of affordability in Scotland, how should it be used and evaluated?
Around 365 non-campaign respondents made a comment at Question 41.
Most comments focused on potential for a shared understanding of affordability to help households experiencing affordability difficulties and struggling to access suitable housing. This included ensuring that the right to adequate housing is being achieved for all, with some noting that the consultation document states that affordability has an important role in the right to housing. The importance of action to deliver the right to housing was highlighted, as were negative impacts of affordability pressures, for example in terms of households’ physical and mental wellbeing. There was concern that rents have been increasing at above-inflation levels for a number of years and that rent affordability is a significant issue requiring a strong policy response.
A shared understanding of affordability was seen as essential in identifying how rent increases and associated affordability pressures are impacting households and informing the wider policy approach to reducing poverty. It was also suggested that affordability measures can help to empower households, for example by supporting tenants to engage with their landlord regarding rent setting policies, and to enable households to assess different housing tenure options.
Practical applicationsSetting rent levels
In terms of practical applications, the most common suggestion was that a shared understanding of affordability should be used to underpin some form of rent benchmarking or control measures to ensure that rents are genuinely affordable. It was noted that the SHR sets affordability benchmarks for social rents and that the proposed PRS Regulator could consider a similar mechanism for the private sector.
Respondents also suggested other practical applications associated with ensuring rent levels are affordable, such as informing housing association annual rent consultations. It was argued that any affordability measures should be applicable across social and private rented housing, including intermediate tenures such as MMRs, and in supporting the development of any new housing models or financing options to meet affordable housing needs.
Concerns were also raised around the use of a standard definition of affordability to regulate rent levels in the PRS, with some non-campaign respondents taking the view that existing market forces are best placed to set rent levels in the sector. This included reference to the sector being highly variable, and concern that use of a single affordability measure cannot take full account of these significant differences. Use of affordability measures to ‘artificially’ set rent levels was suggested to be an unwelcome change of policy approach. These concerns were primarily raised by ‘Private landlord, letting agent or their representative bodies’ or ‘Individual’ respondents, and reflected comments at Question 40 that a shared understanding of affordability should also consider the viability of investment for landlords. These and similar concerns are considered in further detail at Question 50.Informing other housing policy
Some non-campaign respondents also suggested a role for a shared understanding of affordability across other aspects of housing policy – indeed, the extent to which affordability considerations can effectively inform policy interventions was seen as a key factor in the success of any affordability standard. Comments highlighted the value of a standard definition of affordability in understanding how the rented sector is functioning for different households and different income levels, and the characteristics of those affected by affordability difficulties in terms of household composition, age, location and tenure. This kind of deeper understanding was seen as essential in informing policy around rent setting (such as rent controls), housing markets interventions and affordable housing supply, and in relation to income and benefits (including a suggested role in determining availability of financial support for rent).
In terms of specific housing policy applications, some non-campaign respondents saw a role for affordability measures in identifying affordable housing requirements through local Housing Need and Demand Assessment (HNDA), and to inform delivery of housing through strategic housing investment programmes and local development planning. It was also noted that a standard definition of affordability could inform the models already used by social landlords to assess affordability.
Some non-campaign respondents referred to the role of a minimum income standard in relation to measures of affordability; this was seen as essential if the application of affordability measures is to enable households to maintain a decent quality of life. A Minimum Income Standard was also cited as an example of how affordability measures can be used to ensure that households’ perspectives and experiences are reflected in rented sector policy. The Living Home Standard was cited as being based on extensive engagement with households to produce a shared understanding of what all homes should provide.
However, there was also a view that any shared understanding of affordability should consider objective data alongside more ‘subjective’ measures. This included reference to specific measures such as rent to income ratios, rent arrears and other social housing management data collected by the SHR, and the continuing supply of private rented properties. Some suggested that resolving potential inconsistencies in objective and subjective measures will be a key challenge for any agreed affordability measure.Reflecting household’s experience
The views and experiences of households were seen as crucial for the evaluation of a shared understanding of affordability. It was suggested that any definition of affordability should be evaluated in the context of whether this accurately reflects households’ experiences and priorities and can be used to improve quality of life for households. Links between affordability and poverty, and the importance of factors such as employment, income and benefits, and living costs such as childcare were highlighted. There was a call for any assessment of affordability to reflect household’s experience of these wider issues. It was also suggested that an independent partner should have a role in evaluating affordability measures, supporting Scottish Government and other policy makers such as the Convention of Scottish Local Authorities (COSLA), the Association of Local Authority Chief Housing Officers (ALACHO) and the Scottish Federation of Housing Associations (SFHA), to ensure a robust evaluation approach.Data collection
It was suggested that collection of data to support evaluation of affordability should make best use of existing infrastructure such as the landlord register, local authority data collection, SHR data collection, and Rent Service Scotland data. Respondents also emphasised the importance of ensuring affordability data is current, referring to potential for the factors driving affordability pressures to change over time. It was suggested that the agency tasked with gathering this data will require statutory powers.
Those who raised concerns around the potential impact of rent controls on landlords also suggested that collection of evidence to support the application of a shared understanding of affordability should also include data to identify the impact on landlords and the supply of private rented housing. This included suggestions for monitoring data to identify any changes in numbers of private rented properties and for gathering of attitudinal data from landlords to identify any plans to leave the sector.
Improving our evidence base
The consultation paper notes that there is a consensus across tenant and landlord stakeholders around the need for collection of more comprehensive private rental sector data to improve understanding of trends in rent levels, and to ensure policy development and interventions are based on clear evidence. Work is ongoing to assess the information needed to inform future policy development and setting of LHAs. A Housing Bill to be introduced in 2023 will also require private landlords to provide a range of rental data and other property information.
The consultation paper notes that further work is required to agree the range of data to be required of private landlords, and commits the Scottish Government to working with partners to ensure that an accurate and up to date register of private rented properties and their landlords is in place. At this stage, 11 categories of data are set out as an indication of the information that could be collected at an individual property level.Question 42 – Do you think the data we are proposing to collect will provide all the necessary evidence to inform national and local rent control considerations?
Responses to Question 42 by respondent type are set out in Table 16 below.
|Q42: Do you think the data we are proposing to collect will provide all the necessary evidence to inform national and local rent control considerations?|
|Academic or research group||1||2||3|
|Housing, legal or advice agency or professional or representative body||2||1||2||3||8|
|Local authorities and their representative bodies||15||3||5||23|
|Other private sector||1||2||3|
|Other professional or representative body||3||2||5|
|Private landlord, letting agent or their representative bodies||7||26||4||18||55|
|Public body or agency||2||6||8|
|Religious group or body||1||2||1||4|
|Social landlords and their representative bodies||2||3||4||3||12|
|Tenants’ and residents’ groups and their representative bodies||4||1||2||2||9|
|Third sector organisation||2||1||1||18||22|
|Union, student or campaign group||4||6||8||18|
|% of organisations answering||37%||45%||18%|
|% of individuals answering||16%||56%||29%|
|Total non-campaign respondents||114||317||158||337||926|
|% of all non-campaign respondents||12%||34%||17%||36%|
|% of all non-campaign respondents answering||19%||54%||27%|
|% of campaign respondents answering||100%||0%||0%|
|% of all respondents||74%||4%||2%||20%|
|% of all those answering||93%||5%||2%|
A very substantial majority – 93% of those answering the question – thought that the data proposed will provide the necessary evidence to inform rent control considerations. The proportion of non-campaign respondents who agreed with this dropped to 19% overall, with 37% of organisations and 16% of individual respondents in agreement. A majority of ‘Local authorities and their representative bodies’ respondents thought the data would provide the necessary evidence while most ‘Private landlord, letting agent or their representative bodies’ thought it would not.
Around 455 non-campaign respondents made a comment at Question 42.
Many of these respondents agreed that there is a need to improve the evidence base on private rents, highlighting the value of improved data to inform rent control considerations. They also saw significant value in improving the evidence base on the PRS in terms of supporting a detailed evaluation of rent affordability, and improving understanding of the operation of the PRS to better inform national policy and strategy. There was also support for the collection of data to support local housing policy objectives, for example in relation to Rent Pressure Zones (RPZs) and short-term let control areas.
Some non-campaign respondents expressed particular support for the focus on accessing data on actual rents being charged, noting limitations associated with the current reliance on advertised rents. For example, it was suggested that the lack of reliability in existing rent data affects the calculation of LHA rates, with potentially significant impacts for households in receipt of Housing Benefit or Universal Credit. There was also support for the inclusion of contextual information to aid more detailed analysis of data, for example on property type and condition, and tenancy details.
There was also a view that there are wider issues with the data currently used to understand the housing system and that, before proceeding further, there should be a full review of housing data collection, quality and the policy and regulatory needs supported. Data collection proposals should then be developed based on the outcome of such a review.Approach to data collection
Some non-campaign respondents sought clarity on Scottish Government proposals for the approach to data collection, including the frequency of data collection. It was suggested that this should be annually, for example as part of annual updates to the national landlord register. Concerns were also raised around:
- Potential challenges in incentivising or compelling landlords to comply, and the financial costs for landlords required to provide the data.
- Resourcing of data collection for local authorities. There was a view that data collection will require extensive joint working between local authorities and partners to ensure a joined-up approach. Concerns around resourcing this additional burden on local authorities reflected a view that some local authority landlord registration teams are already insufficiently resourced.
However, it was also noted that much of the data to be collected will remain unchanged from year to year and it was suggested that landlords should be asked to confirm what has changed, rather than being required to re-enter all data for each return. Letting agents were also seen as having a key role to play in facilitating collation of data. It was proposed that the data collection approach could be piloted first in areas where a significant proportion of properties are let through agencies.
Some non-campaign respondents also highlighted the potential importance of a PRS Regulator and there was support for use of RPNs to support compliance. Enabling wide access to rent data findings was also seen as having potential to incentivise compliance.
Issues were also raised around both data quality and confidentiality including that:
- There may be gaps in the data collected, as well as potential for double counting of properties where there are joint owners.
- Collection of property-level data could lead to disclosure, particularly in rural areas with more limited volume of properties.
While many respondents felt that collection of the data suggested in the consultation paper would help to improve understanding of how the PRS operates, a number of changes were suggested. A small number of non-campaign respondents suggested that seeking a more limited range of data may increase rates of compliance across the sector. It was suggested that proposals for PRS data collection to go beyond the level of data asked of publicly-funded social landlords may be seen as disproportionate for private landlords.
However, most of those suggesting changes identified additional data which they felt will be required to support rent controls. In terms of specific suggestions for additional data, the most common in relation to the physical form and condition of the property related to:
- energy efficiency information, including EPC rating
- quality, including of fittings and any furnishings
- accessibility, including any adaptations
- water supply arrangements
- fire safety information
- for flatted properties, which floor the property is on
- the aspect of the property
With respect to the rental amount and other financial considerations suggested additions included:
- Whether the rental amount includes Council Tax and any services charges such as stair cleaning and internet access.
- How the rent level relates to mortgage costs for landlords, for example taking account of local house prices and interest rates. This was highlighted in relation to ensuring rents are sustainable for existing landlords, and that the sector is accessible for new landlords.
- Deposit value.
There were also a number of other suggestions for additional data collection including with respect to:
- the HMO status of each rented property
- whether the tenancy is privately or agency managed
- whether the tenancy is for the whole property, or is ‘room only’
- whether the tenancy is an MMR or a student let
- availability of facilities such as lifts, concierge services, gym/pool facilities, etc
- accessibility of local services
- household characteristics, for example to inform the approach to tackling child poverty in the PRS – potentially by linking to other existing datasets
- the presence of pets
- date of tenancy start, to enable analysis of rent increases for longer-term tenancies
- time of year – for example, student properties may achieve a lower rent where they become vacant during periods of low demand
- number of applicants per let
- void rates
Respondents also referenced other factors that may not be within the remit of data collection to support rent control considerations, but which they saw as relevant to the affordability of rents. For example, it was suggested that data on the PRS must be understood in the context of other financial pressures (such as increasing energy costs, cost of living increases and Council Tax) and supply of and demand for affordable housing.
There were also concerns around whether the proposed range of data to be collected can provide an accurate picture of the operation of the PRS. This included a view that the extent of regional variation in the characteristics and role of the sector will present particular challenges, and it was noted that that factors such as access and energy/heating arrangements can have a disproportionate effect on rent levels in rural areas. There was concern that these factors will make it difficult to ensure that data can support meaningful comparison of properties in rural areas.
It was also suggested that more detail is required on what the consultation paper means by ‘rent controls’ in order for respondents to be confident that the proposed data will be sufficient to support any such measures. In this context, there was support for further consultation on the introduction of rent controls to review the data required. Engagement with agencies already delivering similar types of regulatory framework was suggested in order to help to inform the approach to data collection.Question 43 – What can we do to ensure that landlords and agents provide accurate rental data (and other relevant property information), as soon as any changes are made?
Around 430 non-campaign respondents made a comment at Question 43.
Many respondents supported an approach where landlords would face clear penalties for failing to provide accurate rental data as soon as changes are made, reflecting a view that some form of compulsion will be required to ensure data is robust.Penalties for non-compliance
Suggestions included that the provision of up-to-date rental data should be made a legal requirement (for example as part of landlord registration criteria), and that financial and other penalties should be imposed for non-compliance. Support for financial penalties reflected a view that making non-compliance a criminal offence has not been an effective approach for landlord registration, and that more targeted penalties will be required. However, some non-campaign respondents suggested that penalties should only be used if a more proactive approach to engaging with landlords is not successful.
In terms of specific penalties for non-compliance, RPNs were the most frequent suggestion. Respondents noted that this would simply require extension of current penalties for non-registration to cover failure to provide up-to-date information. Reference was also made to the TDS regulations as a potential model, where the penalty is awarded to the tenant.
There was also support for:
- Use of fines and other financial penalties, with HMRC fines for failure to file tax returns suggested as a potential model.
- Temporary suspension of landlord registration, with a view that continued non-compliance should be grounds for revoking landlord registration.
Other points included that:
- Linking of datasets could be used to identify changes of tenancy or rent, for example between landlord registration, Housing Benefit and Council Tax data. The data gathered should also be linked with other relevant information streams, such as energy efficiency and fire safety data, to further enhance its value.
- A data gathering body (such as a PRS Regulator) could ensure landlords and agents provide accurate rental data, could and provide effective communication to ensure awareness of the new requirement. However, concerns were raised around the resourcing of such a body, with some of the view that landlord registration and HMO licensing services are currently underfunded and unable to deal with illegal non-registered landlords.
- Tenants may be in a position to help to identify non-compliance, for example if tenants are made aware of the requirement as part of the tenancy sign-up process. However, it was also thought that tenants may be concerned that this could jeopardise their tenancy and may require an incentive to report breaches.
It was noted that around half of private rented properties in Scotland are managed by agents who typically deal with landlord registration duties, and that these landlords would expect their agent to assist with any data returns.
However, a number of non-campaign respondents expressed significant concerns around an approach which requires landlords to supply of the type of rental data described, noting the range of regulatory obligations already placed on landlords. Specific challenges for landlords and agents managing ‘non-standard’ private lets were referenced.
Concern was also expressed around potential for smaller landlords to choose to leave the sector as a result of an additional resource burden, particularly if this is associated with potential financial penalties. In this context, it was suggested that the data gathering approach should be informed by stakeholder engagement, for example as part of the proposed new regulatory approach for the sector.
There was also a view that the focus should be on minimising barriers to compliance, or encouraging compliance – in the latter case, for example, by demonstrating the value of data collection. It was suggested that a perceived lack of benefit associated with landlord registration has had an adverse impact on compliance, and that reporting of rental data could provide a benefit to landlords in the form of useful intelligence about the private rented market.
In terms of minimising resource implications for landlords there were calls for the range of information to be reduced, for support to be made available to landlords, and for the data collection approach to be designed to minimise the time required to provide data. The importance of providing landlords and agents with a quick and easy method for data submission was highlighted. There was support for data to be collected via landlord registration channels – with which landlords are already familiar – and proposals for development of a single platform to manage landlord registration and collection of rental data. However, the potentially significant resources required to establish and manage such a system were also highlighted.
Also in the context of minimising the burden on landlords, an approach based on proactively contacting landlords on a regular basis to request relevant data, rather than requiring landlords to provide data as changes occur, was proposed. It was also suggested that less frequent data collection maybe more proportionate while still ensuring data is fit for purpose, reflecting a view that much of the data will remain unchanged from year to year. One suggestion was that data should be provided at the point of registration and thereafter on renewal, so at three year intervals.
Use of other transactions to collect rental data was also suggested, for example where a new tenancy starts, where rents are increased, or where deposits are lodged with a deposit scheme.
The consultation paper proposes that, to provide tenants with information on rents for properties they are considering renting, rental data and property information provided by landlords should be made publicly available.Question 44 – What is your view on making rental and property information publicly available for tenants and others to view?
Around 565 non-campaign respondents made a comment at Question 44.
Many of these respondents – including most ‘Individuals’, ‘Tenants' and residents' groups and their representative bodies’ and ‘Local authorities and their representative bodies’ – supported making rental and property information publicly available. For many, this reflected support for greater transparency in the sector more generally and it was suggested that there is no justification for restricting information that could empower households to make informed housing decisions and enable them to find an affordable home. There was specific reference to potential for data to help tenants challenge rent levels in their existing property, or to compare housing options when choosing a new property. This appeared to reflect some concerns that currently available data on the PRS is insufficient for these purposes.
Respondents also highlighted the wider value of data on the PRS for future housing policy development, and a view that an evidence-based policy approach will require evidence to be widely accessible. It was suggested that any restriction on reporting of rental data should be:
- by exception
- on the basis of public interest and/or data protection concerns for individuals
It was also noted that much of the information to be collected is already in the public domain through letting adverts. Reporting of data on social housing was cited as a point of comparison, with some calling for a similar level of detail to be provided for the PRS.
It was also suggested that allowing tenants to access to their own data would also provide an additional level of quality assurance, for example allowing tenants to flag any errors in their data.
In addition to discussion around the principle of making rental data publicly available, some non-campaign respondents highlighted considerations relating to how data is reported and disseminated. Some highlighted the importance of including enough contextual information to enable meaningful comparison of rent levels across different properties – for example by including any service charges included in the rent, and historical rent levels. A comparison tool, similar to that available for social rents, was recommended to enable meaningful comparison of rent levels.
Other non-campaign respondents, primarily ‘Private landlord, letting agent or their representative bodies’ or ‘Individuals’, raised concerns around reporting of rental data, particularly the risk of disclosing details of individual tenancies. GDPR and other data protection requirements were referenced, including calls for further detail on how these will be met. Non-campaign respondents also referred to potential difficulty in ensuring that data will support meaningful comparison of individual rents, and the risk of misinterpretation. Some saw a risk of upward pressure on rent levels if landlords are made aware that others are charging higher rents. There was also a view that tenants may not wish for details of their tenancy to be publicly disclosed, and that landlords may consider this commercially confidential, for example where the landlord has chosen to discount the rent. However, it was noted that comparable property-level information is available for social rents and private house sales, and any justification for the PRS taking a different approach was questioned.
Respondents suggested a range of approaches to ensure that reporting does not include individual addresses, for example by limiting this to postcode area, street level, ward or Housing Market Area. It was also suggested that aggregate data (for example showing average rents for an area) would still enable tenants to identify if their rent is higher than others locally.
A number of ‘Private landlord, letting agent or their representative bodies’ respondents questioned whether new tenants would benefit from information on the rent paid by former tenants of a property. It was suggested that the market rent for a property may have changed significantly since the rent was set for the previous tenant; for example, where this has been a relatively long tenancy, where rents had previously been reduced to help former tenants, and/or due to changes in market conditions.
Use of Rent Penalty Notices
The consultation paper suggests that a mandate will be required to ensure that landlords and letting agents provide the data required to build an effective evidence base on the PRS in Scotland. It is noted that current legislation making failure to update landlord registration details a criminal offence has not been a particularly effective for landlords. The consultation paper proposes that RPNs – legal notices that suspend the rent liability of tenant(s) of a property – may be a more effective approach.Question 45 – What is your view on enabling Rent Penalty notices to be issued where a landlord fails to provide up to date registration, rent data and property details?
Around 535 non-campaign respondents made a comment at Question 45.
Many respondents expressed a view that RPNs are required to incentivise landlords and ensure that rental and property information is kept up to date. It was suggested that provision of the proposed data should not be an unreasonable requirement on landlords, and some noted that they had not seen evidence of landlords struggling to comply with landlord registration requirements. Those expressing support for RPNs also highlighted the value of an improved evidence base in terms of contributing to better professionalism and regulation of the PRS.
Some non-campaign respondents noted that RPNs are already part of the landlord registration system, with some of the view that RPNs had been the most effective tool for authorities in ensuring compliance with registration requirements. It was suggested that provision of data could be made a requirement of landlord registration such that RPN arrangements would be extended to apply to collection of rental data. Some also wished to see RPN arrangements extended to include other data collection channels, for example in relation to EPC bandings and Affordable Warmth Grants.
Others, primarily ‘Private landlord’, letting agent or their representative bodies’ or ‘Individual’ respondents, set out arguments against use of RPNs which were often seen as a disproportionate response to failure to provide information. It was observed that failure to update rental data could be due to a simple administrative oversight.
There was also a view that the regulatory burden on landlords is already considerable, and a perception that the approach to reform of the PRS is too focused on penalising landlords. Concerns were expressed that imposing further regulatory burden and penalties on landlords will deter investment and improvement in the sector, ultimately disadvantaging tenants by reducing the number and quality of properties available. Some referred to evidence that the current level of regulation is already causing landlords to leave the sector.
It was also suggested that resources should be dedicated to addressing unregistered landlords and/or regulation of short-term lets, before further regulatory requirements are placed on registered landlords. There were also concerns that RPNs can be ineffective if tenants continue to pay rent to the landlord.
A range of non-campaign respondents – including those in favour of and those opposed to use of RPNs – highlighted the importance of ensuring the effectiveness of data collection systems before any RPNs are issued. This reflected concerns that current landlord registration procedures are not sufficiently robust to support use of RPNs. Reference was made to problems with current landlord registration systems, including examples of landlords not receiving reminders or other correspondence, and a view that individual landlords must not be penalised where failure to provide data is caused by inadequate systems.
Specific suggestions for an effective approach to data collection included:
- Better communication to ensure awareness and ‘buy-in’ from landlords, and that landlords are clear on both the information required, and on when and how this should be provided.
- A proactive approach that involves landlords receiving multiple contacts and opportunities to provide the required data before any penalties (such as RPNs) are considered. Additional support may be required for some landlords.
- RPNs should only be required as a measure of last resort in a small proportion of cases, for example due to persistent or long-term non-compliance.
A potential issue raised related to tenants in receipt of Universal Credit, and there were calls for the Scottish Government to ensure that the use of RPNs would not disadvantage these tenants in the event of any refund of rent.Resources for monitoring and enforcement
A number of non-campaign respondents also highlighted the importance of ensuring that the body or bodies responsible for collecting data are adequately resourced to deliver effective monitoring and enforcement. This reflected a view that inadequate resourcing has limited the effectiveness of enforcement around landlord registration.
It was noted that the ability to issue an RPN as a sanction for provision of inaccurate data will first require access to reliable, contradictory information, and that monitoring changes in rental and property information will also require additional resourcing.
In light of these concerns, respondents sought further detail on arrangements for collection of data, and in particular how enforcement (including failure to update information) will be resourced. This included queries from a small number of ‘Local authority or their representative bodies’ respondents regarding their role in collection of rental data. There were also calls for information on RPNs to be updated so that their scope is clearer – for example to make clear that notices can apply for reasons other than non-registration.Alternatives to issuing RPNs
A range of alternative or additional enforcement approaches were suggested to ensure that collection of rental data produces a robust dataset. The respondents making these suggestions included some who opposed use of RPNs but acknowledged that some form of penalties will be required to ensure landlord compliance. There were references to other regulatory frameworks and bodies as potential models for the approach to enforcement of data collection, such as the SHR, and regulation of private rented housing elsewhere in the UK.
Suggestions for specific alternatives or additions to RPNs included that:
- A fixed penalty fee or fine would be a more proportionate penalty, with the landlord registration penalty fee cited as an example. Smaller fines were proposed where landlords fail to respond to initial data requests.
- The TDS model could be adapted, with penalties awarded to the tenants as an incentive to contribute to enforcement.
- If provision of rental and property data was scheduled alongside renewal of landlord registration, renewal of registration status could be withheld until all required data is provided.
- Arrangements for escalation in cases of persistent non-compliance should ultimately result in de-registration.
Consideration of appropriate forms of rent controls
The consultation paper notes that new rights to help tackle increasing rents were introduced with the PRT. While provisions such as limiting rent increases to once every 12 months have proven successful, others have been less effective. For example, despite all private tenants with a PRT having the right to challenge unfair rent increases, very few people have requested a rent adjudication.Rent adjudication
Amongst the possible reasons for limited use of rent adjudication, the consultation paper notes that potential for adjudication to result in a rent increase beyond that proposed by the landlord could be a factor. In this context, the consultation paper proposes that, where private tenants seek rent adjudication, this can only result in a decision to decrease or maintain rent at the level proposed by the landlord. This would allow tenants to challenge in-tenancy rent increases without fear that this could result in a rent increase beyond that being proposed by the landlord in the rent-increase notice.Question 46 – Do you agree that the rent adjudication process should only result in rents being decreased or maintained?
Around 600 non-campaign respondents answered Question 46.
Many respondents supported proposals to remove the potential for the adjudication process to lead to a larger rent increase than that proposed by the landlord. There was agreement that the risk of this happening has limited the effectiveness of adjudication in addressing affordability pressures, and a view that this is an unreasonable risk for tenants. Some respondents noted that current rules mean that those requesting adjudication risk being penalised for using provisions intended to increase protections for private tenants. It was argued that rebalancing of the adjudication process is required with a greater focus on protecting tenants, while ensuring clear evidence-based outcomes.
Those in favour of proposals also suggested that changes were unlikely to result in unreasonable adjudication requests, given the under-use of the facility to date, and that a more effective and better used rent adjudication process may act as a deterrent to landlords considering unfair or unaffordable rent increases. The adverse impact of significant and/or unexpected rent increases for tenants were also highlighted, including concern that limiting the frequency with which landlords can increase rents does not limit the size of rent increases. Rent adjudication provisions were seen as the only safeguard for tenants against unaffordable rent increases and there were calls for more action to ensure all private tenants are aware of the adjudication option.
Other respondents – including most ‘Private landlord, letting agent or their representative bodies’ respondents and some ‘Local authorities’ – disagreed with the proposals, and some questioned the robustness of evidence on the reasons for tenants choosing not to use adjudication procedures. It was argued that the proposed changes would result in adjudication being unfairly balanced against the landlord, and that current rules should remain unchanged to ensure fairness to landlords and to prevent ‘speculative’ rent appeals.
There was also a concern that some form of counterbalance is required to prevent tenants choosing to appeal all rent increases, with some non-campaign respondents of the view that proposed changes risked a significant increase in ‘frivolous’ appeals. Some cited their own experience of rent adjudication, noting that this had required significant time and resources. It was also argued that most adjudication results in some form of rent increase, demonstrating that proposed changes are unwarranted. A requirement for monitoring was identified, to identify any spike in adjudication applications and to manage the associated impact on local authority resources.
A further argument was that the Scottish Government has not allowed sufficient time to assess whether current provisions are working well. Some noted that many landlords have avoided any mid-tenancy rent increases during the COVID-19 pandemic, and that existing PRT provisions have therefore only had around two years to ‘bed in’. Further assessment of the operation of rent adjudication before significant changes are made was requested.Alternative proposals
Some non-campaign respondents raising concerns around proposed changed to rent adjudication suggested alternative proposals, in some cases reflecting the view that a mechanism to prevent excessive or unfounded adjudication referrals is required. Specific suggestions included:
- Ruling out any further upward rent adjustment where the rent increase proposed by the landlord is above the current CPI +1%.
- Empowering tribunals to limit any mid-tenancy rent increases to an agreed threshold, for example inflation or median income growth.
It was also suggested that, given the relative rarity of mid-tenancy rent increases, rent adjudication rules should be extended to apply across a wider range of cases.
Some wished to see encouragement of more dialogue between tenants and landlords to resolve issues. These respondents referred to potential for effective mediation to ensure both parties are satisfied with an outcome, minimising any risk to the tenant/landlord relationship.Additional actions
Other respondents referred to factors seen as influencing tenants’ willingness to use rent adjudication, suggesting further changes to current adjudication provisions to ensure they are as effective as possible.
Minimising adjudication timescales was thought important, including because tenants may choose to vacate a property if faced with a wait of many months for an adjudication decision. This was seen as creating a risk of landlords using unaffordable rent increases as a means of evicting tenants.
It was also argued that the Tribunal should consider broader issues when assessing the affordability of rent, such as property quality and condition, and energy efficiency. This included calls for rent adjudication to prevent any rent rises for properties with an EPC rating of D or lower.
It was also noted that more reliable PRS data should enable tenants to make more informed decisions about whether to appeal rent increases, and provide a more robust evidence base for adjudication.
Rent setting in the social rented sector
The PRT gave local authorities the ability to apply to Scottish Ministers to designate RPZs to help tackle high rents. The consultation paper notes that RPZs have not been established as was hoped, and that the Scottish Government has committed to implementing a national system of rent controls, with an appropriate mechanism to allow local authorities to introduce local measures, by the end of 2025. Given the range of safeguards already in place to protect social rented sector tenants, it is proposed that national rent controls should only apply to the PRS.Question 47 – Do you agree with the proposal not to extend any national rent controls to the social rented sector? Please explain your answer
Responses at Question 47 by respondent type are set out in Table 17 below.
|Q47: Do you agree with the proposal not to extend any national rent controls to the social rented sector?|
|Academic or research group||1||2||3|
|Housing, legal or advice agency or professional or representative body||2||2||4||8|
|Local authorities and their representative bodies||16||1||1||5||23|
|Other private sector||1||2||3|
|Other professional or representative body||2||1||2||5|
|Private landlord, letting agent or their representative bodies||3||24||11||17||55|
|Public body or agency||2||6||8|
|Religious group or body||2||1||1||4|
|Social landlords and their representative bodies||9||2||1||12|
|Tenants’ and residents’ groups and their representative bodies||4||3||2||9|
|Third sector organisation||1||2||19||22|
|Union, student or campaign group||4||4||10||18|
|% of organisations answering||40%||40%||19%|
|% of individuals answering||16%||50%||34%|
|Total non-campaign respondents||115||272||176||363||926|
|% of all non-campaign respondents||12%||29%||19%||39%|
|% of all non-campaign respondents answering||20%||48%||31%|
|% of campaign respondents answering||0%||100%||0%|
|% of all respondents||1%||76%||2%||21%|
|% of all those answering||2%||96%||3%|
A very substantial majority – 96% of those answering the question – disagreed with the proposal not to extend national rent controls to the social rented sector. Among non-campaign respondents this fell to 48% who disagreed. Organisational respondents were evenly divided between those who thought rent control should be restricted to the PRS and those who did not: a majority of ‘Local authority’ and ‘Social landlords and their representative bodies’ respondents thought it should be restricted, while most Private landlords thought it should not.
Around 355 non-campaign respondents made a comment at Question 47.
Among respondents who disagreed with proposals to restrict rent controls to the PRS were some who were opposed to any form of rent controls but who suggested that, if any such controls are to be introduced at all, then they should apply across social and private rented housing.Reasons for extending rent controls to social rented housing
Reasons for thinking rent controls should also be extended to social rented housing included high rates of rent increases seen in social housing and that, as set out in the consultation paper, social rents have risen at twice the rate of rents in the PRS. While some noted that social rents remain on average lower than private rents, it was also argued that incomes are generally lower amongst social tenants. Some respondents saw a need for a more effective mechanism to ensure social rents are affordable, and questioned why a consistent approach to ensuring affordability of rents would not apply across both sectors. Significant commonality of policy aims across private and social housing, for example in terms of ensuring access to good quality and affordable housing, was highlighted.
Concerns were raised that rent increases have had a similarly adverse impact on social tenants as has been evident in the PRS. While it was acknowledged that the impact of rent increases has been mitigated for social tenants in receipt of Housing Benefit, respondents suggested that many social tenants have still faced significant financial pressures associated with increasing rents. There were references to the impacts of the bedroom tax and benefit cap for social tenants and the failure to increase benefits in line with rent increases. It was also suggested that a social tenant who is not in receipt of benefits is likely to spend more of their income on rent than a private tenant in a comparable property.
Evidence that a substantial proportion of social tenants have had difficulty affording their rent was also cited, and it was reported that there is widespread concern amongst social tenants about future affordability in light of continuing rent increases. This was seen as indicating a need to tackle increases in both social and private rents, and to consider all available options to ensure that social rents remain genuinely affordable. In this context, some respondents were opposed to ruling out rent controls for social rented housing at this stage.Differences between sectors
However, it was also suggested that a single system of rent controls may not be appropriate given differences the between social and private rented housing. Some non-campaign respondents referred to differences in how the sectors function, for example noting that social housing is more heavily regulated and therefore more homogenous in terms of housing quality, and that social landlords receive public subsidy and operate on a not-for-profit basis.
It was also noted that social and private tenants typically differ in profile, for example with social tenants usually having lower incomes. Some non-campaign respondents suggested that any rent controls applied in social housing would therefore have to be adapted to reflect these differences in function and role. It was also noted that respondents would be able to offer a clearer view on how rent controls should be adapted once the Scottish Government has provided greater clarity on what the proposed rent controls are.Reasons rent controls should be restricted to the PRS
Some non-campaign respondents who opposed introduction of rent controls for social rents referred to the well-established regulatory framework in place for social housing. In particular, these respondents noted that the introduction of rent controls would cut across existing rent affordability safeguards, including for example the statutory duty to consult on any rent increases. There was a view that existing safeguards are sufficient to ensure that social rents remain affordable. This issue is considered in further detail at Question 48.
Differences in rent levels between social and private housing were also referenced, and that social rents remain significantly lower on average than private rents.
There was also a view that delivery of government policy priorities has been a key driver of social rent increases over recent decades, for example with rent increases funding policy requirements around housing quality and energy efficiency, and supply of new affordable housing. It was suggested that the introduction of rent controls for social rented housing could undermine delivery of these and future national policy priorities. Some ‘Local authority’ respondents suggested that, as the local strategic housing authority, they are best placed to ensure that rents take account of local conditions.Keeping social rents affordable
A range of respondents – including some who opposed rent controls for social rented housing – raised concerns around the rate of increases in social rents, and expressed a view that some social rents are at the limits of affordability. Further consideration of the factors influencing social rent increases was seen as important to inform any policy response and there were calls for the Scottish Government to fund the national policy requirements placed on social landlords more fully.
Respondents suggested several other means of ensuring social rents are affordable. For example, it was proposed that the results of rent consultations should be made binding on social landlords. More generally, it was suggested that regulation of social rents should ensure that introduction of any measures to ensure rents are affordable should not be used to justify delays in investment in social housing. It was proposed that the extent to which a social landlord has ensured that both affordability and quality standards have been met should inform allocation of public funding to landlords.Question 48 – Do you think the current safeguards for rent setting in the social rented sector are sufficient and, if not, how could they be strengthened?
Around 145 non-campaign respondents answered Question 48.
Some of these respondents noted that a number of statutory and voluntary safeguards are currently in place around rent levels, rent setting and affordability for social tenants. This included reference to:
- The legal requirement for social landlords to consult their tenants when proposing to increase rents.
- Statutory standards set out by the Scottish Social Housing Charter.
- Grant funding of new social housing being linked to benchmarking of rents.
- An evidence-based approach to rent setting and transparency in how rental income is used.
- The role of the SHR in assessing rent affordability for social landlords
Some non-campaign respondents were of the view that these safeguards are sufficient, and it was suggested that the resource requirements associated with introduction of additional safeguards would be disproportionate. There was also a view that current safeguards are effective in ensuring social rents are affordable, with the differential between social and private rent levels cited as evidence of this effectiveness.
An alternative perspective was that social rent safeguards are relatively limited in scope, and/or are currently under-used by social landlords and tenants.
Concerns were raised around the affordability of social rents, primarily focused on the lowest income households. Difficulties in accessing social housing for those on very low incomes (including homeless households) were referenced and it was reported that changes to Housing Benefit and Universal Credit have contributed to rent arrears and risk of eviction for these households.
There was also a view that the statutory requirement for social landlords to consult on proposed rent increases is not resulting in social tenants having sufficient influence on rent setting. Some respondents raised concerns around whether there is a consistency of approach to rent consultation across landlords, including a view that consultation approaches are not always accessible and easy for tenants to understand. There was also a perception that social landlords do not take sufficient notice of consultation results when setting rents and it was suggested that some social landlords have work to do to ensure that rent setting is fair across their housing stock.
It was noted that there is no official guidance for social tenants on how rent affordability should be understood, or on the approach to rent setting. Reference was made to differing approaches to rent setting (and subsequent rent increases) across social landlords. It was suggested that a shared definition of affordability for social rented housing, and guidance for rent setting and rent consultation would be helpful for social landlords.
In terms of potential to strengthen current safeguards for social rents, some respondents repeated their view that rent controls should be applied across both private and social rented housing. Other suggestions included that:
- Available data on arrears and evictions for social landlords should be subject to closer scrutiny to identify any evidence of affordability difficulties for social tenants.
- Wider analysis of data on social and private rented housing should be undertaken to ensure equality of outcome in terms of rent affordability.
- The results of rent consultations should be made legally binding on social landlords, for example by replacing a rent consultation with a statutory ballot.
- Landlords should ensure that consultations are accessible to all.
- All consultations should include a ‘no rent increase’ option.
- A potential role for tenant representatives should be considered.
As noted in relation to Question 47, some sought a greater acknowledgement of the extent to which Scottish Government policies have contributed to increasing social rents, and how this is likely to continue to be the case.
Vision and principles of future rent controls
The consultation paper highlights the contribution that rent controls are expected to make to delivery of the Scottish Government’s vision for people to have equality of outcomes irrespective of the tenure they live in. It makes clear that the objective for rent controls is to make rents more affordable, and to support work to reduce poverty and improve outcomes for low income tenants and their families.
A separate consultation with detailed rent control proposals will be undertaken later in the current Parliament, and at this stage views are sought on the proposed vision and principles to underpin rent controls. The consultation paper describes the vision for rent controls as ensuring tenants pay affordable and reasonable rent for good quality homes. The underlying principles to deliver this vision are that rent controls will: (a) have an appropriate mechanism to allow local authorities to introduce local measures; (b) will be evidence based; (c) will support and encourage the sector to improve housing quality; (d) will learn from safeguards already in place for social rents; and (e) will focus on giving private tenants a stronger voice while taking account of all stakeholder views.Question 49 – Are there elements of the existing Rent Pressure Zone system that could be built upon when designing a new system of rent controls?
Around 330 non-campaign respondents answered Question 49.Reasons for retaining/modifying RPZs
Some non-campaign respondents suggested that it would be premature to replace existing provisions before any RPZs had been trialled; there was a view that further evidence is required to demonstrate the effectiveness or otherwise of RPZs in terms of ensuring rents are affordable. It was also noted that Scottish Government data shows below-inflationary increases in private rents across most parts of Scotland, and it was argued this suggests that a blanket rent control approach is not necessary, whereas a targeted approach to rent controls may strike the right balance.
Concerns were also raised around the time and resources required of landlords, letting agents and local authorities to support what may be an unnecessary regulatory change. In this context, some respondents were of the view that barriers to implementation of existing RPZ provisions should be addressed before a new national rent control system is considered. This included specific suggestions for changes to current RPZ criteria and evidence requirements, and calls for addition resourcing and support for local authorities.Elements that could inform a new rent control system
Some non-campaign respondents did think aspects of the RPZ system could be incorporated as part of a future system of rent controls. This included some respondents who were opposed to the principle of rent controls, but who wished to see any future rent controls maintain aspects of RPZ provisions. The importance of the localised aspect of the RPZ system was emphasised and there were calls for this to be replicated in any future rent controls. For example, it was proposed that any excessive mid-tenancy rent increases should be dealt with locally.
Other aspects of the RPZ system identified as suitable for any future rent control systems included:
- Time limiting any restriction on rent.
- Linking rent restrictions to inflation.
- Applying rent restrictions only to mid-tenancy rent increases.
- Maintaining the role of Scottish Ministers in determining whether local rent controls are warranted, on the basis of evidence submitted by the local authority and consultation with landlord and tenant stakeholder groups.
Many respondents argued that little or no part of the existing RPZ system should be included in any future rent control system. Some considered RPZs to have been a policy failure, suggesting that the policy design made implementation impossible from the outset, primarily due to unrealistic evidence requirements. However, key deficiencies of RPZ policy were seen as potential learning points for rent controls and it was recommended any system of rent controls must address issues with RPZ provisions.Evidence requirements
The evidence requirements stipulated by RPZ regulations were described as excessive and it was suggested that any future rent control system should re-consider provisions for the identification of unaffordable rents and/or excessive rent increases. It was suggested that a lower burden of evidence set should be set and that requirements should be linked to proposals for collection of rental and property data (discussed at Question 42).
Establishing a regulatory body for the PRS was seen as an important measure in ensuring a consistent approach to data collection to support rent controls. The need for guidance on how tenants can report rents which they feel are unfair was also suggested.Rent increases between tenancies
Unregulated rent increases between tenancies were seen as a disincentive to tenants considering a move, an incentive for landlords to find ways to evict tenants, and as meaning that tenants who move more frequently may pay more. It was also suggested that RPZ regulations do not appear to prevent landlords from increasing rents shortly after the start of a tenancy, providing the rent does not subsequently increase more often than once a year. Some noted that within-tenancy controls have been criticised by research into existing rent control systems, suggesting that this should be seen as an argument for stronger regulation.Implications of CPI +1% rent increase
There were concerns that RPZs would not be effective in ensuring rents are affordable in the long term. It was argued that the CPI +1% rent increase allowed by RPZs would (as of March 2022) equate to 6.5% – well above the level of increase typically proposed by landlords. It was also suggested that the benefits associated with the 2016 Act’s removal of the ‘no fault’ grounds for eviction could be undermined if ineffective controls mean that rent increases can outstrip inflation.Failure to improve quality or reduce rent levels
Failure to take the opportunity to improve quality in the sector was highlighted, and it was noted that other existing rent control systems have been used to leverage improvements in housing quality. Many respondents also highlighted the link between housing quality and net zero targets, suggesting that use of RPZs to drive up quality standards would have the added benefit of reducing the climate impact of private rented housing.
Failure to reduce current rent levels was also referenced, with respondents citing evidence that private rents are already unaffordable for many households in Scotland.Narrow geographical focus
Many respondents referred to the relatively narrow geographic focus of RPZs, suggesting that rent controls are required across all parts of Scotland, although the need for flexibility in response to local circumstances was also suggested.Question 50 – Do you agree with the vision and principles set out above in relation to a future model of rent controls for the private rented sector in Scotland?
Around 590 non-campaign respondents made a comment at Question 50.
A number of these responses were informed by opposition to any form of rent controls, raising concerns that rent controls have the potential to result in unintended consequences that could reduce supply in the short term, for example by making the PRS increasingly unattractive for landlords and investors. Evidence of a fall in the number of PRS properties in recent years was cited, with increasing regulation reported as an important factor for landlords planning to reduce the size of their PRS portfolio. Some non-campaign respondents were sceptical about the likely effectiveness of rent controls in ensuring that rents are affordable. In addition to the concern that any loss of supply could drive up rents, it was suggested that limiting mid-tenancy rent increases would encourage landlords to make use of other opportunities to increase rents.
There was also a view that, while the proposals are welcome, rent controls alone cannot solve the inadequate supply of affordable homes and that increasing the supply of social housing is the most important change needed to support the right to adequate housing.Vision
In terms of views on the vision for rent controls as set out in the consultation paper, there was support for the focus on rent affordability and housing quality. However, many suggested that the vision and principles set out are too vague for respondents to offer a firm view. There was a call for definition of key terms, and concern that the consultation paper does not clarify the Scottish Government’s vision for the future size and role of the PRS in Scotland.
It was argued that the overall vision for the sector should be reflected in any future rent control system, including detail on how rent controls will balance protection for tenants with the risk of encouraging disinvestment by existing landlords. There was some concern that the vision and principles set out in the consultation paper do not consider the potential impact and risks associated with rent controls for the PRS. For example, there were calls for more explicit acknowledgement of potential issues such as:
- Any loss of landlords and investment.
- How impacts might differ across different parts of the sector, such as rural and urban areas, and the student market.
- How rent controls might affect how the sector interacts with other parts of the housing market.
The need to ensure that policy design anticipates potential adverse impacts, incorporates appropriate enforcement, and can respond to local variation in market pressures was highlighted. Establishing an expert independent panel to inform the design of rent controls was suggested.
It was also argued that the right to housing should be a central element of a rent control system and should take precedence over any risk of landlords leaving the sector due to additional regulation. There was a view that a smaller PRS would be preferable to a sector which cannot deliver on human rights.Principles
Considering the principles for a rent control system set out in the consultation paper, respondents expressed particular support for the localisation of rent controls, and for an evidence-based approach which ensured openness and transparency.Local measures
Some non-campaign respondents expressed specific support for mechanisms to enable localisation of rent controls, including comments highlighting the extent of variation in the size and profile of the PRS across Scotland. However, many other respondents raised concerns that localisation should not mean that controls are limited only to specific places and there was a call for a national system of rent controls which allows scope to take account of local circumstances.Evidence based
There was support for an evidence-based approach to rent controls. However, it was suggested that this evidence should encompass the full range of factors that can influence rent affordability – such as household incomes and other living costs.Support to improve housing quality
The link between rent controls and improving the quality of private rented housing was highlighted, with many respondents expressing a view that rent controls could have a role in incentivising quality improvements. The Scottish Government was asked to go further by using rent controls to penalise failure to improve standards, for example, by ensuring that controls can reduce rents if properties do not meet basic energy and performance standards.Giving private tenants a stronger voice
Comments on the intention to give private tenants a stronger voice included suggestions that tenants’ views should be prioritised over the views of landlords. Many respondents described tenants’ views as reflecting the need to access suitable accommodation, contrasting this with the views of landlords which some saw as being based on generation of financial profit.
It was argued that a rent control system needs to achieve a fairer balance of power between tenants and landlords, for example by improving the availability of affordable housing such that tenants are better able to exercise consumer power in their housing choices.Additional principles
Respondents also referred to other considerations which they wished to see reflected in the principles for a future rent control system including that:
- The right to housing should be reinforced by the addition of a principle directly addressing the need to ensure housing is affordable. In addition to limiting rent increases, there should be a facility to reduce unaffordable rents.
- Rent controls must aim to ensure rents are stable, and to protect tenants from unpredictable rent increases.
- Effective evaluation methods must be put in place to assess the impact of rent controls.
- How other aspects of the regulatory regime might interact with rent regulation should be considered. It was suggested that, unless regulation of short-term holiday lets is strengthened, there is risk of private landlords moving to short-term holiday lets in response to introduction of rent controls.
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