Private Housing (Tenancies) Bill draws mixed response
Attempts by the Scottish Government to provide “more security, stability and predictability” to tenants renting in the private rented sector (PRS) have been broadly welcomed, though concerns have been raised proposals may harm investment in the sector.
Announced yesterday by housing minister Margaret Burgess, the Private Housing (Tenancies) (Scotland) Bill will introduce a more streamlined system with no confusing pre-tenancy notices, modernised grounds for repossession and easier-to-understand tenancy agreements. The legislation will mean tenants can no longer be asked to leave their home simply because the tenancy has reached its end date. Landlords will have modern protection for repossessing their property, such as intention to sell or move in themselves.
Rent increases will be limited to only one per year, with three months’ notice.
The bill also offers the opportunity for local authorities to implement rent controls in areas where there are excessive increases in rents and a concern about the impact this is having on tenants and the wider housing system.
The Chartered Institute of Housing (CIH) supported the need for more tenant security but called for balance between the needs of tenants and landlords.
Annie Mauger, director of Chartered Institute of Housing Scotland, said: “The private rented sector has expanded rapidly in recent years and now provides a home for 14 per cent of all households in Scotland, including a growing number of families with children. We support the need for changes to the current system to provide better security for people who want to settle into a long-term home in the private rented sector. We welcome this bill as offering an important opportunity to drive up standards within the sector.
“At the same time, it is important that this new legislation strikes the right balance between the needs of tenants and landlords. Giving tenants extra security is very important, but we also want to ensure that businesses remain viable for landlords and investment in the sector is not discouraged. In particular, we are keen to ensure that grounds for repossession are clear and robust and the new tribunal system works effectively and has enough resources to deal with the volume of cases that will be redirected from the Sheriff Court.”
Scotland’s PRS champion Gerry More has broadly welcomed the further clarity given by the publication of the bill but emphasised the importance of balancing the needs of tenants, landlords and investors if the Scottish Government is to achieve its objective of significantly expanding capacity in this fast growing sector.
Having been tasked with attracting long-term institutional investment to enable the development of professionally managed purpose-built private rented housing at scale, Mr More said: “There is much to be welcomed in today’s announcement on updating the tenancy regime with initial rents continuing to be market-led.
“However, we now need to work through the detail, particularly in relation to the use of rental caps and how student tenancies are ended, in order to ensure Scotland remains competitive relative to other countries.
“The Scottish Government is working with the sector on a cohesive range of measures including exploring the development of a rental income guarantee mechanism and the Chief Planner has also this week sent a letter to Local Authority heads of planning encouraging them to consider the role new build PRS homes can play in meeting housing need and demand in their areas.
“Scotland needs a modernised system which helps increase the supply of much needed housing. I therefore look forward to continuing positive discussions with the Scottish Government on how this can be achieved.”
Shelter Scotland said the bill represents the biggest move forward in private tenancy law in the last quarter of a century.
Graeme Brown, director of Shelter Scotland, said: “The private rented sector in Scotland has doubled over the last ten years and is now home to more than 330,000 households – 85,000 with children. This growth and change in types of people living in the sector means the tenancy regime needs a major overhaul.
“Shelter Scotland hopes this bill will rebalance the relationship between tenant and landlord by improving security of tenure for private renters and laying down a clear, modernised new tenancy, benefiting landlords and tenants alike.
“The abolition of ‘no fault’ eviction is a very big step forward and, combined with a flexible and secure tenancy, it will help families in particular put down roots in their communities and help people to stay in their home for as long as they need.”
Graeme Brown added: “While the legislation won’t solve every problem in Scotland’s private rented sector - we still need robust enforcement of existing rules on landlord registration and to encourage investment in ageing private rented housing – it is an essential rebalancing of rights that will provide tenants with increased stability by protecting them from arbitrary eviction.”
Scottish Green MSP Patrick Harvie said the publication of the bill is “overdue but very welcome”.
He added: “Many Scots have no option but to rent privately, and figures from Shelter show that almost a fifth of homeless applications come from the private rented sector. The need for action is clear, and it’s good to see ministers finally bringing ideas forward.”
John Blackwood, chief executive of the Scottish Association of Landlords, said he found there to be “a remarkable amount of common ground” throughout the development of the legislation but warned that measures must not harm investment in the sector.
He said: “We have particular concerns about measures such as rent controls, as well as removing the right of a landlord to end a lease naturally, subject to a reasonable notice period. Whilst we understand the political pressure to tackle rent rises in hotspots such as Aberdeen and Edinburgh, we are concerned these measures could harm investor confidence and drive landlords out of the market, leaving a vacuum that could be filled with less than scrupulous Landlords. The way to reduce rent levels in a sustainable manner is to increase housing supply, not punishing landlords that are investing tens of thousands of pounds in their properties.
“Similarly, the proposal to remove the right of a landlord to bring a tenancy to an end, subject to a reasonable notice period, will harm confidence amongst those looking to invest in the PRS, as well as making it harder for some groups to find rented accommodation. For example, many landlords split their properties between students and holiday lets, particularly in places like Edinburgh. Instead of providing housing to these two groups during the year, landlords may decide not to rent to students as they couldn’t guarantee that they would leave the property at the end of the academic year in time for visitors to the city. Instead they will take more traditional, longer-term tenants, reducing the supply available for students and visitors.
“We will be sharing our concerns with MSPs in the coming months and hope we can find solutions which ensures the final legislation strikes the right balance between protecting tenants and encouraging continued investment in the PRS.”
Dr John Boyle, spokesman for campaign group PRS 4 Scotland, commended the Scottish Government’s desire to create more secure tenancies but said the bill will “raise a number of alarm signals”.
He said: “In particular, the focus on rent caps and a one-size fits all tenancy is likely to deter the investors the sector needs and the devil will be in the detail of the final legislation. What we need going forward is clarity on key questions.
“Already investors and landlords will be concerned that the bill leaves discretion for individual local authorities to set the level of rent caps, and this could lead to precisely the type of long term uncertainty that we know deters investment in housing stock. Moreover, with local authorities making decisions on rent controls based on average area wide prices, we risk deterring the types of high quality build to rent development that improves urban place making. Regrettably, the popular cry for rent controls has clouded the truth about the rental market. Rents are not universally going up; in former hot spots, such as Aberdeen, they are now decreasing. Where rents are rising, such as in Edinburgh, supply is tight and demand exceptionally high. The debate has been hampered by the lack of definitive data on Scotland’s PRS and this needs to be corrected before the bill progresses.
“Landlords and tenants in the student market will be particularly worried by the apparent removal of any ability for students to take a 10-month lease, and there will be a knock on negative effect on short term holiday lets too. It is clear that the intention of the Bill was not to hammer students and Edinburgh’s festivals as well as investors in student accommodation, but that is what is likely to happen. Other features, like the removal of no-fault possession, will need to be worked on further, both before the bill is passed, and through test cases of the Tribunal, which will need to be extremely well resourced from the outset.
“We remain encouraged that everyone can and will unite behind the desire to increase the supply of good quality housing for rent. The goals are the same, to create a sustainable PRS for all income groups, but evidence suggests that rent controls and limited choices for tenancies will not get us to where we want to be.”
Scottish Land & Estates welcomed plans to simplify residential tenancies but warned that more needs to be done to maintain supply and attract new investment to the sector.
The organisation said there were many positive elements to the bill but that certain elements could impact on rural housing supply.
Katy Dickson, policy officer (business & property) at Scottish Land & Estates, said: “We welcome the degree of clarity that the introduction of the Bill has provided and we can see that there are many positive elements to the government’s proposals.
“The simplification of the tenancy regime is something that we have long argued for and it is pleasing that the Scottish Government has made a concerted effort to address the need for reform.
“The introduction of a single notice to leave system, with robust and reasonable grounds on which to end a tenancy, is to be welcomed, and increased notice periods will hopefully address many of the concerns regarding security and certainty raised during the consultation.
“As we have pointed out throughout the consultation process, the removal of the ‘no-fault’ ground for repossession would leave a significant gap where landlords may struggle to deal to remove tenants, especially where there are issues of anti-social behaviour that affect both the landlord and neighbouring properties. We hope the new system will address these concerns but we will need to study the Bill in more detail over the coming days. In particular we hope that the progressive repossession grounds for rent arrears cases will actually deliver an effective measure for the many landlords who routinely face this issue.
“With our members providing much of the rented rural housing stock across the country, we also want to see a new regime that delivers for these areas, so are disappointed that the ground to recover possession because the property is required for an agricultural worker is not included.
“The Scottish rental sector has long faced issues with high demand, low supply and problems enforcing the current legislation. We hope the current legislation will not reduce supply or exacerbate the lack of investment in the sector.”
The Living Rent Campaign welcomed the news as a “huge victory” for tenant activists who have campaigned hard for the changes but called the bill to go further.
Keir Lawson, from the Living Rent Campaign, said: “We have secured dramatic improvements in security with the removal of no-fault grounds for eviction, and we have put the issue of rent controls firmly on the political agenda.
“But this bill can and should go further. We are worried that the provisions for rent controls as outlined here are not strong enough. If we want to step back from the brink of the crisis of affordability in private rented housing, then it is vital that these regulations bring rents down for both sitting and new tenants.
“We have also long argued for rent controls to be linked to the quality of housing, in order to tackle slum conditions that are all too common across Scotland, and we will continue to argue for this.
“Finally, there is a real risk here that many of the new rules about evictions are poorly defined and do not take tenants circumstances into consideration. We will continue to campaign for stronger tenants’ rights to ensure evictions will not cause undue hardship.”
RICS Scotland PRS forum chairman, Jonathan Gordon FRICS, said: “RICS encouraged the government to review the sector and was involved in the review group stage which recommended this change.
“Assured and short assured tenancies are nearly 30 years old and are no longer fit for purpose. This documentation is very complex, particularly for setting up or ending a tenancy and we welcome the Bill’s provision to introduce a more transparent tenancy regime with modern terms. While the proposed changes to repossession grounds could improve security for young families in rented accommodation in planning for the future, the improved and modernised grounds for evicting of the small number of problem tenants which, alongside new first tier tribunals, is likely to make necessary evictions quicker.
“It is always important to consider all options which could potentially expand the supply of private rented homes in Scotland and to explore routes which might make a positive impact on the sector and drive up property standards. However, RICS does not support rent controls for the private rented sector, and we do not recommend that the Scottish Government introduce a cap on rent increases.”
Citizens Advice Scotland described the bill as good news for tenants and landlords alike.
CAS spokesman Fraser Sutherland said: “We welcome the introduction of this new bill which will make private rented tenants’ rights stronger than ever before.
“For many years CAS and others have called for action against rogue landlords who use the threat of unfair evictions to get their way, for example by stopping complaints about necessary repairs. The new leases will allow tenants to stay in property that they want to make their home without threat of irresponsible evictions.
“This bill is also good news for responsible landlords too, as they will have better rights against problem tenants who refuse to pay rent.”