The Scottish Government’s Bill aimed at reversing the autumn 2016 reclassification of housing associations as public bodies has been introduced to the Scottish Parliament.

The Housing (Amendment) (Scotland) Bill responds to last year’s decision by the Office for National Statistics (ONS) that Registered Social Landlords (RSLs) should be classified as public bodies in the national accounts, having previously been classified as private bodies.

This Bill is intended to pave the way for the ONS to reclassify RSLs back to the private sector in the UK national accounts.

Registered Social Landlords (RSLs), housing associations or housing cooperatives that are registered with the Scottish Housing Regulator, are not-for-profit organisations that aim to provide quality, low cost accommodation for people who need it the most.

The ONS reached its decision in light of certain powers that the SHR is able to exercise over RSLs. The Bill reduces or removes these powers through a series of amendments to the Housing (Scotland) Act 2010 (the Act that established the SHR).

The Scottish Government studied the reasons behind the ONS decision and worked closely with the Scottish Housing Regulator, RSLs, lenders, investors and tenants to draft the Housing (Amendment) (Scotland) Bill that will allow the ONS to reclassify RSLs back to the private sector.

In a blog welcoming the announcement, housing minister Kevin Stewart said the legislation will support the delivery of 50,000 new affordable homes and protect the Scottish Government’s budget.

He added: “Reclassifying RSLs back to the private sector is crucially important, as it will ensure their borrowing continues to be treated as private borrowing, which can be used to augment £3 billion of public investment provided by the Scottish Government to support the delivery of 50,000 new affordable homes in the next five years.

“If left unchanged, the ONS’s decision would mean that all new net borrowing by RSLs would count as Scottish Government expenditure and would require additional budget cover.

“This Bill is an essential, technical measure intended to ensure that the control and influence that the Scottish Housing Regulator (SHR) and local authorities can exercise over RSLs is compatible with RSLs being classified back to the private sector in the UK national accounts.

“I hope it will be welcomed and supported by everyone who wants to see the Scottish Government get on and meet our 50,000 affordable homes target.”

The move has also been welcomed by the Glasgow and West of Scotland Forum of Housing Associations (GWSF) which said it recognises that the Bill is necessary to avoid the Scottish Government having to provide substantial funding to set against housing association borrowing for delivering new homes.

GWSF director David Bookbinder said: “We know this Bill is crucial in hopefully bringing about a reversal of the recent reclassification. Whilst supporting the proposed legislative measures, however, we will be keen to discuss with the Scottish Government and Scottish Housing Regulator what checks and balances can be put in place to guard against any excessive disposal of social housing stock.

“Occasional disposal of untenanted stock can be part of any reasonable asset management strategy, but the system of regulatory consent has provided particular reassurance to tenants, lenders and the wider housing sector that the approach to disposals is sensible and proportionate. We trust that the sector in Scotland will act very responsibly once the consents system has gone, but guidance on issues around disposals will be important.

“We would in any event expect Ministers to be very concerned if, in the future, there were any signs that social housing disposals were reaching worrying levels.”

The Housing (Amendment) (Scotland) Bill in summary:

The Scottish Government’s policy is the same as that of the UK government, which by amending the regulation of Private Registered Providers of Housing (PRPHs) through the Housing and Planning Act 2016 sought to pave the way for ONS to reclassify PRPSHs to the private sector. The Northern Ireland Executive and the Welsh Assembly Government are also pursuing the same policy, for the same reasons, in their respective jurisdictions.