���˿���

The impact has been a subject of concern from the social rented sector, but we have been pleased with our ability to reach agreement with the sector. The average approach—the approach of not setting a cap and not even seeking a voluntary, uniform cap for the social rented sector, but of offering an average instead—allows for some flexibility.

Some social landlords will have an urgent need to invest in quality and maintenance as well as other aspects of their investment programme. Some will have managed more successfully than others to keep rents low and under control during the pandemic. They will not all have followed exactly the same path, because they are independent bodies. Given the different circumstances that different social landlords are in, it was appropriate that we allow some degree of flexibility.

Social landlords exist for a social purpose and they are not there to extract the maximum rent that they can extract from the properties that they have on offer; they take that social purpose very seriously. None of them would seek to impose unaffordable rent increases or ones that could reasonably be avoided. In fact, we are seeing early indications that the rents that are being set are significantly below average. I have seen figures from some local authorities that have set their rent increases for the coming year at 2, 3 or 4 per cent—significantly below the average that we have been seeking. We anticipate that that will continue to be the case, and the Scottish Housing Regulator will continue to give us information on that.

Obviously, we are in regular dialogue with them. I have to say, though, that I have seen some media reports that have not quite captured the full detail of this. If there is an announcement about what is going to happen to the cap, not every media report will properly capture the difference between the impact on the social rented sector and the impact on the private rented sector. That is why we need to continue to work directly with social landlords, for example, who have that on-going responsibility for consultation and tenant engagement, as well as with private landlord representative bodies and organisations that speak directly to and advocate on behalf of tenants.

It also worth reflecting on the fact that there is a role for organisations that engage with tenants in the social rented sector but which are not social housing providers, such as the Tenants Information Service, and the work of local authorities such as Glasgow’s tenant-led housing panel—is it a panel? [Interruption.] I have been told that it is a commission—I will actually be seeing some of them later this week. They, too, continue to have a role not just in letting us know about additional channels of communication that we should be using but in speaking directly to tenants. Indeed, they have been very active in doing so.

Previously, when we have debated not so much this legislation but the new deal for tenants, it has been clear that ideology comes into the debate a little bit. There are some who are of the view that a more deregulated, more free-market approach to housing will increase supply and that any impact on prices will be detrimental to that. Actually, if we look at some European countries that have had systems of rent controls in place for a long time, we see a larger private rented sector as a proportion of the housing stock than we see in Scotland.

That is not the universal experience, and it is well understood that rent controls can achieve their objectives well or poorly. We continue to engage with all stakeholders to ensure that we design a system that is right for Scotland and that will be able to achieve protection in terms of affordability but which will also be consistent with what Scotland needs in terms of good-quality housing supply and investment in all the hugely important priorities around the transition to net zero.

There is a connection between rental income and investment in either sector. That relationship between rental income and investment is not the same in the social rented sector—which, as I said earlier, is a non-profit-making sector—as it is in the private rented sector. There are examples of build to rent, but a great deal of private rented accommodation is not actually provided by landlords—it is not necessarily built by them but is acquired by them as existing property.

Therefore, there are huge differences between the sectors, and we are keen to continue to do the work that we have been taking forward since the publication of the new deal for tenants and which will continue to be in development until the bill is introduced later this year. I look forward to further extensive dialogue with the committee at that point.

That is a very good question. We acknowledge that, given the nature of mid-market rent, there are differences not only in rent levels, but in what is included in the rent. For example, there are issues in relation to service charges.

Although we took the view in relation to the emergency legislation that mid-market rent properties tend to be private residential tenancies and would be treated as such in the act, we recognise that there are longer-term issues to work through before we introduce the new bill and get to a national system of rent controls. We are keen to engage with the social rented sector to understand people’s concerns about that and identify the appropriate way to address them.

We debated that issue and I reflected on it during our debates on the bill. We weighed up various factors while trying to reach an approach on rent arrears. In my opinion, tenants in very severe rent arrears need support so that they do not become stuck where they are, building up ever more rent arrears. They need support through the tenant grant fund and from other forms of financial support and they need to be able to work constructively with their landlords to resolve the reasons why they are in rent arrears, so that they can work out the best way forward.

We think that the approach that we took in setting that level of severe rent arrears gives appropriate protection without leaving people stuck where they are and building up ever more unaffordable rent arrears. If arrears reach a level of severity that is significantly beyond what we have currently set out, they will be extremely destructive and disruptive to a person’s circumstances. Whether they stay where they are or move to another property, those debts will become a burden that we believe is unreasonable. The type of protection that people who are facing those arrears need is not simply for us to say that they should stay where they are and see the arrears grow ever higher.

Again, as we debated during the passage of the Cost of Living (Tenant Protection) (Scotland) Bill, we recognise that the two dominant parts of the rented sector—the social rented sector and the private rented sector—operate differently. In particular, the social rented sector has a long tradition, and requirement, for consultation and engagement with tenants in relation to rent setting. We wanted to respect that necessary and valuable engagement and consultation.

We know that rental income does not necessarily provide for profit—social landlords are not profit-making bodies—but it provides for investment in new build, for retrofitting for energy efficiency and net zero, for maintenance and upgrades of properties and for a wide range of services that social landlords provide in the community. The social rented sector plans such investments over a long time. Given that several members echoed concerns from across the sector during the passage of the bill, more people recognised that some short-term protection was necessary but that, if the zero per cent cap continued for an extended period, it would not only reduce rental income in the year of the cap’s operation but have a compound impact on the financial planning of social landlords over a much longer period, and there would be a detrimental impact on tenants because of the reduced investment.

Such factors do not apply to the private rented sector in the same way. That sector tends to be profit making and tends to have a lower level of energy efficiency than the social rented sector, because some properties have not been upgraded in the way that will be required in the future under the new-build heat standard and the heat and buildings regulations on retrofitting. In the absence of some of the factors that apply in the social rented sector, we felt that the legislation was appropriate.

The difference in approach was also necessary because, in the absence of large organisations representing private landlords—we have a diverse and fragmented private rented sector—there was no opportunity to negotiate a voluntary agreement with private landlords that would have achieved the same effect as the agreement that I am pleased to say that we reached with the social rented sector.

The difference in approach is a mixture of a recognition of the different factors and characteristics of the two parts of the rented sector and the differences in opportunity to achieve a voluntary agreement in the nature of how rent is set. All those factors led us to recognise that a different approach had to be taken. However, I emphasise, again, the broad level of parity that we are talking about. As private rented sector rents are significantly higher than social rented sector rents, we believe that there will be, roughly speaking, parity in monetary terms between the rental increase that will be allowable for that most common type of property—two-bedroom properties—in the private rented sector.

Yes. I reinforce the point that we have never suggested that the emergency legislation is a solution to every aspect of affordability in the rental market. We believed that it was necessary in order to prevent some very significant rent increases, of which we were becoming aware, and to protect people in the throes of the extreme cost of living crisis. The longer-term goal of having a broader and deeper understanding of what affordability really means in housing is about acknowledging those wider costs, which include things such as service charges and utilities, as Willie Coffey said.

A genuinely comprehensive understanding of affordability is also about place. It is about issues such as transport costs and energy costs, which we have talked about, and it requires that longer-term work. “Housing to 2040”, as well as our commitment to legislation in the area, will continue to deliver on those aspirations.

We have to continue to engage with the universities around the obligations that they have to look after the students that they choose to attract, whether those are domestic or overseas students.

We took the view that the specific measures in the emergency legislation in relation to the purpose-built student accommodation market were not having a significant effect, because the scope for in-tenancy rent increases was negligible to non-existent. Although the intention to achieve parity of protection was always there, we had to take the view that the specific measures on the rent cap in the purpose-built student accommodation sector were not having that effect, so that has been suspended.

In relation to the wider arguments, we have long acknowledged that there are deeper issues to explore in relation to student accommodation. That is why we have the current review. The members of the steering group for that have been working hard, and the review is nearing completion. We expect the steering group to make its recommendations to ministers, and at the appropriate time we will report to Parliament and give our response.

Mr Hepburn—the minister who is responsible for the higher and further education side—and I will continue to engage with each other across Government and with the education sector around those issues.

Miles Briggs also mentioned homelessness. If we look at the tenures from which homelessness referrals come, there has been an extended period of a number of years in which the private rented sector has been a significantly higher source of homelessness than other tenures. That reduced significantly during the period of the emergency legislation for Covid, but there has been a continual rise and, before the introduction of this emergency legislation, it was exceeding its pre-Covid levels.

That increase has not been seen in other tenures, so we have an issue in relation to eviction from the private rented sector as a source of homelessness. That is another reason why we believe that the measures—particularly those on protection from eviction—remain necessary.

No. We have covered the main arguments that needed to be made.