Sturgeon reveals plans for rent controls with new Private Tenancies Bill
First minister Nicola Sturgeon has laid out plans to introduce new bills to improve security for private tenants, introduce rent controls and abolish the ‘bedroom tax’ as early as possible.
Setting out her government’s legislative programme for the last session of the Scottish Parliament before the 2016 elections, Ms Sturgeon said the new Private Tenancies Bill will improve security for tenants in the private rented sector (PRS) and provide clear rights and safeguards for landlords. The bill will provide more predictable rents and protection for tenants against excessive rent increases, including the ability to introduce local rent controls for rent pressure areas.
Specifically, the bill will:
- Introduce a Scottish Private Rented Tenancy to replace the current Assured system.
- Remove the ‘no-fault’ ground for repossession, meaning a landlord can no longer ask a tenant to leave simply because the fixed-term has ended.
- Provide comprehensive and robust grounds for repossession that will allow landlords to regain possession in specified circumstances.
- Provide more predictable rents and protection for tenants against excessive rent increases, including the ability to introduce local rent controls for rent pressure areas.
- Create a more streamlined, clearer to understand tenancy system that is fit for the modern private rented sector.
The first minister also revealed that the Scottish Government’s target to provide 30,000 affordable homes by the end of this parliament is set to be exceeded.
The affordable homes target, which included 20,000 social homes of which 5000 will be council homes, has been backed by planned investment of £1.7 billion. By the end of March 2015, a total of 26,972 affordable homes (90 per cent of the target) had been delivered.
She pledged to provide £195 million over next three years to extend the Help to Buy (Scotland) scheme which will help at least 6,500 households and promised a “root and branch review of the planning system” with a particular emphasis on building more homes by delivering a quicker more accessible and efficient process.
Since Help to Buy relies on funding flowing through the Barnett mechanism, more detail on the scheme’s arrangements will be provided following the publication of the UK Spending Review in November.
A new Rural Housing Fund would also be introduced to help people who wish to stay and live in rural communities.
If re-elected, the SNP said it would introduce a Scottish Social Security Bill in first year of new parliament to pave the way for measures to address weaknesses in Universal Credit, mitigate as far as possible the impact of UK government welfare cuts and abolish the ‘bedroom tax’.
CIH Scotland said the legislative programme “acknowledges the positive role that housing has to play in promoting social justice, good health and improving our environment”.
Ashley Campbell, policy and practice officer, said: “We note that the government aims to surpass its target of developing 30,000 affordable homes over the lifetime of the Parliament – each one of these homes represents a step towards meeting housing need across Scotland. The Help to Buy (Scotland) scheme has the potential to support people into home ownership as well as boosting the construction industry – we welcome the commitment to provide additional funding with a focus on affordable home ownership next year.
“However, while we welcome these successes, we know that we need to do more. Building the number of new homes we need to house Scotland’s growing population will not be an easy task. It will require coordinated efforts from partners across the housing sector, local and national government and the private sector as well as significant reform to land and planning systems. It is a challenge that we must embrace together.
“The forthcoming Private Tenancies Bill represents an opportunity to increase standards in a rapidly-expanding sector which now houses over 300,000 households in Scotland and we look forward to working through the details. The introduction of measures to regulate letting agencies operating in Scotland also provides an opportunity to increase professional standards and improve the experiences of private renters. However, we would also welcome greater commitment from the government to support private landlords and letting agents in becoming more professional, bringing homes up to standard and creating a sector that is truly an attractive option for people looking for a place to call home.
“We welcome the proposals to make use of new powers devolved through the Scotland Bill to improve the delivery of social security in Scotland. We have been engaged in discussions throughout the process of the Smith Commission, the draft legislation and now exploring the possibilities of how these powers can be used in practice.”
Home building industry body Homes for Scotland welcomed the “root and branch review” of the planning system and was encouraged by the Help to Buy successor scheme announcement.
Chief executive Philip Hogg said: “A ‘root and branch review’ of the planning system is much needed if we are to be able to build the many thousands of homes Scotland requires so this is very welcome news, particularly given the focus on increasing delivery of high quality housing developments.
“Given the significant impact of the current Help to Buy (Scotland) shared equity scheme with regards employment, investment and wider community benefits as well as boosting housing completions, we are also encouraged by the commitment of £195m to support a successor scheme over the next three years.
“Whilst the new scheme has a smaller budget in comparison to the £305m for Help to Buy (Scotland), we hope it will help provide further confidence to both consumers and builders but await further detail on criteria and accessibility before being able to assess its likely impact.”
Graeme Brown, director of Shelter Scotland, described the PRS bill as “a very positive step”.
He said: “It is good news for tenants, landlords and letting agents alike. We look forward to seeing the bill in more detail, the timescales for implementing these changes and how they will work in practice.
“The private rented sector is now home to 330,000 households across Scotland, including around 85,000 families with children. The changes included in the bill will begin the process of reforming the private rented sector and making it more modern, stable, flexible, predictable and fairer for everyone that calls it home.”
Responding to the announcement on rent controls, Harriet Protheroe-Davis from the Living Rent Campaign, said: “This is a big victory for tenants and for the Living Rent Campaign. It is absolutely right that the upcoming bill will strengthen the rights and protections for tenants, as well as including provisions for the introduction of rent controls in high-pressure areas.
“It is important that the model of rent controls fully addresses the problems in rented housing, and we will continue to campaign to ensure that it does, but today’s announcement shows that the Scottish Government has listened to the thousands of people who have backed the Living Rent Campaign’s calls for rent controls and better protections.
“Rents are becoming increasingly unaffordable, and if we are serious about tackling poverty in the private rented sector, rent controls are a must.”
Jon Sparkes, chief executive of Crisis, said the announcements on tenancy reform show Scotland is “once again taking a lead in putting groundbreaking measures in place to protect people from the devastation of homelessness”.
He added: “With the private rented sector continuing to grow – and the ending of an assured shorthold tenancy now the leading cause of homelessness across the UK – it is particularly encouraging that greater protection for tenants is at the heart of the Scottish Government’s housing plans through the removal of the ‘no fault’ ground for eviction.
“It is also pleasing to see acknowledgement of the challenge posed by high rents in some areas of Scotland, which can put secure housing out of reach for many. These areas badly need more affordable homes to prevent the housing crisis escalating further. The UK government should also mirror the policy intent behind today’s announcement on devolved welfare powers and reconsider cuts to housing benefit – ensuring financial support genuinely reflects the needs of those struggling to make ends meet.”
Sarah Speirs, director of RICS Scotland, said: “The extension of Help To Buy with an additional £195m over the next three years, further stimulates demand while failing to address the critical issue of housing supply. RICS welcomes the Scottish Government’s continuing investment in affordable homes, however, we suggest the target of 30,000 to be delivered by the end of this parliament will need to be increased and expanded, with further investment required to grow supply across all tenures. The Rural housing fund will benefit remote and sparse communities, where small numbers of extra homes make a huge difference to the rural economy and agricultural workforce.
“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 is concerned that yet more government intervention in the PRS market has the potential to unsettle institutional investment, at a time when its contribution to provide much needed supply, is vital. Indeed, legislation ‘creep’ has a significant, and negative, impact on consistency which, in turn, damages the investor confidence required for a well-functioning market.
“Whilst the proposal for rent controls currently lacks detail, we urge the Scottish Government to err on the side of caution in taking the proposal forward. If rent control is implemented incorrectly, for example the setting of rents below market rent without any balancing concessions for landlords, this could result in a catastrophic impact on PRS supply.
“Furthermore, whilst longer tenancies will provide more security for individuals renting privately, the mandatory extension of tenancies may have a detrimental effect on the number of properties coming onto the rental market. RICS welcomes steps allowing landlords to terminate lease agreements on specific grounds, including breach of tenancy and to sell the property.”