Andrew Watson: The Scottish Housing Regulator meets with rural landlords

Andrew Watson: The Scottish Housing Regulator meets with rural landlords

Andrew Watson

Deputy chair Andrew Watson shares his thoughts following the latest meeting of the Scottish Housing Regulator’s Rural & Islands Landlord Group.

In November we had another of our regular meetings with the standing group which brings together senior leaders from Registered Social Landlords (RSLs) that operate primarily in rural areas and the islands. We meet with the group to help us understand the challenges faced by those we regulate.

We first discussed the challenges landlords are facing around rent setting. One major challenge participants highlighted was the significant cost inflation they are all experiencing, and particularly for costs in maintenance and construction; these are running at levels well above the headline rate of inflation, especially in rural areas and the islands. All participants had a strong motivation to keep rent increases as low as possible, but recognised that this is becoming increasingly difficult in the face of such cost inflation – this is a real dilemma for board and committee members. The relative merits of consulting on the basis of a range of options or with a simple proposal were also discussed.

Participants also highlighted the difficulties that the volatility in official inflation figures presents for business planning and communications with tenants about proposed rent increases. This led to a discussion about possible different approaches to rent setting that moved away from a reliance on official inflation figures, or at least the all items CPI which, as noted above, doesn’t necessarily capture the rate of inflation actually being experienced by landlords. The group discussed the importance of longer term planning on rent levels centred on business plans, rather than having annual exercises that focus on the inflation figure at a point in time.

The group then turned to the Scottish Government’s consultation on the Social Housing Net Zero Standard (SHNZS), which was published a few days before the group met. The SHNZS is the proposed replacement for the Energy Efficiency Standard for Social Housing (EESSH). The immediate reaction of participants to the proposed new Standard was that it was better than EESSH, but questions remained around its measurement and the issue of a performance gap between modelled and actual energy usage in a home.

The biggest question is still around who will pay for landlords to achieve the Standard, and how much of the cost should fall on tenants, how much on landlords and how much on taxpayers. Participants all recognised the very significant cost to achieve the Standard and highlighted the importance of balancing the investment needed to deliver net zero, providing affordable warmth for tenants and residents, and maintaining rents at levels tenants can pay.

There was also a recognition of the challenge around building the capacity in local supply chains to deliver on the work that is needed, especially around the installation and maintenance of clean heating systems. Again, this is a particular challenge for rural areas and the islands. Participants emphasised the importance of taking steady steps in this regard to ensure we realise the wider local economic benefits of retrofit.

There was also a plea to change the approach to the distribution of the funding which is currently available for net zero; at the moment this is done largely on a competitive basis. Participants argued that there needs to be a more strategic approach to the use of this funding, to avoid the risk that those areas with the highest level of fuel poverty miss out on essential funding.

Finally, the problems with obtaining timely utility connections were discussed.

We agreed that to revisit our discussion on net zero at the next meeting of the group, but also to focus on wider housing strategy as set out in the Scottish Government’s Housing to 2040 Strategy.

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