Housing (Scotland) Bill: What rural landlords need to know at stage 2

The Housing (Scotland) Bill sets out a range of reforms intended to enhance rights for tenants and introduce new duties to prevent homelessness. This will inevitably impact landlords in the private rented sector.

Although some amendments are expected as the Bill makes its way through consultation, the next stage is expected in September, following Parliament’s summer recess.

Rent control

The Bill makes further reform to the existing temporary rent control measures introduced through the Cost of Living (Tenant Protection) (Scotland) Act 2022. As set out in the Bill, local authorities will be mandated to carry out assessments of relevant tenancies and report to the Scottish Ministers on:

• The level of rent payable in its area
• The rate of increase in rent
• The impact that the level of rent and rate of increase in rent under relevant tenancies has on properties, tenants and landlords in rural areas within that local authority area.

Landlords should note that the Bill empowers local authorities to request information from landlords within their areas. Such information will include not just rent, but information about the floor area of the property, the number of bedrooms and the state of repair. A landlord’s failure to comply with the request, or supplying false or misleading information, may result in penalties of up to £1,000.

If the Bill is passed, the local authorities will first report to the Scottish Ministers by 31 May 2027 and then in five yearly intervals thereafter, subject to any interim assessments and reports. The report must be reviewed by the Scottish Ministers as soon as reasonably practicable and they in turn publish their own report stating whether or not they propose to designate any part of the local authority area as a rent control area. Before making such a proposal, the Scottish Ministers must first consult to gather the views of thoserepresenting the interests of affected landlords and tenants. A rent control area should only be imposed where it is seen as “necessary and proportionate for the purpose of protecting social and economic interests of tenants in the [rent control] area”. The intention is that where a rent control area is no longer necessary, the designation will be varied or removed as appropriate.

Designated rent control areas will have rent increases that keep pace with inflation. Rent reviews will be capped at a “permitted rate”, which limits rent increases to CPI plus 1% with a maximum increase capped at 6%. For permitted rent increases above the standard cap, specific conditions must be met. This will be further considered at Stage 3 but will likely include circumstances such as significant improvements being required to the property. Whilst not common, the rural sector occasionally sees unusual, historic or grand country houses being let to tenants who have no financial or housing problems and simply wish to live in such a unique property. Rent controls would often be inappropriate in these circumstances and may not be covered by the statutory exemptions.

The Scottish Association of Landlords (SAL) has also raised that there must be scope for landlords who have kept their rent below market value to be able to “reset” the rent to market value in a rent control area.

From the outset, relevant tenancies include a private residential tenancy and an assured tenancy. A significant amendment agreed at Stage 2 is that a relevant tenancy for rent control now includes purpose-built student accommodation (PBSA) and student accommodation. It is anticipated that this will be examined again at Stage 3 given that the Scottish Government has expressed its view that PBSAs remain outside of rent control provisions. Groups representing PBSA developers have expressed concern about the impact this will have on the commercial viability of such developments.

Evictions

The Bill provides that the First-tier Tribunal may consider whether it is appropriate to postpone the date of an eviction when granting an eviction order. The Tribunal can consider matters such as financial hardship, a detrimental effect to health and disability of the tenant, the tenant’s household and the landlord. For the tenant and their household, the Tribunal may also consider seasonal factors; the attempt to include a ban on winter evictions was defeated. Landlords should be reassured that this provision does not prevent the eviction order being granted but grants the tenant a longer period in which to make alternative arrangements.

With regard to unlawful evictions, landlords will be subject to tougher penalties. The level of damages recoverable by a tenant has increased, and a landlord who has carried out unlawful evictions may be found unsuitable to be a fit and proper person to be registered as a landlord.

There have been no substantial adjustments at Stage 2 and it is anticipated that this element of the Bill will carry through to the Act.

Other enhanced tenant rights

An uncontroversial introduction to the Bill has been enhanced permissions for tenants to keep a pet. A landlord may not unreasonably refuse consent to a pet being kept on the property but may impose reasonable restrictions (i.e. requiring a higher deposit) during the period of the lease.

For tenants under a private residential tenancy, they may also make minor non-structural “category 1” alterations without seeking landlord approval. A tenant may make more substantial “category 2” alterations subject to obtaining landlord approval, which may not be unreasonably withheld, and after 6 months from the start of the lease. There is currently limited information on what alterations will specifically be categorised as a category 1 or category 2 alteration; this will be dealt with in secondary legislation and will take another few years to be realised and detail provided.

Rural impact

A new introduction at Stage 2 is that within a year of Royal Assent the Scottish Ministers must conduct an impact assessment on the effect of the Act on rural and island communities. The Scottish Ministers must  publish a report and state any action, if any, required through conducting the assessment. The scope of the assessment is not defined in the Bill, but recognition of the varied impact of the Act in urban and rural settings is welcome.

As several key matters are still up for discussion under the last Consultation, there are likely to be further amendments to the Bill before the Act is passed.

How we can help

If you feel you may be affected by the upcoming changes to the Housing (Scotland) Bill, our team of rural law specialists are able to help. Get in touch here for practical, strategic advice tailored to your circumstances or contact Jennifer Preston (jennifer.preston@andersonstrathern.co.uk) directly if you have any questions on this topic.