DATA LABEL: PUBLIC SERVICES FOR THE COMMUNITY POLICY DEVELOPMENT AND SCRUTINY PANEL PRIVATE CONSULTATION ON PROPOSED FAIR RENTS (SCOTLAND) BILL REPORT BY HEAD OF HOUSING, CUSTOMER AND BUILDING SERVICES A. PURPOSE OF REPORT There is currently an open consultation lodged within the Scottish Parliament as the first stage in introducing a Private Member’s Bill on the topic of ‘Proposed Fair Rents (Scotland) Bill’. The closing date is 6th August 2019. The report is to inform Panel Members of the draft council response. B. RECOMMENDATION Panel members are asked to note the proposed response to the consultatation on proposed fair rents by the Scottish Government and that the report will be submitted to Council Executive for final approval prior to the consultation response deadline. C. SUMMARY OF IMPLICATIONS Focusing on our customers' needs I Council Values Being honest, open and accountable Making best use of our resources Working in partnership Providing equality of opportunity II Policy and Legal Private Housing (Tenancies) (Scotland) Act (including Strategic 2016 Environmental Assessment, Equality Antisocial Behaviour etc. (Scotland) Act 2004 Issues, Health or Risk Assessment) III Implications for None Scheme of Delegations to Officers IV Impact on performance None and performance Indicators V Relevance to Single We live in resilient, cohesive and safe Outcome Agreement communities VI Resources - (Financial, None Staffing and Property) VII Consideration at PDSP Yes VIII Other consultations None 1 D. TERMS OF REPORT This consultation relates to a draft proposal lodged by Pauline MacNeill, Member of the Scottish Parliament for Glasgow Region. The proposal sets out a Bill to protect private sector tenants by introducing measures to limit rent increases and to increase the availability of information about rent levels. At the end of the consultation period, responses will be analysed with the intention that a final proposal will be lodged in the Scottish Parliament along with a summary of all responses. If this proposal receives the required support and if the Scottish Government does not indicate that it intends to legislate on the area in question, a Members Bill will be introduced. This Bill will then begin a three stage scrutiny process, which may result in amendments or it being rejected. This process will take place before this Bill can progress on to becoming passed by Parliament as an Act. This consultation seeks to collate a range of views on the private rented sector rent charges, and how equitable these are. The analysis of this data should enable potential problems to be identified, and inform proposed improvements to current policy. D1 Background The growth of the Private Rented Sector in Scotland over the last 20 years has seen the market share increase from 5% in 1999 to 15% in 2017. This share increased significantly to over 25% in larger city regions. The reduction in the availability of social housing, and increased difficulty for many people in obtaining mortgages has led to a rise in more people, and families in particular, turning to the private rented sector to meet their housing needs. The Scottish House Condition Survey in 2017 found that 27% of households renting in the private sector have children in the property as opposed to 25% in the social sector. With a sharp increase in the last decade of the number of children in private rented accommodation who are living in poverty, the consultation seeks to examine affordability of the private rented sector in balancing these factors. D2. Current position Current law and practice in Scotland is that all landlords are required by law to apply for registration with their local authority under Part 8 of the Antisocial Behaviour etc. (Scotland) Act 2004. This registration is renewed every 3 years, and it is a criminal offence to operate as an unregistered landlord. West Lothian Council administers the Private Sector Landlord Scheme and this is delivered via Housing, Customer and Building Services. On 1 December 2017, the new private residential tenancy (PRT) came into force, replacing the assured and short assured tenancy agreements for all new tenancies. This tenancy agreement provides more security, stability and predictability for tenants. This legislation introduced controls around the frequency of rent increases by landlords, and Rent Officers within Rent Service Scotland play a role in adjudicating rent increases. If a tenant feels this is unreasonable, they can apply for rent adjudication via this service. Part of the consultation is focussed on improving the integrity of data around comparing fair rents, on the basis that the current system is opaque and information is not robust or transparent. 2 D3. Summary of the proposals within the consultation • Cap on rent increases – the proposal would see annual private sector rent increases across Scotland capped at 1% above inflation (indexed against the consumer price index) and applied to both existing and new tenants. • Property improvements – landlords can apply via a Rent Officer to apply an increase in rent above the cap to reflect substantial improvements made to the property. This would be determined by the officer. • Rent appeals – As it stands, if a tenant thinks a proposed rent increase is unreasonable, they can apply to a rent officer at Rent Service Scotland for rent adjudication. The rent officer will set the rent level based on a range of information about the property and can increase the rent if they decide it should be higher, as well as decreasing it if they think it is too high. The proposed changes mean this remains largely the same as the current process, with a slight change. When a tenant appeals rent, rent officers and the First-Tier Tribunal System can either lower or maintain rent, but cannot raise it. • Rent Pressure Zones - Rent Pressure Zones (RPZs) were introduced as part of The Private Tenancies (Housing) (Scotland) Act 2016 but have not yet been used by any local authority. A review of council officers fed back that evidence required to justify an RPZ could take between 3-5 years to collate, and that the integrity of data sources on private rents charged is not robust. • Landlord Register – as well as registering every three years, the Bill would expand this so that landlords must also declare the rent that they charge, and update the register when this changes. • Criminal offences and enforcement – The maximum penalties currently applied to unregistered landlords can reach £50,000. Failure to declare a criminal offence as part of an application can reach £1,000. The Bill would see the penalty system reflect the expanded duty to declare the level of rent being charges by landlords. 3 D.4 Summary of WLC response to the consultation • Cap on rent increases – Partially supportive. There are benefits for tenants in terms of ensuring clarity and consistency in approach to setting rent levels across the country. There may be a possibility that rents may be arbitrarily increased up to the cap by landlords. There is also potential for significant increase in the quality and amount of data available to inform local and national analysis of rent levels, segmentation by property type, and affordability of increases. • Rent level appeals – fully supportive. The current process is to apply to a Rent Officer for an independent adjudication of rent levels. This assessment can lead to a decrease, or an increase if deemed appropriate. This deters many tenants living in properties where the rent is already disproportionate from applying out of fear of further increase. The new proposals limit the adjudication to the application of decreases only. • Landlord registration scheme – fully supportive. This proposal would see landlords declare the amount of rent they will charge for each property they register. The council would then be able to monitor rent levels across the authority area in much greater detail, and this would enable analysis and comparison of private sector and public sector rents at a local and a national level each year. • Rent Pressure Zones – fully supportive. The proposal makes it much easier for councils to apply for the creation of a rent pressure zone through the availability of more accurate information about private sector rent levels. The current process is extremely onerous and resource intensive and the proposal would see this streamlined in terms of evidence gathering to justify a case for an RPZ. Knowledge of all private rent levels would enable officers to build a credible case that rents are being inflated above market value would see applications much more likely. Other points of note: • Slight additional costs in gathering, processing and quality assurance for the additional rent level detail for the current approx. 5000 private landlords are called out as a likely financial impact for WLC. • WLC have called out that there is likely to be a positive impact on tenants from protected characteristics as defined within the Equality Act (Scotland) 2010. This view is based on evidence that those from one or more of the protected characteristics are less likely to challenge discrimination for fear of reprisals – and proposals to remove discretion in adjudication in landlord practice can be helpful in creating a fairer system of fair rent practice. • WLC have requested a review of the impact of any changes at 12 months to assess any drop-off in private landlord registration, and other unforeseen impacts. E. CONCLUSION This report informs Panel Members of the draft Consultation response which is to be submitted on line prior to the deadline of 6th August 2019. 4 F. BACKGROUND REFERENCES Link to the final version of the consultation document ‘Proposed Fair Rents (Scotland) Bill https://www.parliament.scot/S5MembersBills/20190513_Final_Version.pdf Appendices/Attachments: 2 Appendix 1 - Draft WLC consultation response Appendix 2 – Fair Rents Consultation Document Contact Person: Sarah Kelly, Performance and Change Manager, Housing, Customer and Building Services 01506 281877 [email protected] Anne Marie Carr, Interim Head of Housing, Customer & Building Services.