Response to the Scottish Government Housing (Scotland) Bill consultation

Consumer Scotland is the statutory body for consumers in Scotland. Established by the Consumer Scotland Act 2020, we are accountable to the Scottish Parliament. The Act defines consumers as individuals and small businesses that purchase, use or receive in Scotland goods or services supplied by a business, profession, not for profit enterprise, or public body.

Our purpose is to improve outcomes for current and future consumers, and our strategic objectives are:

• to enhance understanding and awareness of consumer issues by strengthening the evidence base
• to serve the needs and aspirations of current and future consumers by inspiring and influencing the public, private and third sectors
• to enable the active participation of consumers in a fairer economy by improving access to information and support

Consumer Scotland uses data, research and analysis to inform our work on the key issues facing consumers in Scotland. In conjunction with that evidence base we seek a consumer perspective through the application of the consumer principles of access, choice, safety, information, fairness, representation, and redress.

The Consumer Principles are a set of principles developed by consumer organisations in the UK and overseas.

Consumer Scotland uses the Consumer Principles as a framework through which to analyse the evidence on markets and related issues from a consumer perspective.

The Consumer Principles are:

• Access: Can people get the goods or services they need or want?
• Choice: Is there any?
• Safety: Are the goods or services dangerous to health or welfare?
• Information: Is it available, accurate and useful?
• Fairness: Are some or all consumers unfairly discriminated against?
• Representation: Do consumers have a say in how goods or services are provided?
• Redress: If things go wrong, is there a system for making things right?

We have identified access and choice as being particularly relevant to the consultation proposal that we are responding to.

Chapter 1: Properties exempt from Rent Control Area restrictions

Properties let below market rent - mid-market rent properties

Question 1. Should mid-market rent (MMR) properties be exempted from the application of rent controls under the Bill?

Yes. We note that this is consistent with the recommendations of the recent Housing Investment Taskforce.[1] It is important that the implementation of Rent Control Areas does not adversely impact investment in the supply of good quality affordable rented property.

Question 2. We have set out some possible criteria which could be incorporated into a definition of MMR for the purpose of a possible exemption. Do you agree with these criteria?

Yes.

Question 3. If there is an exemption for MMR properties, should this include specific requirements on the level of rent charged, such as a link to Local Housing Allowance rates or to a specified percentile of market rates?

There should be a clear definition of what qualifies as a Mid-Market Rent property and these properties should have binding restrictions on rent levels separate from Rent Control Area restrictions.

Question 4. Should MMR properties only be exempted from rent control areas for the duration of time that they meet the specified criteria?

Yes. Exceptions should not be indefinite and only while specified criteria are met.

Question 5. Are there any other types of housing provision which should also be considered as part of an exemption for MMR property?

No.

Questions 6-13.

Consumer Scotland has not provided a view.

Other circumstances where exemptions would be appropriate

Question 14. Should a landlord of an exempt property be required to communicate to tenants and prospective tenants about the exemption?

Yes. All tenants need clarity about the conditions of their lease, both before entering into and during their tenancy. Tenants of MMR properties are by definition on low to medium incomes, and the Scottish Government’s own MMR analysis has found that 85% of MMR tenants consider affordability of the rental charge very important.[2] In line with the consumer principle of information, landlords should enable tenants to make a well-informed decision about whether to enter into an MMR or BtR tenancy, by providing clarity around the possibility, frequency, and potential amount of potential rent increases. It is therefore important to advise prospective tenants in advance what type of property they are renting, and whether or not such a property is or would be subject to rent controls in a designated Rent Control Area.

Question 15. What could the process be for tenants to verify that a property is exempt?

While the onus to provide evidence of eligibility for an exemption should lie on the landlord, we recognise that there could be a risk of fraudulent or misleading information being provided and there is a need for an independent source for tenants to verify such claims. As the Scottish Landlord Register[3] serves as the centralised and independent source for information about PRS properties, we recommend that a field is inserted to determine if a property is exempt from rent controls, Yes or No. This should be verified by officials at the point of registration.

Chapter 2: properties subject to modified rent control area restrictions

Landlords who charge rent significantly below advertised rates

Questions 16-17.

Consumer Scotland has not provided a view.

Landlords who make improvements to their property

Question 18. Should landlords be able to increase rents by more than the level of the rent cap to recover costs, where they have undertaken certain improvements which may enhance the rental value or bring additional benefit to the tenant

Consumer Scotland is actively engaging with the Scottish Government as it develops the forthcoming Heat in Buildings Bill to ensure that this is developed with the needs and aspirations of consumers as a core tenet of this legislation.

We also plan to respond to the Scottish Government’s live consultations on draft energy efficiency regulations for the private rented sector and on the heat and energy efficiency technical suitability assessment (HEETSA) over the coming months. It is important that any proposals are consistent with the approach taken to implementing rent control measures and that information provided to both consumers and landlords is clear, coherent and provides confidence for both parties to make decisions regarding investments and tenancies.

Consumer Scotland does not take a specific view on whether landlords should be able to increase rents to cover the costs of certain home improvements. Any such improvement to the property would help to add to the overall market value of the property so would already benefit private landlords in the long term. We note that the Scottish Government does not consider that landlords should be able to increase rent simply to cover the cost of meeting minimum standards but that they wish to incentivise landlords to make improvements that bring additional value or potentially offer additional benefits to tenants.

We would encourage the Scottish Government to carry out in depth analysis of any further proposed changes in order to protect tenants in the private rented sector from any unintended consequences such as significant rent increases, additional charges or the risk of landlords choosing to exit the private rental market.

Question 19. Should landlords who make improvements to a property which improve energy efficiency (for example by making specific improvements which improve the Energy Performance Certificate (EPC) rating of the property, or by installing an upgraded heating system) be allowed to raise the rent above the level of the rent cap?

As with question 18, we have not taken a specific view on circumstances where it may be appropriate for private landlords to recoup costs through increasing rent. Any improvements made to improve the rating of an EPC would help to add value to a property; i.e. by making it more thermally efficient.

As older heating systems become obsolete landlords are expected to replace them to ensure that their tenants have warm and comfortable homes as part of their existing tenancy agreements. Changes may also be required in future to meet any minimum standards prescribed. The Scottish Government needs to consider how it can support and incentivise private landlords to make energy efficiency improvements which will not only provide tenants with warm homes but also affordable heating. These measures need to be brought forward in a way which is consistent with the implementation of rent controls, balancing the need for landlords to get a fair return for investment and the need for tenants to have affordable tenancies which meet appropriate standards.

Question 20. Are there any other types of improvements that should potentially qualify for this kind of increase above the level of the cap?

Consumer Scotland does not take a view on specific types of improvements and whether they should qualify for any increase above the cap.

Question 21. How do you think improvements that might qualify for this increase above the level of the cap should be distinguished from work that would be expected as part of routine property maintenance?

To avoid costs of routine maintenance or appliance upgrading being passed on to tenants, we consider that what is not routine property maintenance should be well defined, easy to understand, and subject to robust criteria.   

Consumer Scotland research, due for publication this summer, has found that there are significant ‘grey areas’ where tenants are unsure about their own rights and obligations, as well as those of their landlord. Tenants and landlords need provisions that are clear and easy to understand. We encourage the Scottish Government to consider setting out the detail of what is or is not routine maintenance in more detailed regulations or guidance.

All private landlords have a duty to ensure that their properties meet the Repairing Standard and the Tolerable Standard, so that tenants can enjoy safe and secure homes. These duties will be strengthened by the Housing Bill’s specific protections relating to damp and mould. Simply ensuring that a rental property remains well maintained and not in a state of disrepair should not in itself justify increases above an applicable rent cap and the threshold for improvements which can justify such an increase should be high. It may be useful for the Scottish Government to consult with stakeholders on the development of robust criteria which balance the needs of landlords to receive a fair return with the needs of tenants to understand and enforce their rights.     

Question 22. Do you think that a rent increase above the cap should be calculated by:

a) improved rental value basis

b) cost recovery basis

c) other

Consumer Scotland has not taken a view on how any such increase above the cap should be calculated. However, if it is decided that there should be any increases above the cap then this needs to be done in a way that it can be easily monitored to ensure that tenants are protected from any unnecessary and unfair rent increases.

Question 23. If a cost-recovery basis was used, what kind of factors should be taken into consideration when deciding how it should be applied?

While we have not taken a view on the specific approach that should be taken, we agree with the considerations set out in the consultation around how the cost recovery approach could be applied. Many improvements made to a property will help to increase the market value of that property, ultimately benefiting the landlord. While some improvement could benefit tenants, there is no guarantee they will benefit; either financially or otherwise from any improvements made to the property. Regardless of the approach taken, consideration needs to be given to how government can incentivise landlords to make improvements that will ultimately benefit tenants living in the property; such as greater thermal efficiency or more affordable, lower cost heating.  

Question 26. What should the process be if a landlord seeks to make a rent increase above the level of the rent cap for any of the reasons referred to in the previous sections in this chapter? (Landlords who charge rent significantly below advertised rates, landlords who make improvements to their property, other costs a landlord may face):

a. landlords should be required to seek approval before raising the rent above the rent cap

b. landlords should be allowed to raise rents above the cap without a requirement to apply to an external decision maker

Consumer Scotland has not taken a specific view on whether landlords should be able to raise rent above the cap to recover costs for certain improvements to the property. However, if increases above the cap are allowed then there must be an appropriate process in place for any such increase to be approved. This will help to protect tenants from unnecessary rent increases above the cap or from increases that don’t meet the criteria. In the event that increases above the cap are allowed then Consumer Scotland would be supportive of option A.       

Chapter 3: ending joint tenancies in the private rented sector

Requirement for a pre-notice

Question 32. What additional information do you think should be included in a 2-month pre-notice (for example information on the process, signposting to advice and support available)?

Under the Private Housing (Tenancies) (Scotland) Act 2016, joint tenants are jointly and severally liable to pay the full amount of rent. In practice, this means that a tenant who wishes to leave an abusive joint tenant continues to be liable to pay the rent for the home they do not occupy, until all of the tenants agree to give notice. According to the Bill’s Policy Memorandum, the overarching policy objective is to reform how joint tenancies in the PRS are ended, to enable one joint tenant to end the tenancy for all tenants where there is no mutual agreement between joint tenants to end the tenancy.[4] The purpose of pre-notices is to ensure that the joint tenant who is leaving cannot be held liable for a tenancy against their wishes, whilst also ensuring a fair process that allows remaining tenants to find a replacement or make alternative arrangements.

Under clause 48A of the Bill, a pre-notice will be in writing and state the departing tenant’s intent to bring the tenancy to an end by giving the landlord notice. This consultation seeks to help Scottish Ministers determine if there should be any further requirements.

In line with the consumer principles of safety and fairness, we consider that the proposed requirement of a prenotice to joint tenants will be effective in making it easier for tenants to leave a joint tenancy in the PRS instead of being ‘trapped’, whilst protecting remaining tenants against losing their home, or undue rent increases. To avoid unintended consequences, it is crucial that those leaving a joint tenancy are able to do so as smoothly as possible, without facing any hurdles in addition to the standard process of giving notice. Unnecessary complexity can create barriers for consumers in seeking to exercise their rights, so it is important that this process is as straightforward to use as possible if the provisions are to be effective.

While it is difficult to ascertain how many tenants seek to leave a joint tenancy because of domestic abuse every year, Citizens Advice Scotland has reported an increase in demand in 2023 for advice from tenants who were unable to leave a joint tenancy, and from those who were subject to increases above the rent cap where a tenant successfully exited the tenancy.[5] Scottish Government reports on homelessness have shown that 13% of homelessness applications in 2023/24 were due to violence or abusive disputes within the household, and 19% of applications due to other household disputes or relationship breakdowns.[6] It also shows that women are much more likely than men to become homeless as a result of violent or abusive relationships. Domestic abuse survivors must be provided with as much protection and support as they need to help them exit an abusive household, and to find a safe place to live and rebuild their lives. In this light, we are also keen to see progress on implementation of Part 1 of the Domestic Abuse and Civil Law (Scotland) Act 2021.  

Consumer Scotland research, due for publication this summer, indicates that many tenants have limited understanding of their rights, and how to exercise them. We therefore consider that any changes in this process should be easy to understand, and clearly communicated to tenants as well as advice bodies.

We consider that it is the responsibility of the landlord, not of tenants, to ensure their tenants are aware of their tenancy rights, advice, support, and redress options. Nor should they need to rely on other tenants to make them aware of their rights and options. As soon as a landlord receives a 28-day notice from a joint tenant, the landlord should contact the remaining tenants to inform them and advise them of their options. We envisage that it would be possible to develop a pro forma notice that could be used to reduce administrative burden on landlords.

At the point of entering into a tenancy agreement, tenants need clarity around their rights and obligations. In order to ensure that all tenants are provided with this information, we recommend that a standard tenancy agreements become mandatory, rather than optional for landlords to use.

We also recommend that mandatory tenancy agreements clearly set out information about tenants rights and obligations around the termination of a joint tenancy.

We also consider that tenants require clarity around deposit arrangements in case of the departure of a joint tenant. The Bill would benefit from additional provisions setting out the arrangements for the return of joint tenancy deposits when a joint tenancy ends. Under the current system, a deposit is held in one of Scotland’s three tenancy deposit schemes. When there is a joint tenancy, one tenant is the lead tenant, and the full deposit is returned to this lead tenant upon the end of the tenancy. How this is then distributed between multiple joint tenants, is their responsibility. Alternative Dispute Resolution services provided by deposit schemes do not cover disputes between tenants.

Under the joint tenancy proposals in the Bill, the departure of one joint tenant does not necessarily result in the termination of the tenancy agreement they were a party to, i.e. if a replacement tenant is found, or if remaining tenants decide to stay and take on the tenancy. This may result in unintended consequences in terms of tenancy deposits, as in such circumstances, there will be no grounds to return the deposit. Further clarity on the treatment of deposits where a joint tenancy ends would be useful. In particular, when a tenant leaves because of domestic abuse, it is important that they are able to immediately access the deposit they provided, or an equal amount in the form of a grant.

In this context, we note that in England and Wales, Women’s Aid has the ability to provide funding of up to £2,500 that can be used to help survivors put down a deposit for rental accommodation.[7] Scottish Government’s Fund to Leave in 2023/24 offered women in five local authorities who were leaving their abusers up to £1,000 to pay for essentials, but this has been discontinued and it is unclear what current support there is to help survivors in Scotland put down a deposit.[8]  

Question 33. Do you think a legal form (sometimes known as a prescribed form) should be created that a joint tenant must use for issuing the pre-notice?

No. In line with the consumer principle of information, we recommend that there should be a template or model pre-notice letter that departing tenants may use to ensure that notice is duly given. This will provide all tenants with the required clarity and minimise disputes as to whether notice has been given. However, to help minimise the administrative burden placed on those leaving an abusive household, we consider that use of a specific template for a pre-notice should not be mandatory.

We consider that a pre-notice must be clear, timely and in writing, to ensure that remaining joint tenants have clarity and time to decide whether and how to continue their tenancy. Clause 48A of the Bill requires that the departing tenant must state that they intend to bring to an end the tenancy by giving the landlord a notice, and we consider that this fulfils the required need for clarity. There is no prescribed form to give a 28-day notice to landlords, and we do not support placing an extra burden on departing tenants giving pre-notice to joint tenants.

Question 34. Do you think that the pre-notice should be sent by the tenant initiating the end of the tenancy in a specific way to the other joint tenants, for example recorded delivery or by sheriff officer?

No. PRS tenants are able to give notice to their landlord by email, letter, or by giving their written notice to their landlord in person, without a need for recorded delivery or involvement of the legal system, and we consider that there is no reason to impose additional requirements to the manner in which pre-notices that are given to joint tenants. However, when entering into a tenancy, joint tenants should be informed that they should be able to evidence that they have given timely and written pre-notice to joint tenants.

Requirements for serving the final notice to leave on the landlord

Question 35. Do you think the tenant initiating the ending of the tenancy should be required to provide evidence that the pre-notice has been sent alongside the notice to landlord? For example, proof of email, postage, or information that shows it has been served by a sheriff officer.

Yes. The departing tenant should be able to evidence that pre-notice has been given to prevent misuse of this provision, and we consider it reasonable that such evidence is enclosed with the 28-day notice to the landlord. Enclosing such evidence will eliminate the need for the landlord to rely on information provided by remaining joint tenants. Particularly in cases where a domestic abuse survivor has given pre-notice, the remaining tenant may not accept this and seek to assert that no pre-notice was given.

Equally, the requirement to enclose evidence that a timely pre-notice was given should help to prevent misuse of clause 48A by departing tenants.

Question 36. Do you think that the copy of the 28 day notice to the landlord should be sent by the tenant initiating the ending of the tenancy in a specific way to the other joint tenants, for example recorded delivery or by sheriff officer?

No. We consider that this duty should be upon the landlord. The departing joint tenant will have fulfilled their duty towards other joint tenants by giving them pre-notice. We recommend that the landlord is obliged to contact the remaining tenants as soon as they have received the 28 day notice.  

Question 37. Do you think the tenant ending the tenancy should be required to give evidence to the landlord that a copy of the 28 day notice has been sent to all other joint tenants? For example, proof of email, postage or by served by sheriff officer.

No. They could attach a copy of an email receipt, proof of recorded delivery, or an acknowledgement from the receiving joint tenant(s).

Summary of process

Question 38. We will be developing guidance to accompany these measures that would support both landlords and tenants understand and make use of the new process.

We want to provide information and support in certain circumstances such as domestic abuse where further guidance would be helpful, for example where a non-contact order is in place.

What particular information or advice should the guidance cover?

In line with the consumer principles of access, information, and fairness, all guidance should be easy to read for tenants with impairments, and written in practical language that is easy to understand.

We consider that information should include, but not be limited to:

• Tenancy rights around when they can give notice.
• Practical information on how and when to give pre-notice to joint tenants and 28-day notice to the landlord.
• Clear representation of the options remaining tenants have once they have been given a pre-notice.
• Signposting to information and legislation, as well as advice services, domestic abuse organisations, law centres.

Consumer Scotland research into the PRS, due for publication this summer, has highlighted the importance of enabling tenants to access information that is useful to them, at a time when they need to use it. Our research indicates that many tenants have limited understanding of their rights, and how to exercise them. Therefore, we consider that this information should be enclosed with or become part of a mandatory joint tenancy agreement.