Housing (Scotland) Bill: Stage 2 and Next Steps

Introduction

Following on from our previous update, Stage 2 of the Housing (Scotland) Bill has now completed.

As the Bill moves into Stage 3 there is scope for further discussion and amendments before the Bill becomes Law.  This means that several of the proposed amendments that were not progressed at Stage 2 may be revisited at Stage 3, and the amendments agreed at Stage 2 may be discussed further.

It is expected that Stage 3 will happen after the summer recess in September.

Student Accommodation

One of the most significant amendments agreed at Stage 2 is the expansion of the “relevant tenancy” definition to include PBSAs and student accommodation.

The effect of that amendment is the inclusion of student residential tenancies and PBSAs in rent control provisions.

The Bill permits local authorities to designate rent control areas within which rent increases are capped at a “permitted rate”, which limits rent increases to CPI plus 1%, with a maximum increase capped at 6%. To increase the rent above the standard cap specific circumstances must be met, e.g. significant improvement to the property may be justification for a rent increase above the cap.  Stage 3 will seek views on how the exemptions to the cap should be applied.

The Scottish Association of Landlords backed this amendment on the basis that it will provide certainty to landlords and investors that rents will not be frozen or fall in real terms.

From a PBSA perspective however, the Scottish Government has expressed concerns around the inclusion of PBSAs in the rent control amendments and have shared their intention to bring forward amendments at Stage 3 to ensure that the PBSA sector remains outside of the scope of rent controls.  We expect to see further changes in this area however as the Scottish Government does not have a majority in the Scottish Parliament, non-governmental support will be needed.

28 Day Notice period

The Bill includes provisions for ending a tenancy, with a standard 28-day notice period for tenants to leave a property. 

The Scottish Government has published correspondence confirming that it will legislate to introduce an amendment at Stage 3 for a 28-day notice period, to clarify the specific circumstances under which a 28-day notice period would be allowed for student tenancies. 

Th Scottish Property Federation (SPF) has stated that its expectation is that the 28-day notice is to be for specific circumstances and based on industry best practice.  Based on an exchange between the SPF and the Cabinet Secretary, the indications are that the amendment will provide for a Regulation making power, but the intention is to base the notice duty on specified grounds of illness, bereavement or where a student is moving to another university.

Homelessness Prevention

As a reflection of one of the primary aims of the Bill being to prevent homelessness, Stage 2 effectively removed the intentionality test in homelessness assessments whilst retaining a discretionary power to assess intentionality. Organisations like Crisis and Shelter Scotland have advocated for the removal of the intentionality test, arguing that it often penalises individuals facing challenging situations. However there remain concerns that removing the intentionality test could lead to the system being exploited and the move to discretionary assessments resulting in inconsistent practices between different local authorities.

The Bill also includes provisions to strengthen homelessness prevention through "ask and act" duties, whereby public bodies are required to make inquiries about individuals' housing situations and take appropriate action.

There was an unsuccessful bid to include a winter eviction ban in the Bill.

Enhanced Tenant Rights

Stage 2 of the Bill introduced several provisions aimed at enhancing tenant rights.   Tenants will have the right to request permission to keep a pet, and landlords must not unreasonably refuse permission. In considering the tenant’s request, landlords can impose conditions (e.g. requiring a higher deposit) but the tenant has the right to appeal to the First-tier Tribunal if they consider the landlord’s refusal or conditions to be unreasonable.  Tenants can make minor alterations without seeking landlord consent but for more significant changes a tenant must obtain landlord approval, which cannot be unreasonably withheld. Landlords may require a higher deposit to cover potential reinstatement costs.

Next Steps 

It is expected that Stage 3 of the parliamentary process will take place after the summer recess in September, where MSPs will have the opportunity to propose further amendments, which will be debated and decided.

Please contact the CMS Real Estate team for further information on the Housing (Scotland) Bill.

Article co-authored by Lina Ivanova, Trainee Solicitor at CMS.