– in the Scottish Parliament on 17th March 2016.
The next item of business is stage 3 proceedings on the Private Housing (Tenancies) (Scotland) Bill. In dealing with the amendments, members should have the bill as amended at stage 2, which is SP Bill 79A, the marshalled list of amendments and the groupings.
The division bell will sound and proceedings will be suspended for five minutes for the first division of the afternoon. The period of voting for the first division will be 30 seconds. Thereafter, I will allow a voting period of one minute for the first division after a debate. Members who wish to speak in the debate on any group of amendments should press their request-to-speak button as soon as possible after I call the group. I would be grateful if members would now refer to the marshalled list of amendments.
After section 2
We turn to group 1. Amendment 5, in the name of the minister, is the only amendment in the group.
Amendment 5 is a technical amendment that ensures that formal writing is not required to create a private residential tenancy.
Under section 8 of the bill, a landlord is required to set out in writing all the terms of the tenancy and to provide the tenant with a written tenancy agreement. However, if a landlord fails to do that, a private residential tenancy will still exist if the property is let to an individual as a separate dwelling, the tenant occupies all or part of it as their principal home, and the tenancy is not one that is excluded under schedule 1.
I move amendment 5.
I have concerns about amendment 5. I understand what the minister said and the amendment’s purpose, but I am concerned that it may have unforeseen circumstances. I ask the minister to explain a couple of key things in order for me to not oppose the amendment.
First, has the amendment been properly thought through to ensure that there are no potential unforeseen circumstances or potential grounds for dispute?
Secondly, has there been any attempt to consult more broadly on the potential unforeseen circumstances that the amendment may bring about? I am gravely concerned that the amendment could open up a situation in which existing arrangements may be pursued as tenancies that were never intended to be tenancies.
As I said, amendment 5 is a technical amendment that ensures that, if someone is operating as a landlord, there is someone in the premises and the landlord has not provided the appropriate documents, they cannot use that as an excuse to say that the person does not have a private residential tenancy. We have thought the amendment out very carefully to ensure that it cannot be abused, and we are very satisfied that it is the appropriate way to take the matter forward.
The question is, that amendment 5 be agreed to. Are we agreed?
As Parliament is not agreed, there will be a division. Before I call the division, I suspend the meeting for five minutes.
14:34 Meeting suspended.
14:39 On resuming—
We will now proceed with the division on amendment 5.
The result of the division is: For 85, Against 10, Abstentions 0.
Amendment 5 agreed to.
Section 3—Power to modify schedule 1
We move on to group 2, Amendment 6, in the name of the minister, is grouped with amendments 28 to 31, 33, 34, 93, 45, 46, 50, 51, and 69.
Amendments 6, 45 and 69 are minor tidying amendments that will have no impact on the policy or operation of the new tenancy.
At stage 2, the bill was amended so that the default notice period that tenants must give to end a tenancy is 28 days, irrespective of the tenancy’s duration. [Interruption.]
The bill as introduced specified a 56-day default notice period for tenancies that had lasted more than six months. Amendments 28 and 29 simply tidy up section 39 in consequence of the amendments at stage 2 and do not in any way change the substance of the provision.
Amendment 30 splits section 41 into two sections. That does not change the effect of the section; the purpose is simply to improve the readability of the bill. The first new section will set out what an eviction order is, and the second will provide further detail about the circumstances in which such an order can be made. Amendment 93 is a consequential amendment.
Where a wrongful-termination order is granted against joint landlords, the first-tier tribunal can specify that each landlord is liable for a particular amount as a penalty. That allows the tribunal to reflect the fact that one of the landlords is more culpable than the others in relation to the wrongful termination. The cumulative total of individual amounts is capped so that the total penalty payable to the tenant will not be more than it would have been if there was one landlord, rather than joint landlords.
At stage 2, the maximum amount payable by a landlord under a wrongful-termination order was increased from three months’ rent to six months’ rent. Amendments 31, 33 and 34 therefore update the total amount recoverable from joint landlords, so that that is also set at six months’ rent.
Schedule 1 sets out the types of tenancy that cannot be private residential tenancies and includes tenancies of agricultural land that meet the conditions that are set out in the schedule. The Land Reform (Scotland) Bill creates two new types of tenancy: the modern limited duration tenancy and the repairing tenancy. Amendment 46 inserts the new tenancies into schedule 1, so that they are excluded on the same basis as the existing types of agricultural tenancy are excluded.
Amendment 50 ensures that the provision relating to trust ownership applies only where a person is acting as landlord in his or her capacity as a trustee. If the landlord happens to be a trustee under a trust, but that is unrelated to the let property, amendment 50 ensures that the trust provisions do not apply.
Amendment 51 replaces an existing reference to particular types of trust beneficiary with one overarching reference to trust beneficiaries. The amendment in no way widens the scope of the provisions but simply uses more modern language.
I move amendment 6.
Well, we have known each other for about nine years, and it is about time we got a bit less formal in this Parliament. I look forward to being part of a less formal Parliament after being returned in May. [Interruption.]
I appreciate the minister’s point about the new tenancies that are created by the Land Reform (Scotland) Bill, which we passed only yesterday. Will she say whether she has considered giving tenanted houses in the agriculture sector the protection that we accord to normal tenancies?
That brings us to group 3. Amendment 7, in the name of the minister, is grouped with amendments 52, 71, 110, 72 to 76, 78 and 79.
Amendment 7 is a technical amendment that extends the meaning of tenancy and connected expressions in other enactments to include a private residential tenancy.
Various statutes lay down rules in relation to tenancies. When the word “tenancy” is used in a statute, it ordinarily picks up the common-law meaning. At common law, a fundamental feature of a tenancy is that it has an ish, or a termination date. A private residential tenancy does not have an ish. Therefore, in enactments passed before or after the bill, references to tenancies would not ordinarily catch private residential tenancies. Amendment 7 ensures that they do, where appropriate.
Amendment 52 is being made simply to flag up in the bill the effect of the amendment made by amendment 75 to the Housing (Scotland) Act 2001, which will prevent a sublet or other private transfer of a social rented house from creating a private residential tenancy over the social rented house.
Amendments 71 to 74, 76, 78 and 79 make changes to various other pieces of legislation in consequence of the bill. I do not propose to go through each amendment in detail but, in brief, the other pieces of legislation affected by the consequential amendments are being altered so that they will, in future, apply in the same way in relation to private residential tenancies and tenants as they presently apply in relation to existing types of statutorily protected tenancies and tenants.
Amendment 110 is not required, as paragraph 7 of schedule 1 to the Housing (Scotland) Act 2014 will, once it has been brought into force, make the change that the amendment would make. Therefore, the amendment duplicates existing statutory provisions and I cannot support it. Accordingly, I ask David Stewart not to press amendment 110.
I move amendment 7.
My amendment 110 would amend the Rent (Scotland) Act 1984 to ensure that the offence of illegal eviction references the requirement for landlords to go to the first-tier tribunal to secure an eviction to remove a tenant from the property. The amendment is essential to make it crystal clear that the provisions of the 1984 act apply to the new private residential tenancy.
I am aware that the minister is committed to making that change via the Housing (Scotland) Act 2014 and, therefore, I will not move the amendment. I thank the minister for meeting me and taking the time to consider the issue in detail.
Amendment 7 agreed to.
Section 14—First-tier Tribunal’s power to sanction failure to provide information
That brings us to group 4. Amendment 8, in the name of the minister, is grouped with amendments 9 to 11.
The bill requires landlords to provide tenants with certain things. Section 8 imposes an obligation in relation to the written terms of the tenancy, while section 9 imposes a separate obligation in relation to other information that may be specified by regulations. Where those are not supplied, the tenant can apply to the tribunal for a payment order against the landlord.
Amendment 8 provides that, where there are separate failures under sections 8 and 9, the maximum financial penalty available will increase accordingly. That is, the tribunal will now have the ability to award an amount not exceeding three months’ rent for each breach, rather than a maximum of three months’ rent for both breaches. That recognises that the sections impose two distinct obligations and ensures that a landlord who has already breached one of the sections cannot then disregard the other with impunity.
At the same time, amendment 8 avoids the penalty being increased for every individual breach of section 9 that is cited in an application. It recognises that any section 9 failure is, in essence, one of not providing the package of any additional material to which the tenant is entitled under section 9. If that breach consists of a number of different failings, the tribunal can take account of that fact when deciding whether to award the maximum amount for a breach of section 9, rather than a lesser sum.
Amendment 9 prevents a tenant from increasing the amount he or she can be awarded by bringing separate applications for each individual item not provided under section 9. This means that there is no second opportunity to make a claim under section 9 if it could have been included in an earlier section 9 claim. That will ensure that the tribunal’s time and resources are not wasted by having to consider separately later something that it could have taken into account in its consideration of the earlier application.
I move amendment 8.
I support amendment 8, and I will explain briefly why. During the evidence that was taken on the bill, it appeared that the three months’ rent penalty that was stipulated in the bill at stage 1 was inadequate as an appropriate punishment for some of the actions that may be taken by landlords. That evidence supported a stiffer penalty, so the six months’ rent penalty that will now be available in some circumstances is appropriate.
I said at an earlier stage that I would accept that change in order to ensure that we had a balanced bill. Sadly, that balance will not be in the final bill today. Nevertheless, as I said that I would support the change, amendment 8 has my support.
Amendment 8 agreed to.
Amendments 9 to 11 moved—[Margaret Burgess]—and agreed to.
After section 22
That brings us to group 5. Amendment 12, in the name of the minister, is grouped with amendments 13 to 18.
The bill provides that when a landlord’s proposed rent increase is referred by a tenant, a rent officer can set the tenant’s rent at what he or she judges to be the open-market value. Amendment 12 allows a rent officer to correct an error in an order that he or she has issued, which means that time and resources need not be spent on an appeal against the order to deal with a simple mistake that can easily be fixed by the rent officer issuing a corrected order.
Amendments 13, 14, 16 and 17 rephrase the open-market rent calculation, which is carried out when a tenant disputes the landlord’s proposed rent increase. That does not alter the effect of the provision, but simply makes it clearer—that is in response to feedback that was received from stakeholders.
It continues to be the case that the calculation is based on a hypothetical new letting of the property by a willing landlord to a willing tenant. The current tenant is relevant to the calculation only if his or her actions would, for better or worse, change the open-market rent that could be achieved on a hypothetical new letting.
It also continues to be the case that the landlord is not to benefit from a higher rent due to the tenant having carried out any improvements voluntarily, and the tenant is not to benefit from his or her failure to comply with tenancy terms where that has a direct impact on the open-market rent, for example, because the furnishings have been ruined. However, those are now the only two exceptions which need to be stated.
In addition, the scope of the exception has been extended to cover all work that is voluntarily paid for or carried out by the tenant for maintenance as well as improvements, and work that is paid for by the tenant but carried out by someone else.
In calculating the open-market rent rate, one of the criteria is the start date of the new hypothetical open-market let. The underlying principle is that that ought to be the date on which the rent increase would have taken effect had it not been contested. At stage 2, the mechanism by which a rent increase notice takes effect was amended. Amendment 15 updates the open-market rent calculation in order to reflect the amended rule, so that it is always tied to the date on which the increase should have taken effect.
Where a landlord’s proposed rent increase is disputed, the rent officer to whom the dispute is referred must issue a provisional order before issuing a final order setting the new rent. That gives the parties a chance to contest the rent officer’s proposal before it is finalised.
Section 28 deals with the case where the parties have settled the dispute themselves before the rent officer has made a decision. It requires the rent officer to make an order simply giving effect to whatever agreement the parties have reached. Amendment 18 removes the requirement for a rent officer to issue a provisional order in those circumstances. That is in recognition of the fact that the order reflects the parties’ agreement, so there is no need to give them an opportunity to contest it.
I move amendment 12.
Amendment 12 agreed to.
Section 27—Determination of open market rent
Amendments 13 to 17 moved—[Margaret Burgess]—and agreed to.
Section 28—Withdrawal of referral or appeal
Amendment 18 moved—[Margaret Burgess]—and agreed to.
Before section 30
We move to group 6. Amendment 19, in the name of Patrick Harvie, is grouped with amendments 20 to 24, 80 to 82, 43 and 44.
It has been clear to me for some considerable time that some rent control is necessary if we are to ensure that private rented accommodation is affordable for people who need it. As has been made clear in debate after debate in the chamber, far too many people have been left knowing that owner occupation is unaffordable to them and social rented housing is unavailable to them.
That being the case, we cannot afford to allow private rented housing to be seen merely as a market commodity. The provision of housing is not like any other transaction; it is a serious responsibility to take on and, if the private rented sector is going to continue to do more and to provide more housing for people who have no other option, we need such housing to be provided on a basis that they can afford and which does not leave people—as too many are today—being fleeced for poor-quality accommodation.
The Government’s acknowledgement that some form of rent control mechanism is necessary—although it took some time to get there—was welcome. It is welcome that we have something in the bill on the issue. However, I have argued consistently that the bill could be improved. It appears that the Scottish National Party’s membership agrees that a stronger and bolder national form of rent controls would be a good idea and I commend it for making that decision at the SNP conference.
Does Mr Harvie agree that to be unduly harsh with rent capping might deter investment and prevent the provision of new homes in the very areas where they are scarce and that a proportionate intervention, as suggested by the Scottish Government in the bill, is the appropriate way forward?
“Unduly harsh”? I do not think that we should be unduly harsh; I think that we need to be just harsh enough.
Having the ability to ensure that the sector provides affordable, high-quality accommodation should be our priority. In other countries that have a full national form of rent control, there is good evidence to show that it does not deter investment from responsible landlords who want to provide accommodation at the level that it should be provided at.
The arguments about how far we should go in the bill will rumble on. Although I would prefer a system that simply gave local authorities the ability to designate a rent pressure zone themselves—I am not sure that I see why they need to ask permission from central Government to do that—I acknowledge that we will not get to that point in the bill.
At stage 2, I sought to introduce a time limit within which the Government had to respond to such an application. Let us be clear that, by the time a local authority reaches the point of applying for a rent pressure zone, that will be on the back of months, and possibly even years, of sustained pressure and campaigning from those who are at the hard end of the debate—those who are being fleeced for accommodation that they ultimately cannot afford.
By the time the application comes through, it must be dealt with rapidly. The Government was unwilling to accept my stage 2 amendment to set what I thought was a reasonable limit. I have been willing to compromise with the Government, and I lodged amendment 20 because I gather that the Government is willing to accept the idea of an 18-week period.
I ask the minister to tell us, in responding to the group of amendments, what requirements she has in mind in specifying that the Scottish Government can set out requirements that an application must meet in order to be valid. I recognise that the Government is willing to accept a compromise that goes some way towards what I had been hoping for. However, if the Government is able to specify the requirements that define a valid application, why will it still be necessary to have a period of 18 weeks in which to consider whether an application should proceed? Can the minister tell us what the requirements will be? I look forward to hearing her response to that question and to hearing responses on the wider aspects of the group of amendments from the minister and other members.
I move amendment 19.
On a point of order, Presiding Officer. I would like clarification. My console is showing the number 85. That does not refer to the amendment that we are discussing, does it?
We are discussing amendment 19. If we come to a vote, the console should show the right number.
Oh, right—it is the seat number. [Laughter.] I did not know that I had a seat number.
I hope that the consoles will show the amendment numbers when we come to vote. I invite the minister to speak to amendment 43 and the other amendments in the group, and I ask members to settle down, please.
I will speak to amendments 19 to 24, 80 to 82, 43 and 44. I thank Patrick Harvie for his contribution and I am pleased to support his amendments 19 to 24.
Minister, I will stop you for a moment. Could we have order in the chamber, please? One or two members have requested to speak on the group so, if members have to conduct conversations, I ask them not to do so in the chamber.
Patrick Harvie may feel that he might have gone further with amendments 19 to 24, but I believe that he has managed to strike a good balance, which is why the Government is happy to support them. However, his amendments 80 to 82 seek to broaden the scope of the criteria for a rent pressure zone to include rents that are “too high”. At stage 2, he lodged a broadly similar amendment to amendment 80 and the committee members rejected it by seven votes to zero.
I appreciate that Mr Harvie’s concern may relate in part to the affordability of rents in the private rented sector, but I cannot support amendments 80 to 82, for two reasons. First, the bill provides that any rent caps that ministers set in a rent pressure zone must be at least at the level of the consumer prices index plus 1 per cent. Accepting Mr Harvie’s amendment 80 would mean that, in an area where rents were considered to be too high but were not currently increasing by too much, a rent cap could be imposed that was more than the amount by which rents were increasing. That could encourage landlords to increase rents further, by the full amount of the cap, which would leave tenants worse off.
Secondly, we are working hard to encourage institutional investors to enter the private rented sector and contribute to the supply of new housing.
If the minister is not able to accept amendments 80 to 82, what does the bill have to offer for those for whom rents have been spiralling out of control before the legislation comes into force? What disincentive will there be that leads landlords not to hike up their rents before the rent control system comes into being?
I have debated that issue previously with Patrick Harvie. We said that we would consult on increasing rents in rent hot-spot areas, and that is what we are doing.
What Patrick Harvie proposes would not help the very people whom he suggests would be helped. In areas where rents were deemed to be “too high”—as he describes them—his proposal could encourage landlords to put up rents by CPI plus 1 per cent year on year, which might not happen if rents were not subject to the amendments that Patrick Harvie lodged.
We have in the bill a proportionate approach to rent controls, which involves areas that have been identified as hot spots that are impacting on the wider housing system. At the same time as we are passing the bill, the Government is committing to increasing the supply of housing across all tenures, because we know that increasing supply will ultimately bring rents down. There would be unintended consequences to Patrick Harvie’s amendments 80 to 82, which I certainly wish to avoid.
I want to be absolutely clear. We will make landlords and tenants fully aware of the tenant’s right to challenge a rent increase through a rent officer and then the tribunal. In addition, the rent increase notice, which will be prescribed by ministers, will contain sources of support and money advice, as will all the prescribed notices under the new tenancy.
The provisions in the bill on rent pressure zones address the problem of rents rising by too much in hot-spot areas. As I said, Patrick Harvie’s amendments 80 to 82 could lead to higher rents, so I cannot support them and I ask members not to support them, either.
I turn to my amendments 43 and 44. The bill provides that a local authority may apply to the Scottish ministers to request that all or part of its area be designated as a rent pressure zone. After receiving an application from an authority, ministers may make regulations to designate an area as a rent pressure zone.
At stage 2, I lodged amendments that provide that regulations to amend or revoke any designation will be subject to the negative parliamentary procedure. After stage 2, the Delegated Powers and Law Reform Committee asked that I consider again whether that procedure was appropriate for regulations to amend or revoke a zone. I have reconsidered, and amendments 43 and 44 will make regulations that amend or revoke a zone subject to the affirmative procedure, just as regulations to designate a zone are. I thank the committee for its input on the subject.
I thank Patrick Harvie for lodging his amendments and I offer Labour’s support for not just the amendments but his comments on the operation of rent pressure zones. As the minister will know, although Labour supports the introduction of rent pressure zones, we have concerns and we are not entirely convinced that they are the best way to take action on rent rises. We remain concerned about how the zones will work in practice. We are particularly concerned about their effectiveness in addressing affordability in the private rented sector.
Patrick Harvie’s amendments would offer improvements to the proposals in that they would not only introduce an 18-week timeframe in which to act but help tenants in areas where rents are already too high—not just areas where rents are rising too fast. For those reasons, we will support his amendments.
The inclusion in the bill of rent pressure zones is one reason why I will oppose the bill at decision time. It is a fact that Patrick Harvie and I will never agree on how market forces operate in a marketplace. I believe strongly that, if a rent pressure zone is designated, it will create an investment vacuum in an area where we can least afford it. As a consequence, I oppose the zones per se. The provisions in Patrick Harvie’s amendments in the group would make rent pressure zones not better but worse, so I will oppose the amendments in his name.
Although amendments 43 and 44, in the minister’s name, relate to the rent pressure zone provisions, they relate particularly to the change from the use of the negative procedure to the use of the affirmative procedure. I have always been a fan of the negative procedure. I have spoken up in many committees and in the chamber more than once to defend its use in many circumstances, and I do not have the prejudice against it that those who prefer the affirmative procedure have. However, if the Government wants it that way, it can have it that way, so I will support amendments 43 and 44.
One of the few things that Mr Johnstone and I might agree on this afternoon is that the bill is intended to be a balanced bill. The proposals on rent pressure zones represent a balance between the pressures on tenants and investment in the area, and I believe that they will benefit tenants who find themselves in such situations.
We will not, for reasons that the minster outlined, support amendments 80 to 82. I also say to Patrick Harvie that we are not at the SNP conference today—we are at the final stage of a bill that has been through committee deliberations. The committee unanimously—including Labour members—voted against the same proposals at stage 2 because we did not feel at that time, and I do not agree now, that they would bring any benefit to the bill.
I invite Patrick Harvie to wind up and say whether he intends to press or to seek to withdraw amendment 19.
I whole-heartedly support Alex Johnstone’s comment that he and I will never agree on the operation of market forces. That is an unquestionable truth. Our society has failed people who have been left with no alternative but the private rented sector. They are left at the mercy of those market forces, and the market is not operating in their interests.
The imperative is for a house to be a home and not a speculative investment. Although there is good evidence from other European countries that a rent control system is entirely compatible with continued investment in the provision of private rented housing—[Interruption.]
Without that basic level of rent control, we will continue to see too many of our constituents being fleeced for poor-quality housing.
I thank Ken Macintosh for his supportive comments. On the minister’s view that amendments 80 to 82 could have unintended consequences that I might not have thought of, I note that if the amendments are not agreed to and we pass a bill that looks only to address future rent increases but fails to address historical rent increases, this debate will remain open. There will be unintended consequences if we pass the bill without the measure, because without it we will still have continual demands from our constituents to address the historical unfair and exploitative rents that too many of them are being forced to pay.
I say again that I welcome the fact that the minister supports amendments 19 to 24, although it will be important to ensure that the Government responds quickly and straightforwardly to local authorities that want to have rent pressure zones. However, as I will also say in relation to the next group of amendments, I fear that we will pass a bill that will not be as effective as it could be and which will not provide what is genuinely needed. I feel that we have made a compromise between those who want nothing and those who want something that is genuinely workable. I am glad that we are taking a small step forward, but I am quite sure that it will not be the last one.
I will press amendment 19.
The question is, that amendment 19 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 81, Against 18, Abstentions 0.
Amendment 19 agreed to.
Amendment 20 moved—[Patrick Harvie].
The question is, that amendment 20 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 81, Against 17, Abstentions 0.
Amendment 20 agreed to.
Section 30—Power to designate a zone
Amendment 21 moved—[Patrick Harvie].
The question is, that amendment 21 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 82, Against 17, Abstentions 0.
Amendment 21 agreed to.
Amendment 22 moved—[Patrick Harvie].
The question is, that amendment 22 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 81, Against 17, Abstentions 0.
Amendment 22 agreed to.
Section 32—Limits on power to designate a zone
Amendment 23 moved—[Patrick Harvie].
The question is, that amendment 23 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 82, Against 17, Abstentions 0.
Amendment 23 agreed to.
Amendment 24 moved—[Patrick Harvie].
The question is, that amendment 24 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 81, Against 17, Abstentions 0.
Amendment 24 agreed to.
Section 33—Procedure for designating a zone: consultation and information
Amendment 80 moved—[Patrick Harvie].
The question is, that amendment 80 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 28, Against 71, Abstentions 0.
Amendment 80 disagreed to.
Amendment 81 moved—[Patrick Harvie].
The question is, that amendment 81 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 27, Against 71, Abstentions 0.
Amendment 81 disagreed to.
Amendment 82 moved—[Patrick Harvie].
The question is, that amendment 82 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 28, Against 71, Abstentions 0.
Amendment 82 disagreed to.
After section 34B
We move to group 7. Amendment 83, in the name of Patrick Harvie, is the only amendment in the group.
Amendment 83 is fairly simple. It requires ministers to conduct a review of the bill within three years of it being passed. The report of that assessment should take account of the impact that rent control provisions have on the affordability, availability and quality of private rented housing during that period.
If Alex Johnstone’s worst dreams come true and the bill has a terrible impact on the availability of housing, we will be able to assess that outcome. However, I suspect that that will not happen. Rather, I suspect—particularly on account of the votes on some of the amendments in the previous group—that the bill will introduce a rent control measure that is a small step in the right direction but which does not do enough. After that three-year period, I doubt that many rent pressure zones will have been declared, and I doubt that we will have helped many tenants in the private rented sector.
I do not for a moment regret the fact that the Government has taken this much of a step, but it is going to have to go further. The demand from within the political spectrum and beyond—from the people we represent and the organisations that work to support people in relation to housing, and the private rented sector specifically—will continue to build the call for a more coherent, bolder and more national form of rent control mechanism. As I have mentioned, the evidence from other European countries shows that that can be achieved and that we can ensure that the private rented sector, whether it is a small or a large part of the housing mix, provides a value-for-money, affordable and high-quality offer to its tenants. That is what we should all be looking to achieve, and we will be in a stronger position to achieve that if we conduct the kind of review that amendment 83 calls for. Given that we are implementing a new measure, it is reasonable and proportionate to spend a few years seeing how it works, shake out any flaws and then figure out whether we can build on it and go forward with something stronger.
The Government indicated in the debate on the previous group that it would accept some of my amendments. I have no idea whether it will accept this one, but I encourage the minister to recognise that this kind of exercise will have great value with regard to taking forward the rent control system and ensuring that it is as good as it needs to be.
I move amendment 83.
We are tight for time over the whole afternoon, so I ask members to keep their remarks as brief as possible.
Today’s bill offers extra protection, flexibility and security to private renters in Scotland. However, on the issue of affordability, it remains to be seen how much support it will offer tenants who are exploited by rip-off rate rises. As the living rent campaign highlighted just last week, the proposals fall far short of a credible strategy to tackle the spiralling and unaffordable cost of renting. Similarly, it is difficult to predict at this stage what the effect of the bill will be on the quality and availability of private rented housing. I intend to move an amendment on that very point later today.
Amendment 83 proposes that the Government review the operation and impact of the legislation on the affordability, quality and availability of private rented accommodation within the next three years. My Labour colleagues and I believe that that is not only sensible, reasonable and proportionate, as Mr Harvie pointed out, but very much required.
On affordability in particular, the proposals in the bill on rent pressure zones feel as if they have been designed almost never to be used. They offer no protection to those whose rents are already unaffordable, and there is a chance that they could drive up rents for those vulnerable tenants who have to move frequently. I point out to the minister that the living rent campaign and Shelter, with its make renting right campaign, are supportive of the amendment. I urge the minister also to support amendment 83.
On hearing Patrick Harvie describe the way in which his amendment might function, I was almost—but not quite—tempted to support the idea. The ground on which I do not support it involve the fact that we have a Government that conducted two detailed consultations with the industry and, in the end, saw only what it wanted to see. I suspect that the requirement for the Government to report on the outcome of the legislation would just be one more opportunity for the Government to see what it wants to see.
I do not support the amendment, but not on the ground that Alex Johnstone has just outlined—I want to be absolutely clear about that.
I have concerns about the amendment in relation to its timescale, which involves conducting a review three years after the bill receives royal assent. The new tenancy is expected to commence in late 2017, to tie in with the commencement of the new private rented sector tribunal, as that is an essential part of its operation. That will also allow us time to develop the supporting secondary legislation, including the model tenancy agreement, and raise awareness among tenants and landlords. Therefore, the new tenancy would commence approximately halfway through the review period. That means that, by the review date, the new tenancy would have been operational for only approximately 18 months, and I do not think that that is a sufficient amount of time to allow us to undertake a full and comprehensive assessment of how the new tenancy is impacting on the sector. Further, I do not consider the amendment to be necessary, as I have already committed to reviewing the new tenancy within five years of its commencement. The proposal would therefore place an unnecessary duty on the Government and an additional burden on the Government’s resources. Therefore, I ask Mr Harvie not to press amendment 83.
I invite Patrick Harvie to wind up and to indicate whether he intends to press or withdraw his amendment.
I was a wee bit anxious that Alex Johnstone was going to throw his weight behind this amendment and scupper it, but it seems that the minister had already decided not to support it anyway. Maybe I dodged a bullet.
In winding up, I reinforce the argument that, whoever is in the next Parliament representing the citizens we represent today, we should not be willing to let that Parliament go through another five-year period before we look at whether legislation that we are passing today does the job that we require of it. If this legislation is going to have a positive impact in making private rented housing more affordable and preventing the absurd rent rises that we have seen in recent years, we should start to see that effect happen during the next session of Parliament. Reviewing it at the three-year mark is a reasonable course of action. Leaving a review until after five years—which means until after the end of the next session of Parliament—would close off the opportunity that that Parliament should take to ensure that the system works as well as it needs to.
I will press amendment 83 to a vote.
The question is, that amendment 83 be agreed to. Are we agreed?
There will be a one-minute division.
The result of the division is: For 32, Against 7, Abstentions 0.
Amendment 83 disagreed to.
After section 35
We move to group 8. Amendment 25, in the name of the minister, is the only amendment in the group.
Since 1449, legislation has protected Scottish tenants from losing their tenancies when ownership of the properties that they lease changes hands, whether by sale, deeds, death or otherwise. Amendment 25 ensures that private residential tenants will have that protection. It means that when the previous owner of a property was letting it out under a private residential tenancy, the tenancy will continue and the new owner will automatically take over as the landlord.
I move amendment 25.
There are no requests to speak. Does the minister wish to add anything further?
Amendment 25 agreed to.
Section 37—Qualification of sub-tenant protection
I call group 9. Amendment 26, in the name of the minister, is grouped with amendments 27, 59, 102, 103, 60, 61, 104, 62 to 68. I invite the minister to speak to and move amendment 26 and to speak to all amendments in the group. [Interruption.] I also invite members to turn off their mobile phones.
Schedule 3 to the bill currently contains a mandatory repossession ground that enables a landlord to regain possession of a property if the landlord or a family member of the landlord intends to live in the property.
When a family member wishes to live in the let property, my amendments 26, 27, 59 to 63 and 65 to 68 would change the nature of the repossession ground from mandatory to discretionary. That means that, when a family member of the landlord intends to live in the property, an eviction order would be granted only if the ground is met and a tribunal considers that it is reasonable to evict the tenant. When the landlord intends to live in the property, the ground would remain mandatory.
The eviction ground is based on the intention of the landlord or his or her family member. Amendment 68 also provides that, if a family member is incapable of having or expressing his or her intention, the landlord and the person entitled to make decisions about where that family member lives can express the intent.
David Stewart’s amendments 102 to 104 would make the ground discretionary in both cases. Under them, the tribunal would have discretion on whether to evict the tenant, even if it were established that the landlord intended to live in the let property. My amendments amend the ground so that, when a family member wishes to live in the let property, the tribunal will have discretion on whether to grant an eviction order. My amendments strike a better balance. Accordingly, I ask David Stewart not to move his amendments 102 to 104.
I move amendment 26.
Amendment 102 would have the effect of introducing a reasonableness test to the eviction ground that relates to a landlord or a member of the family intending to live in the property. Although I note that the minister has lodged amendments that would change the ground from mandatory to discretionary in respect of family members to a landlord, that does not go far enough. The first-tier tribunal’s discretion should extend to the landlord’s intention, too.
Enabling the tribunal to consider whether it is reasonable to grant the order will add an important layer of protection for private tenants from potentially arbitrary eviction. Evicting a tenant from their home is a serious sanction. That would affect not only the tenant but, potentially, their family and the children in the household. Therefore, it is vital to ensure that the tenants and the landlords’ situations are fully examined by the tribunal before a decision is made either way.
Such an approach would also address concerns raised during the bill process that, by not enabling the first-tier tribunal to take into account whether an eviction order is reasonable, the bill may not sufficiently take into account human rights considerations, principally article 8 of the European convention on human rights, which states:
“Everyone has the right to respect for his private and family life, his home and his correspondence.”
Amendment 102, alongside the other amendments on the grounds for eviction that I will move today, aims to ensure a holistic, reasonable and balanced approach to deciding whether tenants should be evicted.
It is of significant concern that the opportunity for a family member to take up residence and to end a tenancy on that basis will become a discretionary rather than a mandatory ground. I would ask if the minister could possibly explain in her winding-up speech the reason for the change.
Was any evidence taken from stakeholders to influence the decision on why a landlord should have a mandatory ground for taking back a property should he wish to live in it but, should it be a family member that he wishes to put in that property, the ground for doing so would be discretionary? I am aware of simply too many examples of situations, particularly in rural areas, where the need to get a property back for a family member is too important to be treated as discretionary.
We have struck a reasonable balance. We have listened to all sides in the debate about the repossession ground being discretionary or mandatory. I make it clear that, whether a ground is discretionary or mandatory, the tribunal must be sure that the ground has been established. If, for example, a landlord wants to live in the property themselves, they will have to provide evidence to the tribunal of why they intend to do so.
On making the ground for repossession for family members discretionary, that does not mean that such repossession would not be granted by a tribunal. It will look at the circumstances around the case. If the landlord wants to move into the property a family member who does not own the property, the tribunal will have the discretion to look at the case and ask why the family member requires to move into that property. Very often, repossession on that ground will be granted. The amendments are about putting into the bill the element of discretion when it comes to the family member.
We know that there is a fine balance between the ground being mandatory and discretionary and between the rights of landlords and tenants. We think that we have struck the right balance. We cannot accept David Stewart’s amendments 102 to 104. One side is telling us that we are going too far; the other side is telling us that we are not going far enough. Perhaps we have got it right.
The question is, that amendment 26 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 84, Against 13, Abstentions 0.
Amendment 26 agreed to.
Amendment 27 moved—[Margaret Burgess]—and agreed to.
Section 39—Requirements for notice to be given by tenant
We move to group 10. Amendment 84, in the name of Alex Johnstone, is grouped with amendments 85 to 88 and 92.
The purpose of these amendments is to reintroduce the initial period. I believe that the Scottish Government’s stage 2 amendment to remove the initial period was an ill-thought-out overreaction to stage 1 lobbying. The private rented sector tenancy review group advised that there should be an initial period and, at the consultation stage, that proposal received 76 per cent support, including from Shelter Scotland. As I said earlier, during the consultations on the bill, there have been some interesting and unpredictable reactions by Government to fairly strong opinions that have been expressed.
The initial period would have given stability and flexibility to landlords and tenants, as acknowledged by the Infrastructure and Capital Investment Committee and by the Government at stage 1. Stakeholders have offered the minister alternative solutions that would, without jeopardising the whole sector, address the issue of a tenant having to leave quickly, but those have been dismissed. Landlords’ risk of tenant changeovers has increased from twice a year, had we used the six-month initial period, to up to 12 times a year, which is a disproportionate increase in risk.
Some landlords might decide to withdraw from the sector, which would have a negative effect on the market for tenants. Has the Scottish Government thought forward a step and considered the impacts of removing the initial period on a whim? My amendments seek to correct that and give the sector a chance.
I move amendment 84.
Labour is opposed to this group of amendments from Alex Johnstone. The issue of tying in tenants to an initial period came up at the Equal Opportunities Committee and was discussed by the Infrastructure and Capital Investment Committee in its deliberations on the bill at stages 1 and 2. Our concern, which is shared by most members across the chamber, is that the initial proposal in the bill to tie tenants into a six-month lease would have made it difficult for those who need to flee domestic abuse. That can be stressful and dangerous enough for victims of domestic abuse without the added burden or prospect of being chased for six months’ rent for a property that they no longer live in. The Government agreed with Labour and campaigners at stage 2 and removed the provision from the bill. I urge Mr Johnstone not to attempt to reinstate it.
I concur with the concerns that Ken Macintosh has raised and the evidence that we received on the matter, particularly from the Convention of Scottish Local Authorities. The evidence on domestic abuse was absolutely compelling, so I will reject the amendments.
I amended the bill at stage 2 to remove the initial period, as I had concluded that having an initial period was likely to cause problems for various groups of tenants, which I judged best to avoid. I noted the concerns that the Infrastructure and Capital Investment Committee raised about the impact that the initial period could have in cases of domestic abuse, and I concluded that the initial period could make it very difficult for someone in an abusive relationship to terminate a tenancy without incurring financial penalties.
I also noted other circumstances in which the initial period could prove unreasonably restrictive and inflexible for both tenants and landlords. For example, a tenant who had entered into a tenancy in good faith could suddenly find that they have to move quickly, perhaps to provide care and support to a family member who lives elsewhere or to accept a new job. A tenant might have to move elsewhere as part of their current job, or a landlord might offer a tenancy in good faith and then find that they need the property urgently for themselves or that they have to sell it for financial reasons.
The effect of my amendments at stage 2 was to make the tenancy completely open ended and enable tenants to end the tenancy by providing notice at any time, and landlords to use all the grounds for repossession from the outset of the tenancy. That approach has been widely supported throughout the sector, including by Shelter in its recent briefing. That is a simpler and more straightforward approach that will benefit tenants and landlords. Therefore, I cannot support Alex Johnstone’s amendments, and I urge members not to support them.
I am afraid that the case was made for the initial period early in the process, and that had strong support across the board. A specific set of circumstances was drawn to the committee’s attention that could be addressed by eliminating the initial period, but there were alternative routes, and the loss of the initial period takes away predictability and stability from the landlord-tenant relationship in the early period of a new tenancy. The removal of the initial period was therefore a bad idea and it weakens the bill still further. I therefore propose its reintroduction.
The question is, that amendment 84 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 15, Against 82, Abstentions 0.
Amendment 84 disagreed to.
Amendments 28 and 29 moved—[Margaret Burgess]—and agreed to.
Section 41—First-tier Tribunal’s power to issue an eviction order
Amendment 85 not moved.
Amendment 30 moved—[Margaret Burgess]—and agreed to.
Before section 44
Amendment 86 not moved.
Section 49—Wrongful-termination order
Amendment 31 moved—[Margaret Burgess]—and agreed to.
Before section 52
Amendment 87 not moved.
Section 52—Meaning of notice to leave and stated eviction ground
Amendment 88 not moved.
After section 52
We come to group 11. Amendment 32, in the name of the minister, is the only amendment in the group.
The bill contains a repossession ground that enables a lender to regain possession of a property when they intend to sell it. Amendment 32 will ensure that a lender who is entitled to sell the property can apply for an eviction order in the same way that a landlord can.
I move amendment 32.
Amendment 32 agreed to.
Section 53—Six month periods
Amendments 33 and 34 moved—[Margaret Burgess]—and agreed to.
Section 54—Tenancy continues after tenant’s death
We come to group 12. Amendment 35, in the name of the minister, is grouped with amendments 36 to 42, 70 and 77.
The bill as introduced would have required an executor to terminate the tenancy if the sole tenant died and nobody inherited, and it gave a right to inherit only to the dead tenant’s bereaved partner.
I have listened to the evidence that was given to the Infrastructure and Capital Investment Committee at stage 1, and I have lodged amendments 35 to 38 and 42 to remove the need for an executor’s involvement to terminate a tenancy on the sole tenant’s death, and amendments 70 and 77 are consequential on that change. If it is not inherited, the tenancy ends automatically with the tenant’s death.
I listened to what Clare Adamson had to say at stage 2 and have lodged amendments 39 to 41 so that not only the tenant’s bereaved partner but adult family members and carers who lived with the tenant in the let property as their principal home can inherit the tenancy if the appropriate conditions are fulfilled. I am grateful to Clare Adamson for her contribution.
The amendments also make it clear that, when a joint tenant dies, his or her interest under the tenancy dies too, with the surviving joint tenant or tenants being left to carry on the tenancy.
I move amendment 35.
Although we have talked about the balance of the bill, we must remember that the heart of the bill is about the family home and the need to recognise that the house that a tenant lives in is their home. I welcome the Government’s support in this area, and I will support its amendments.
I can see why the Government wants to make the proposed changes, and I can see that they are justified, but amendments 38 to 41 will produce an extraordinary degree of complexity. However worthy the amendments’ objectives are—many of the objectives are worthy—on reading through the proposed new sections, I have grave concerns that the Government is simply creating a legal minefield that it will be extremely difficult to navigate. I seek the minister’s reassurance that that is not what will happen and that we will not end up with a set of provisions that are so complex that they cannot be applied effectively.
The succession rights that we set out in the bill are the same as the succession rights in social tenancies. They are well known and approved and it will not be difficult for people to find their way around them. What we are doing is the right thing to do, as Clare Adamson said.
Is it the minister’s intention to ensure that private sector tenancies are indistinguishable from social tenancies, or is there an understanding on the part of the Government that there is a difference between the two?
I simply say to Alex Johnstone that if they were the same we would not be here considering a bill on private residential tenancies.
Amendment 35 agreed to.
After section 54
Amendments 36 and 37 moved—[Margaret Burgess]—and agreed to.
Section 55—Partner’s entitlement to inherit tenancy
Amendment 38 moved—[Margaret Burgess]—and agreed to.
After section 55
Amendments 39 to 41 moved—[Margaret Burgess]—and agreed to.
Section 56—Executor’s duty to terminate tenancy
Amendment 42 moved—[Margaret Burgess]—and agreed to.
After section 56C
We come to group 13. Amendment 89, in the name of Ken Macintosh, is grouped with amendments 90 and 91.
Amendments 89 to 91 are designed to drive up the quality and standard of accommodation in the private sector. My colleagues and I in Scottish Labour propose the creation of a private residential tenancy charter, to ensure that tenants in private lets are put on a similar footing to that of tenants in socially rented accommodation and have some assurance that their properties will be warm, secure and safe to live in.
It is important to say that good landlords—the majority—have nothing to fear from the amendments in this group. However, we need to take action to stamp out the rogue landlords who provide properties that are cold, damp and frankly inadequate. I discussed that very issue with volunteers from the homelessness charity Crisis at an event earlier this week.
We know from figures that the Bank of Scotland produced that people who rent are, on average, £1,440 a year worse off than people who own their own home. Tenants in the private rented sector pay much more rent than tenants in the social rented sector, yet all too often they receive poorer value for money. As Govan Law Centre’s report “Powerless: no expectations, choice or security” demonstrated, vulnerable tenants are often treated very badly in relation to standards of accommodation and service.
It is unacceptable that private renters should be worse off financially and in relation to the state or quality of the home in which they live. Tenants in the social rented sector have recourse to the Scottish social housing charter, which sets out the standards and outcomes that tenants can expect from landlords. Labour thinks that tenants in the PRS should be able to expect the same.
As the minister and many members know, there is no doubt that the condition and maintenance of homes in Scotland is a serious problem. The recent Commission on Housing and Wellbeing found that half of all housing in Scotland falls short of official quality standards. Data from the Scottish house condition survey suggest that the rates of extensive disrepair, damp and condensation in homes remain unchanged, with more than 70,000 homes falling below the tolerable standard.
Some 14 per cent of people now live in the private rented sector, but it is estimated that a quarter of all the homes that fall below the tolerable standard are to be found in that sector. The PRS sector has more than doubled in size over the past decade, and the expanding number of people who are renting privately need the protection and method of asserting their rights that the amendments in this group would give them.
Amendment 89 would require the Scottish Government to create a private residential tenancy charter, with which landlords would have to comply. Amendment 90 would empower the first-tier tribunal to determine complaints from tenants where there had been a failure to comply with the charter, and would entitle local authorities, as well as individual tenants, to bring complaints to the tribunal. Amendment 91 is a consequential amendment.
I am grateful to Mike Dailly and his colleagues at the Govan Law Centre for all their work to help vulnerable tenants and for suggesting the charter as a way of addressing a gap in the bill on quality. Members will have seen from the briefing that was circulated in advance of stage 3 that my amendments 89 to and 91 are supported by Shelter. These three amendments offer a powerful means to raise standards in the private rented sector, root out poor practice and ensure that PRS tenants obtain better value for money.
I move amendment 89.
I have some sympathy with the aims of Ken Macintosh’s amendments but it is important to place on the record that the Infrastructure and Capital Investment Committee did not have the opportunity to consider them at stage 2. Had we had that opportunity, there would have been the opportunity for a debate and for the minister and Mr Macintosh to have had discussions in advance of stage 3 to scope the impact of the amendments and how best to develop them to have them properly considered and, possibly, included in the bill.
My objection is really that the amendments are being introduced at far too late a stage in the legislative process. For that reason, I urge members not to support them.
I have often criticised the Government for introducing measures late in the legislative process but, in this case, it is not the Government that is to blame. As Jim Eadie said, we have not had the chance to consider the amendments. However, I am prepared to express an opinion on them.
I understand the objective that lies behind the amendments. Indeed, I would like the private rented sector to provide improved housing in Scotland, and anything that we could do to achieve that would be worth while. However, we have a problem in that, as we discussed a moment ago, Ken Macintosh has perhaps confused the opportunities that exist in the private rented sector with those in the social rented sector. The problem is that, were his amendments to be enforced, private landlords would not have to conform to them as he suggested. They would have an alternative: they could disinvest, which would be a catastrophe.
I agree with the objectives but not the means by which Ken Macintosh seeks to achieve them.
On the face of it, the idea of a charter that lies behind Ken Macintosh’s amendments may seem an attractive proposition. However, like Jim Eadie and Alex Johnstone, I have to say that no one in the consultations on our proposals for the bill—we consulted extensively—or during the extensive scrutiny by the committee at stage 1 and stage 2 suggested that the private rented sector needed or, indeed, would be suitable for a charter along the lines of the one that we introduced for the social sector. Neither Ken Macintosh nor any member of his party raised it.
That worries me, because we are being asked at this final stage of the bill’s consideration to introduce provisions on, by any standards, a significant new policy without having consulted the people who would be affected by it or who are intended to benefit from it. That is not how we should legislate. For that reason alone, I cannot support the amendments.
Also, I am not persuaded that a charter is necessary or would even have the intended effect of improving the quality of the private rented sector.
We are already undertaking significant work to improve the private rented sector, not least of which is the new tenancy that is provided for in the bill. That rebalances the relationship between landlords and tenants and, by removing the no-fault ground, better enables tenants to assert their existing rights—for example, the right to require a landlord to carry out repairs to their property.
There is already legislation on standards that privately rented property must achieve under the repairing standard in part 1 of the Housing (Scotland) Act 2006. The proposal is for a further, likely overlapping, set of standards with different enforcement rules. That would be inefficient and would be likely to cause confusion.
The Government’s strategic approach to regulating the sector is set out in our strategy for the sector, which is the first of its kind since devolution. It includes the recent work to regulate letting agents and create a new, more accessible, specialist housing tribunal.
The current approach of setting minimum standards through the repairing standard is a better way of giving tenants the necessary safeguards in relation to the condition of their homes. From later this year, repairing standard cases will be heard by the new housing tribunal. The Government is also undertaking work to improve enforcement of regulations in the private rented sector, including new statutory guidance for local authorities on landlord registration, which will be consulted on later this year.
Although the charter proposed in amendment 89 is well intended, it would only create additional bureaucracy with limited benefit and place a significant extra burden on the new tribunal’s resources, including its financial resources. Therefore, I cannot support the amendment, and I ask Parliament not to support it.
I thank members for their comments. The minister seemed to welcome the intention behind my amendments but then put forward the argument that they would create additional bureaucracy with little effect. I am not sure that that would be the case. The main argument against the proposal seems to be that we did not discuss it at stage 2. I suggest that if it is right to take action, it is right to take action now. It is a weak argument to say that the only reason not to do this is because it is too late.
Ken Macintosh proposes a significant change to the bill. Indeed, it would impact not only on the bill, but on the financial memorandum. The charter for the social sector came out of a lengthy process involving lots of consultation with those involved. There has been no consultation on Ken Macintosh’s proposed charter. It is not right or appropriate to include it in the bill at this late stage.
The minister made the point that she thinks that it is a bit late. I remind her that the issues of quality and standards were raised by many witnesses, not least by Mike Dailly when he gave evidence to the committee. I accept that the minister has concerns about the potential cost, but it is clear that there are concerns about quality and standards.
I thoroughly reject Mr Johnstone’s argument that introducing my proposal would cause disinvestment in the sector. The opposite of that argument would be that we should somehow be grateful for people investing in the sector to offer an inferior service, act as bad landlords and provide poor-quality rented accommodation. That is not right at all.
I accept that the minister has some reservations, although I would have preferred to hear some stronger words of encouragement to the effect that standards and quality matter. I intend to press amendment 89.
The question is that amendment 89 be agreed to. Are we all agreed?
The result of the division is: For 24, Against 60, Abstentions 0.
Amendment 89 disagreed to.
Amendment 90 not moved.
Section 60—Regulation-making powers
Amendment 43 moved—[Margaret Burgess]—and agreed to.
Amendments 91 and 92 not moved.
Amendment 44 moved—[Margaret Burgess]—and agreed to.
Amendment 93 moved—[Margaret Burgess]—and agreed to.
Amendment 45 moved—[Margaret Burgess]—and agreed to.
After Section 62
We move to group 14. Amendment 94, in the name of Patrick Harvie, is grouped with amendments 98, 58 and 99.
Earlier, I moved some amendments that I had good grounds for suspecting that the Government would support. Then I moved some on which I genuinely did not know which way the Government would go. This time, I will move an amendment that I am pretty certain the Government will reject, but which gives us the opportunity to have some debate about a more fundamental reform that may come in time but which the Government is clearly unlikely to accept in the bill.
We are quite rightly limiting the grounds for eviction that a landlord can exercise because we recognise that the purpose of housing is to provide a home and the security of tenure that people in the private rented sector are entitled to receive—people to whom, I remind Parliament again, we have given no other option; people for whom we have failed to provide either affordable owner occupation or available social rented housing. Those people are entitled to security of tenure—it is important to their quality of life, their wellbeing and their ability to raise their families—rather than simply being moved from home to home to home because landlord after landlord has a whim, as has been too many people’s experience. We should be happy and proud that we are giving greater security of tenure to people in the private rented sector.
There will, of course, have to be some circumstances in which a landlord has to have grounds for eviction. None of us would disagree, for example, that a tenant’s misbehaviour might be a reasonable ground for eviction. It has been argued even in some of the more progressive countries in Europe that the intention to move into a property—particularly for a person who is not a professional landlord with dozens of properties—may be a necessity for that landlord; it may be something that they have to do, so we might agree that in such situations that ground for eviction might be used.
I am asking whether the intention to sell a property should be a ground for eviction. Amendment 94 would remove that ground for eviction after five years so that people who become landlords by accident or do so on a small level, perhaps speculatively—a buy-to-let mortgage having been seen as an alternative to a pension or other investment for their own future security—would have five years in which to decide whether to continue to be a landlord long term or to dispose of the property. During that time, they would be able to use the intention to sell as a ground for eviction. However, after that point a person who is doing the job of a landlord would be able to sell the asset with the sitting tenant: the tenant would not have their home taken away from them simply because the landlord had made a financial decision that best served their investment purposes.
If we want a professional private rented sector, it is reasonable that professional businesses that deliver that service should respect the rights of the tenants to whom they selling the service. They would not simply offer keys month by month in exchange for monthly rent; they would be selling a service that includes security of tenure and a secure, safe and decent place to live. A person in that situation who wants to make a change in their own investment portfolio should not do so by evicting a tenant from his or her home.
I accept that that is a more radical reform than the Government will contemplate today, but I point out that in other countries including Germany it is much harder, although not impossible, for a landlord to use the intention to sell a property as a ground for eviction because being a landlord is about providing housing, and not about providing for one’s own speculative investment purposes at the expense of somebody else’s long-term secure and safe home.
I do not expect amendment 94 to be agreed to by Parliament, but I will be interested to hear whether there is any openness to discussing whether a reform of that nature might happen in the future.
I move amendment 94.
I call David Stewart to speak to amendment 98 and other amendments in the group.
As with amendments 102 to 106, amendments 98 and 99 would enable the first-tier tribunal to consider whether an eviction order is reasonable when a landlord has stated the intention to sell a property. That would enable the tribunal to look at the broader issue in terms of the landlord’s case for an eviction action—for example, examining whether the landlord might be able to sell the property with the tenant in situ. That would add an extra safeguard for private tenants that would prevent arbitrary eviction and ensure that the security of tenure that the bill provides is cast iron.
Patrick Harvie is right that the Government will not support his amendment 94. Landlords need to be confident when letting their property that they will be able to sell it with vacant possession. Property valuation for landlords is important, so not being able to evict the tenant in order to sell the property could be problematic for many landlords who need their property, or need to sell their property.
I believe that Patrick Harvie’s amendment 94 would have a serious impact on the supply of private rented housing. It would either reduce the value of the property, which would potentially put landlords in financial difficulty, or it would mean that landlords would simply not want to let their properties as private rented homes. I therefore cannot support amendment 94, and I ask Parliament to oppose it.
David Stewart’s amendments 98 and 99 would, as he said, make discretionary the eviction ground that the landlord intends to sell the property. Again, I emphasise that landlords have to have that right and the confidence that they are able to sell their property. I strengthened that ground by lodging an amendment to outline the types of evidence that may be considered by the tribunal when assessing a landlord’s intention to sell a property. The tribunal has to be satisfied that the ground has been met before it can issue an eviction notice. I think, having listened to stakeholders from both sides, that that strikes a fair balance.
I cannot support David Stewart’s amendments 98 and 99 because the suggested provisions could have a serious impact on the supply of private rented housing.
Amendment 58 is a technical fix that will enable a landlord to regain possession if he or she intends to sell the property for market value, whether on the open market or by private sale. I ask members to support amendment 58.
Working backwards, I will discuss amendment 58 first. I am not convinced that I understand what advantage there is in replacing the phrase “on the open market” with “for market value”. In fact, I have discussed that with one or two people, who are worried about how “market value” might be established and prefer the “open market” wording as being more practical.
David Stewart’s amendments 98 and 99 would turn a mandatory ground into a discretionary ground, which I believe would disadvantage landlords further within the imbalanced relationship that the bill creates.
On amendment 94, in the name of Patrick Harvie, I am concerned that its effect would be to guarantee that the length of every tenancy would be a day or two less than five years. I would not like that to happen.
The minister made a wee slip of the tongue—it was not a serious one, but it was telling. She said that the issue was that landlords might “need their property”, and then corrected herself to say that they might
“need to sell their property”.
There is a fundamental difference between those things. If the property is a home—if that is its purpose and the reason why it exists—and the landlord needs the property to live in, they would have reasonable ground for eviction. However, we are talking not about landlords who need a property, but about landlords who want to maximise their profit. It is about whether the house is providing a home as it is supposed to do.
I accept that my amendment 94 will not go anywhere today. However, if the Government is successful in achieving the aim that it seeks to achieve through this part of the bill, which is the professionalisation of the private rented sector, I suspect that we will have to return to the question whether professional bodies that choose to reorder their financial assets should be able to evict tenants in order to make the exercise more convenient and profitable for themselves, or whether tenants should have a right to live in the home for which they are paying rent, regardless of whether the property is being sold by one professional landlord to another. I will press amendment 94.
The question is, that amendment 94 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 5, Against 68, Abstentions 22.
Amendment 94 disagreed to.
Schedule 1—Tenancies which cannot be private residential tenancies
Amendment 46 moved—[Margaret Burgess].
The question is, that amendment 46 be agreed to. Are we agreed?
The surprising result of the division is: For 94, Against, 0, Abstentions 0.
Amendment 46 agreed to.
Thank you, Mr Johnstone. [Laughter.]
That takes us cheerfully to group 15. Amendment 95, in the name of Alex Johnstone, is grouped with amendments 96, 97 and 47 to 49. If amendment 97 is agreed to, amendments 47 to 49 will be pre-empted.
I suspect that we will be okay on that pre-emption. I apologise for shouting no on the previous vote when I should have kept my mouth shut. I was thinking about this group.
I begin my comments on the group by offering the minister a great deal of praise, because this is the subject on which we got the most effective and constructive movement from the Government at stage 2. There was grave concern about the effect on purpose-built student accommodation and the choice of companies to invest in developing it if the bill was not changed to defend that business model. The Government understood that problem and lodged amendments at stage 2 that dealt with it. I praise the minister for having taken that action.
My concern is that perhaps there is a lack of flexibility in the Government’s stage 2 amendments. My amendments 95 to 97 are designed to create a little more flexibility in how the changes can be implemented under the bill. What worries me—this is where my praise for the minister must be tempered—is that I suspect that amendments 47 to 49 are designed to do the exact opposite and appear to be a step back from the position that the minister took at stage 2.
An important change was made at stage 2. Greater flexibility would be of greater value to the industry and would encourage greater investment, but I worry that, after stage 2, the minister decided that she had perhaps gone too far. I encourage her not to believe that but to go forward boldly and create opportunities for investment in purpose-built student accommodation.
I move amendment 95.
Alex Johnstone’s amendments 95 to 97 would exempt all students from the new tenancy, which means that they would instead rent through a common-law tenancy or occupancy agreement simply because they were students. I cannot support that. I believe that all tenants in the private rented sector should have the same rights and protections. That is only fair and right.
As I have said many times, the basic principle of the new tenancy is that, if someone rents out a property in the private rented sector, they have to regard it as the home of the person they rent it to. I recognise that landlords who let to students may need to adapt their business model to the new tenancy, but that should not be insurmountable. Many students will continue to leave at the end of term, as they will not want to pay rent for a property that they will not be living in. If students stay, it will be because they call where they stay their home. I therefore ask Alex Johnstone not to press his amendment 95. If he presses it, I urge the Parliament to oppose it.
I turn to amendments 47 to 49. The bill provides that a student let of a property with student-specific planning permission—that is, purpose-built student accommodation—is exempt from the new tenancy. Student-specific planning permission means that planning permission for the construction, conversion or change of use of the property or any building of which it forms part was given on the basis that the let property would be used predominantly for housing students.
My amendments 47 and 49 add an extra limb that states that only an institutional provider of student accommodation may be exempt from the new tenancy. The amendments describe an institutional provider as a landlord that has at least 30 bedrooms in the same building or complex and intends to use them predominantly for the purpose of housing students.
The exemption in the bill is framed so as to exclude HMO properties in the mainstream private rented sector, because they do not have planning permission in the terms that I just outlined. The amendments will make it 100 per cent clear that the exemption is only for institutional providers of student accommodation. I ask members to support my amendments 47 to 49.
Labour will not support Alex Johnstone’s amendments 95 to 97 but will support the minister’s amendments 47 to 49. The issue came up in evidence at stage 1, when the committee and the Parliament considered it at length. It is clear that students do not wish to be singled out as deserving of less protection or security of tenure than anyone else in our society.
In many ways, Alex Johnstone’s amendments reflect the question whether we should regard a private rented flat primarily as a business or as a home. Do we want to frame the law to meet the needs of those who rent out property to students or the needs of the students who live there? I recognise that the two are not mutually incompatible, but the whole point of the bill is to shift the emphasis on to the rights of tenants. I urge Alex Johnstone to withdraw amendment 95 and not to move amendments 96 and 97.
We will not support the Conservative amendments in the group, but we will support the Government’s amendments 47 to 49, as what they propose is only fair. We have had representations from individuals who say that we should not support those amendments but, if we block up our halls of residence with people who are no longer students, we will have a serious lack of supply of accommodation in halls of residence. For that reason, we will support Margaret Burgess’s amendments.
I believe that privately built and funded student accommodation has created a revolution in the provision of high-quality accommodation for students. The business model on which much of that investment is based depends on the ability to house students and to use the properties effectively at other times of the year to generate a return.
As a result, students who wish to take up student accommodation should be in a position to allow that business model to be deployed, to minimise the cost of the accommodation and maximise standards. As my amendments provide a genuine opportunity in that respect, I intend to press amendment 95.
The question is, that amendment 95 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 13, Against 82, Abstentions 0.
Amendment 95 disagreed to.
Amendment 96 moved—[Alex Johnstone].
The question is, that amendment 96 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 13, Against 82, Abstentions 0.
Amendment 96 disagreed to.
Amendment 97 not moved.
Amendment 47 moved—[Margaret Burgess].
The question is, that amendment 47 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 81, Against 15, Abstentions 0.
Amendment 47 agreed to.
Amendment 48 moved—[Margaret Burgess].
The question is, that amendment 48 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 83, Against 13, Abstentions 0.
Amendment 48 agreed to.
Amendment 49 moved—[Margaret Burgess].
The question is, that amendment 49 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 84, Against 13, Abstentions 0.
Amendment 49 agreed to.
Amendments 50 to 52 moved—[Margaret Burgess]—and agreed to.
Schedule 2—Statutory terms required by section 6
We move to group 16. Amendment 1, in the name of Adam Ingram, is grouped with amendments 52, 2 to 4 and 54 to 57.
I will speak to amendments 1 to 4.
At the behest of Homeless Action Scotland, I sought to amend the bill at stage 2, so that a tenant need only tell the landlord about a person aged 16 or over residing in the property if that property was that person’s only or principal home. Paragraph 3 of the schedule is welcome, as it gives landlords the power to prevent overcrowding and sub-letting, but my amendments seek to make the duty to inform a landlord about others staying in the property more proportionate.
As the bill is drafted, the tenant would be obliged to send their landlord details of every person who stayed in the property, even if it was a friend who stayed overnight. That would clearly represent an unreasonable intrusion into the lives of tenants. Indeed, the tenant might be in breach of the tenancy and liable to eviction for failing to notify the landlord that someone had stayed for a day or two. The minister accepted the principle of my stage 2 amendment but asked for a more suitable amendment to be brought forward at stage 3, with the same intention.
I have worked with the Government to ensure that these amendments have the same purpose and effect as my stage 2 amendment, and that the bill makes it clear that tenants must notify their landlord only if someone occupies the let property as their only or principal home.
I move amendment 1.
I am grateful to Adam Ingram for lodging the redrafted amendments, which I am happy to support.
I will speak first to amendment 53. The existing statutory term would have enabled landlords to manage their properties effectively, and amendment 53 amends the statutory term further to provide that the notification that is provided to the landlord must be in writing. Requiring the notice to be in writing should go some way towards mitigating any potential disagreement about whether and when a tenant has notified their landlord that somebody else is living with them in the property as their only or principal home. Notice under this term will also meet the requirement for written notice in the succession provisions.
Under the bill, it will be a statutory term of a tenancy that a tenant must allow access to the property for an authorised purpose. Authorised purposes include carrying out work on the property that the landlord is entitled or obliged to carry out, and inspecting the property in order to determine what, if any, work of that nature to carry out.
Amendments 54 to 57 extend the definition of authorised purpose to include valuing the let property. The amendments will enable a rent officer to inspect a property when determining the open-market rent in a rent adjudication case, or when determining the amount by which the rent of a property in a rent pressure zone can be increased as a result of an improvement made to the property by the landlord.
With regard to the landlord being entitled or obligated to carry out any work, reference has also been made to the possibility that the tenant may agree other inspection access rights with the landlord.
Currently, the bill requires access to be granted to the landlord or anyone authorised by the landlord. Those references will now be removed altogether in order to avoid disputes about what “authorised” means, but it continues to be the case that the term of the contract can be invoked only at the landlord’s instance. By not limiting who access can be granted to under that term, it continues to cover access by others, such as tradesmen or rent officers.
I thank Adam Ingram for the explanation of his amendments, which are proportionate and appropriate. We will support them, along with the minister’s amendments.
Amendment 1 agreed to.
Amendment 53 moved—[Margaret Burgess]—and agreed to.
Amendments 2 to 4 moved—[Adam Ingram]—and agreed to.
Amendments 54 to 57 moved—[Margaret Burgess]—and agreed to.
Schedule 3—Eviction grounds
Amendment 98 moved—[David Stewart].
The question is, that amendment 98 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 30, Against 64, Abstentions 0.
Amendment 98 disagreed to.
Amendment 58 moved—[Margaret Burgess].
The question is, that amendment 58 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 83, Against 12, Abstentions 0.
Amendment 58 agreed to.
Amendment 99 moved—[David Stewart].
The question is, that amendment 99 be agreed to. Are we agreed?
There will be a division.
The result of the division is: For 31, Against 64, Abstentions 0.
Amendment 99 disagreed to.
We move to group 17. Amendment 100, in the name of David Stewart, is grouped with amendments 101, 105 and 106.
Similar to the other amendments that I have moved today, the four amendments in the group would enable the first-tier tribunal to consider whether an eviction order was reasonable, where a landlord had stated the intent to refurbish the property or to use it for a non-residential purpose. That would allow the tribunal to look at the broader issues involved in the landlord’s case for an eviction action, as it would look at the purposes for refurbishment or change of use to examine whether it would be reasonable for the tenant to be evicted on those grounds.
Amending the bill in that way would add an extra safeguard for private tenants from arbitrary eviction, thus ensuring that the security of tenure that the bill will provide is cast iron.
I move amendment 100.