The Infrastructure and Capital Investment Committee published its Stage 1 Report on the Bill on 14th January, and the Stage 1 Debate of that Report took place yesterday, 21st January. There has been real concern that the Bill did not strike the right balance between the interests of different stakeholders. Can investors be more hopeful in light of the Committee’s Report? We focus on two key issues.
1. No-fault ground for possession to go
The Bill seeks to remove the no-fault ground for recovery of possession: a concern for both the purpose-built student accommodation (“PBSA”) sector, which relies on being able to provide fixed tenancy start/end dates that coincide with the academic year, and the wider private rental sector in marketing and letting as there would be no certainty when the current tenant would vacate.
Following strong representations from the PBSA sector and the SPF as to the potential adverse impact on investment and for reducing an already stretched supply, the Committee has recommended that the Scottish Government considers options for enabling PBSA tenancies to be set for fixed terms.
While the Committee was not persuaded that the no-fault ground should be maintained, on the basis that no tenant should be removed from their home without good reason, it has called on the Scottish Government to continue working with landlords and letting agents to ensure that the 16 new grounds will be robust enough to allow landlords to recover their properties, to boost investor confidence.
2. Are rent pressure zones really necessary?
The Committee, whilst noting that the rent-pressure zone measures are intended to be a discretionary tool for local authorities to target issues of rent affordability in their area, have requested further information on why the Scottish Government considers that the measures are necessary given it is looking to increase supply.
The Committee noted that many representing letting agents and landlords did not agree with the rent control zone measures the Bill seeks to introduce, and are concerned that such measures could have an impact on investment.
The Committee has asked the Scottish Government to provide evidence to show whether local authorities are likely to use the proposed rent-pressure zone measures.
For now, it is encouraging that the voice of the PBSA and private rented sector seems, to an extent, to have been heard, and that the Committee has referred a number of the concerns back to the Scottish Government. However, at the Stage 1 Debate, the Housing Minister reiterated that, whilst the aim of the legislation is to provide open-ended tenancies and that student lets should not be treated any differently in the PRS, they are still reflecting on the Committee’s recommendations (particularly in relation to PBSA).
The Bill will now move on to Stage 2 of the legislative process, where it will be subject to further amendment.