Response to Pauline McNeil MSP's consultation on a proposed members bill regarding fair rents

CPAG in Scotland responded to three questions in Pauline McNeil MSP's proposed Fair Rents (Scotland) Bill to highlight the need to consider social security policy alongside housing policy.

1. WHICH OF THE FOLLOWING BEST EXPRESSES YOUR VIEW OF CAPPING PRIVATE SECTOR RENT INCREASES ANNUALLY ACROSS SCOTLAND AT ONE PERCENTAGE POINT ABOVE INFLATION (MEASURED ACCORDING TO THE CONSUMER PRICE INDEX (CPI))?

Unsure.

PLEASE EXPLAIN THE REASONS FOR YOUR RESPONSE

We are responding to this consultation because we wish to highlight that changing housing policy alone may not have the intended consequences for people in receipt of assistance to pay rent through social security.

Local housing allowance is the maximum rate of support than someone can receive for their private rented housing costs through housing benefit or the housing element of universal credit. Originally set at the median local rent, it was reduced to the 30^th percentile, then frozen for four years between 2016 and 2020.

The increasing gap between the local housing allowance (LHA) and private rents has rendered many properties unaffordable, or left tenants having to pay the difference from income or benefits intended for living costs. Analysis by Crisis shows that in 15 out of 18 of the rental markets in Scotland there is a monthly shortfall between rents and the amount of LHA tenants can receive.¹ This problem has not arisen as a result of this proposal - it is a longstanding issue - but neither does the proposal seek to address the issue.

In the proposal, the example is given of a rent of £500 being increased by 3% (2% CPI + 1%) so that the new rent is £515. If the LHA does not increase alongside the rent, the tenant would have to pay the additional £15 from their other benefits or income.

If the rent was allowed to increase by 3% every year, but the LHA rates were frozen for four years as they were between 2016 and 2020, the tenant could find themselves having to find an extra £60 a month to pay to their rent, without any additional support from housing benefit or universal credit.

For this proposal to cap rent increases to have the fullest impact, the Scottish Government may wish to consider if an how it could use the powers conferred by s29(3) of the Scotland Act 2016 with regarding to the determination and calculation of housing costs in universal credit.

The proposal also states that Ministers will have the power to change the inflation index if interest rates rise suddenly and by a significant amount to protect landlords – but consideration must also be given to protection for tenants in such an event.

2. WHICH OF THE FOLLOWING BEST EXPRESSES YOUR VIEW OF PROVIDING THAT, WHEN TENANTS APPEAL THEIR RENT, RENT OFFICERS AND THE FIRST-TIER TRIBUNAL WOULD BE ABLE TO EITHER LOWER OR MAINTAIN THE RENT BUT NOT INCREASE THE RENT?

Fully supportive.

PLEASE EXPLAIN THE REASONS FOR YOUR RESPONSE.

Removing the risk of having the rent level increased will encourage more tenants to appeal, and will lead to more rents in the private sector being adjudicated by a regulating body.

3. WHICH OF THE FOLLOWING BEST EXPRESSES YOUR VIEW OF EXPANDING THE LANDLORD REGISTRATION SCHEME SO THAT LANDLORDS MUST INPUT THE RENT THAT THEY CHARGE WHEN THEY REGISTER, AND UPDATE THE SYSTEM WHEN THE RENT CHANGES?

Fully supportive.

PLEASE EXPLAIN THE REASONS FOR YOUR RESPONSE.

Better data about rent levels will help to measure whether financial support to pay rents through social security is sufficient or not.

[1] https://archive2021.parliament.scot/S5_Social_Security/Inquiries/SSCS51….