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Again, I would draw a distinction between anecdotal evidence that is being put about and what we are seeing on the ground. It was only ever possible for the Cost of Living (Tenant Protection) (Scotland) Act 2022 to have a direct impact on rental incomes for a period of 18 months. Now that we are at the point of proposing the extension for the final six months, the effect of a decision today cannot possibly impact on the rental income of properties that are subject to investors’ decisions at the moment. Investors’ decisions at the moment would be about the supply of homes that are available to generate rental income in the future, after the temporary provisions in this legislation have ceased.

Some of the wider concerns of institutional investors are around the Scottish Government’s longer-term proposals for rebalancing the private rental sector and, in particular, for a new national system of rent controls. We are keen to continue to work closely with the sector, which includes engagement that I and Paul McLennan as Minister for Housing have with investors as well as developers as we work through the process to determine the shape of the housing bill that will be introduced next year to give effect to that commitment to a national system of rent controls.

The impact that we are seeing on rental prices reinforces the need to commit to that work. We need to ensure that affordability is part of our understanding of what adequate housing is and that all people have a human right to adequate housing. We will continue to develop that work in a way that is well informed by the perspectives of tenants, landlords, the people who work with them and investors. Across Europe, the situation that Scotland and the rest of the UK have been in in recent years and decades is unusual. It is a particularly unregulated market in private housing terms.

Investors—particularly the bigger institutional investors—make decisions across a wide range of countries and they are well used to making decisions about more regulated and less regulated markets with regard to rental property. Evidence from across Europe is very clear: a well-designed rent control system is entirely compatible with a vibrant housing market and investment in homes made for private rent. We believe that that can be achieved in Scotland as well and that it will be consistent with supplying the quality homes that Scotland needs and achieving affordability, which has been lacking in too many cases.

I do not agree with that characterisation of what the legislation has done.

Pam Gosal is right that rent increases between tenancies are not covered by the legislation. As it is emergency legislation, it was not ever going to be possible, through it, to fundamentally restructure the way that private residential tenancies—PRTs—work. There was recognition that the 2002 act was only ever going to provide protection within tenancies in relation to the annual in-tenancy increases that are allowed under the PRT.

As a result of the legislation being in force in Scotland, the difference is that we are seeing only inter-tenancy increases and tenants are—excepting the exceptional 6 per cent cases—being protected with a 3 per cent rent increase cap within tenancies. Down south, people are being subjected to both. We know that increases in market rents—rents that are being advertised—are significant; for example, the increase is 12 per cent in Glasgow and 10 per cent in Aberdeen. We also know that similar figures are being seen in parts of England; for example, we see increases of 10.4 per cent in Cardiff, 10.7 per cent in Southampton and 13 per cent in Manchester.

The inter-tenancy increases are happening for a wide range of reasons. I am sure that they are a necessity in some cases, but some landlords are pursuing whatever they can get away with. That last point is by no means a characterisation of the whole private rented sector. There are landlords out there who are committed to trying to provide housing that is as affordable as possible for their tenants, but there are also landlords who will go to the maximum that they think the market will bear.

In Scotland, sitting tenants have protection from annual in-tenancy rent increases, rather than their being subjected to both in-tenancy and intra-tenancy rent increases. The level of protection that exists for tenants is higher in Scotland as a result of the legislation.

Yes. That is why we are keen to ensure that we are hearing from the widest possible range of voices, as we come to a decision. I hope that broad support exists for the principle that such a mechanism is necessary to prevent a cliff edge—I do not recall there being serious opposition when the legislation was passed in Parliament—but Ivan McKee is quite right to say that it needs to be designed in a way that is consistent with both our protection for tenants and the wider need for a housing market that meets people’s needs.

Again, some of that variation will be to do with protections being brought in due to Covid and then starting to ease off. Over time, such things can change significantly. I do not think that we have to go back very many years to see a period when evictions from the private rented sector were the principal—the biggest—route into homelessness. That level started to come down because of a number of actions that were taken. We need to continue to ensure that people are protected from the risk of homelessness, and the new homelessness prevention duties are going to be important in achieving that. However, it is pretty clear that the legislation has given additional protection that has been necessary, particularly for people living in the private rented sector.

Rural developers and housing providers do face additional costs, which is why many of the funding streams that we offer have uplift for remote, rural and island communities. For example, we announced—I think, 10 days or two weeks ago—an additional uplift to the social housing net zero heat fund of 11 per cent for rural areas and 22 per cent for remote areas.

Some of those issues will need be addressed. Island communities in particular are sharply aware of some of the additional challenges that they face, whether around skills and capacity or around trust, as folk in some island communities have been stung by sharp practice, with developers with a bad intention coming in from the mainland and doing work to a poor standard, never to be seen again.

We know that we need to address particular issues there, but real innovation and creativity are being brought to bear, which I know from when I was up in Shetland recently. The Hjaltland Housing Association is doing interesting work in addressing net zero challenges in a way that is consistent with the aspiration for high-quality social housing in the more general sense, not just in a narrow energy sense.

There are issues in relation to remote, rural and, in particular, island communities. Those have been assessed in part through the island impact assessment. We are working on a great many of those challenges and we can turn some of those challenges into positives because of the level of creativity that is being brought to bear in many of those communities.

The Scottish Government has a responsibility to ensure that temporary emergency measures are necessary and proportionate and that they are appropriate and fit with our housing objectives, and we have a responsibility to take that approach to our new housing bill so that it is consistent with what we seek to achieve in housing.

As a starting point, we recognise that the right to adequate housing is a human right. That has not been delivered by everyone, and we have a situation in which the level of regulation on a number of standards is significantly different between the private and social rented sectors. We are seeking to reduce the gap in outcomes between those types of tenures. Our experience is that, in the long term, increasing the quality of the regulation of the private rented sector is compatible with growth and viability in that sector.

Although I have noticed that some people have sought to blame the emergency measures for decisions that have been made on the new supply of rented accommodation, the measures have no impact on initial rent setting; they impact only in-tenancy annual rent increases. I recognise that some people will argue against any form of protection for tenants or regulation in the market. I do not think that that extreme position would be appropriate, but we will seek to continue to ensure that the measures that we take strike the appropriate balance between providing safeguards for landlords, which are included in the emergency 2022 act, and continuing to expand protection for tenants.

Good morning, convener, and thank you. I am happy to be here today to present the draft Cost of Living (Tenant Protection) (Scotland) Act 2022 (Incidental Provision) Regulations 2023.

As we have discussed with the committee previously, you will be aware that the emergency Cost of Living (Tenant Protection) (Scotland) Act 2022, which was passed last year, had three key aims: first, to protect tenants, stabilising their housing costs by freezing rents; secondly, to reduce the impact of eviction and homelessness, through a moratorium on evictions; and thirdly, to reduce unlawful evictions and avoid tenants being evicted from the rented sector by landlords who want to raise rents between tenancies during the operation of the temporary measures.

Last month, the committee considered and voted for regulations to extend some of those provisions beyond 31 March to the end of September this year. I was pleased that the Parliament also voted to approve the regulations, thereby ensuring that important protections for tenants continue, given the challenging and uncertain economic times.

Although it is crucial that some emergency provisions continue for the time being, the emergency 2022 act is, of course, temporary, and it is equally important that we plan for the time when the protections come to an end.

During the passage of the Cost of Living (Tenant Protection) (Scotland) Bill, we acknowledged that termination of the rent cap might lead to a large number of private landlords seeking to increase their rent all at once, which could cause significant and unmanageable rent increases for tenants. In those circumstances, the existing rent adjudication process will need to be temporarily modified, to provide a suitable adjudication mechanism that is fit for purpose.

For that reason, the emergency 2022 act contains a regulation-making power to temporarily reform the existing rent adjudication process, which was brought in by the Private Housing Tenancies (Scotland) Act 2016. The proposed approach would support our transition out of the emergency measures and help to mitigate unintended consequences that might arise from our bringing the temporary rent cap to an end.

Schedule 3 to the emergency 2022 act provides ministers with the power in that regard. The short affirmative instrument that the committee is considering today makes a minor technical amendment to schedule 3, to put it beyond doubt that the powers that are conferred on the Scottish ministers function as intended. It does that by renaming a title and heading, renumbering a section and correcting a reference. That will ensure clarity if and when the Scottish ministers choose to exercise the powers conferred on them in schedule 3. Instruments that are made under that power will be subject to the affirmative procedure and subject to scrutiny and approval by this committee and the Parliament.

The severity of the costs crisis and the urgent need to respond quickly meant that the 2022 act had to be drafted and delivered at pace, to ensure that tenants could be offered additional protection as quickly as possible. The short technical instrument that the committee is considering today clarifies a small part of the drafting, to ensure that the important rent adjudication provisions will work as they are intended to do when the time is right to bring the emergency provisions to an end.

I thank the committee for its scrutiny of the draft regulations. I am happy to answer any questions that you have.

Although it is not technically relevant to the instrument that we are discussing—which is a clarification of the drafting of the legislation on the introduction of rent adjudication measures, as and when the temporary measures come to an end—when we referred to the landlord registration figures, we made it clear that that is only an administrative source of data. It does not provide the rich granularity of data that all stakeholders recognise is necessary. Longer-term reforms need to be made to ensure that there is data collection in the private rented sector at the level that we need it.

Although we have an admittedly limited source of information through the landlord registration scheme, it shows that there has been no decrease, and perhaps a slight, very marginal, increase in the number of registered properties prior to the emergency measures coming into force. Mr Briggs is right that there would be a time lag between landlords seeking to make decisions about their future in the industry and any deregistrations. We acknowledge that that is the case and we have presented the information that we have available to us.

As I said in response to your first question, everybody—landlord organisations, tenant organisations, housing academics and the Government—recognises that there is significant need for additional data and for depth, detail and granularity of data in the private rented sector. That is a long-term piece of work, and the Government will bring further work for the attention of the committee and Parliament to improve the collection of data in the private rented sector. For the time being, we have noted that the information that we have, limited though it is, from the landlord registration scheme does not show a drop-off in the number of properties that are available.

Again, as we debated during the passage of the Cost of Living (Tenant Protection) (Scotland) Bill, we recognise that the two dominant parts of the rented sector—the social rented sector and the private rented sector—operate differently. In particular, the social rented sector has a long tradition, and requirement, for consultation and engagement with tenants in relation to rent setting. We wanted to respect that necessary and valuable engagement and consultation.

We know that rental income does not necessarily provide for profit—social landlords are not profit-making bodies—but it provides for investment in new build, for retrofitting for energy efficiency and net zero, for maintenance and upgrades of properties and for a wide range of services that social landlords provide in the community. The social rented sector plans such investments over a long time. Given that several members echoed concerns from across the sector during the passage of the bill, more people recognised that some short-term protection was necessary but that, if the zero per cent cap continued for an extended period, it would not only reduce rental income in the year of the cap’s operation but have a compound impact on the financial planning of social landlords over a much longer period, and there would be a detrimental impact on tenants because of the reduced investment.

Such factors do not apply to the private rented sector in the same way. That sector tends to be profit making and tends to have a lower level of energy efficiency than the social rented sector, because some properties have not been upgraded in the way that will be required in the future under the new-build heat standard and the heat and buildings regulations on retrofitting. In the absence of some of the factors that apply in the social rented sector, we felt that the legislation was appropriate.

The difference in approach was also necessary because, in the absence of large organisations representing private landlords—we have a diverse and fragmented private rented sector—there was no opportunity to negotiate a voluntary agreement with private landlords that would have achieved the same effect as the agreement that I am pleased to say that we reached with the social rented sector.

The difference in approach is a mixture of a recognition of the different factors and characteristics of the two parts of the rented sector and the differences in opportunity to achieve a voluntary agreement in the nature of how rent is set. All those factors led us to recognise that a different approach had to be taken. However, I emphasise, again, the broad level of parity that we are talking about. As private rented sector rents are significantly higher than social rented sector rents, we believe that there will be, roughly speaking, parity in monetary terms between the rental increase that will be allowable for that most common type of property—two-bedroom properties—in the private rented sector.