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Housing to 2040 – what does it mean for landlords?

Thu 13 May 2021

With the 2021 Scottish elections handing the SNP a fresh five-year term in government at Holyrood – their fourth in a row since their first victory in 2007 – what does this mean for housing and the lettings sector in Scotland?

In March 2021, a few months before the May elections, the Scottish Government published its Housing to 2040 policy, Scotland’s first ‘long-term national housing strategy’. It was described as a vision for ‘what we want housing to look like and how it will be provided to the people of Scotland, no matter where they live and what point in their life they are at’.

The Government said it wanted to ensure housing in 2040 would support people to ‘live in the homes they want to live in which are affordable and meet their needs’. It added: “We recognise that we cannot deliver the ambitions in Housing to 2040 alone and we will work with local authorities, housing providers, landlords and the construction and house building sectors to do this.”

With the SNP returned as comfortably the largest party, and only one short of an overall majority, the Housing to 2040 policy is now likely to be progressed in this Parliament. While the thorny issue of independence is likely to dominate over the next few years, as Holyrood and Westminster battle to get their own way, housing – a fully devolved power to the Scottish Government – will continue to be a key topic of discussion.

Here, we take a look at what the Housing to 2040 policy might mean for landlords operating north of the border.

What is the vision?

The route map for the Housing to 2040 vision was set out by Aileen Campbell, cabinet secretary for Communities and Local Government, in late March.

She said the Scottish Government, in order to translate its vision into action, will continue to provide affordable homes across Scotland, particularly homes for social rent.

Housing to 2040 sets a new ambition to deliver 100,000 affordable homes by 2031/32, playing a key role in helping Scotland's economy to recover from the Covid pandemic. There are also plans afoot to decarbonise Scotland’s domestic and non-domestic buildings – with investment from public and private sources estimated to be in the region of £33 billion over the period to 2045. This push for sustainability and cutting emissions is set to support around 24,000 jobs each year as investment reaches its peak in the final years of the 2020s.

As well as the above, the Government said it will take the necessary steps to make the right to an adequate home a reality, tackle high rents and increase stability for those in the private rented sector. Furthermore, it will provide local authorities with the tools they need to improve access to housing in their local areas.

According to the route map, the Scottish National Investment Bank will be a key partner in attracting private investment and exploring alternative financing models for housing. The Bank is expected to shortly publish its first report setting out how it will invest to deliver its missions, with anticipated opportunities for investment in areas which are vital to the delivery of Housing to 2040.

This includes more affordable housing, both for social housing and mid-market rent, and greater investment in Build to Rent (BTR) in the private sector, with an emphasis on the delivery of homes at the affordable end of market rates. BTR is often seen as a direct competitor to buy-to-let landlords as it is often owned by major institutional investors, and the Scottish Government says there are some 9,000 BTR homes progressing in Scotland’s major cities.

The route map dedicates a long section to the private rented sector, with the Government saying it will take action so that the rented sector ‘offers a range of high-quality homes that are affordable for those who choose to live in it’.

That, the Government added, means a private rented sector which ‘offers affordable options for most people, allowing them to benefit from the flexibility the sector offers’. It also means a sector which is attractive to investors, increasing the choice of homes on offer, supporting jobs and creating positive social and economic outcomes beyond only private gain.

The vision is for the ‘affordability, accessibility and standards of the whole rented sector to improve and align’. To help this happen, the Government says it will work with stakeholders to develop a new Rented Sector Strategy in 2021, with a view to consulting on its contents in 2022. Some of the outcomes in the Rented Sector Strategy will require changes to legislation, with the Government saying it bring a new ‘Housing Bill’ early in the next Parliament.

Action will be taken to deal with unreasonable rent increases, with Rent Pressure Zone reformed to allow the Government to take localised approaches in areas experiencing the impacts of high rents.

What action does the Government propose?

In order to provide tenants with greater protections from unreasonable rent increases in the private rented sector, the Government says it will reform existing Rent Pressure Zone legislation, put in place mechanisms to collect robust data on the Scottish private rented sector, and encourage and increase the use by tenants of the ‘Private Residential Tenancies rent adjudication process’.

To strengthen the rights of tenants and give greater protection from unfair evictions, the Government says it will introduce ‘pre-action protocols’ on a permanent basis in the private rented sector, making duties on landlords to work with tenants prior to evictions in the private sector a legal requirement.

It will also ensure that joint tenants experiencing domestic abuse can end a joint tenancy in the private rented sector, and review and consider potential reforms to the current grounds for repossession under the Private Residential Tenancy (to find the correct balance between maintaining tenancies wherever possible and landlords' rights).

To improve and address standards, the Housing to 2040 vision says the Government will progress towards tenure-neutral standards and support work to develop a new Housing Standard for all tenures, review the existing registration and regulation regimes within the private rented sector, and support private sector landlords to improve the quality and state of repair of privately rented homes.

Additionally, the Government says it will establish a Tenant Participation Panel and ‘consider and consult on what additional tools and materials are needed to support both tenants and landlords more effectively’.

Lastly, the Government insists it will collaborate closely with banks and other stakeholders to develop innovative financial products to help renting become ‘an affordable and viable’ long-term option for those who want it. This, it added, could include exploring the potential for ‘combining a mortgage-rent payment during work years, with a rent-free occupancy and pension during retirement’.

How soon will this be actioned?

By its very nature, the vision set out is a long-term one, and it seems likely that dealing with the pandemic and the economic recovery from Covid-19 will take precedence for some time yet. Other major issues such as Brexit and independence are also likely to dominate the early years of this Parliament.

But the Scottish Government has shown before a willingness to make sweeping changes to the private rented sector, and with the refreshed strong mandate it has, winning just under half the vote and just under half of the seats in Parliament, considerable rental reform in the next few years can’t be ruled out.

If you would like to find out more about being a private sector landlord in Scotland, and the challenges and rewards it brings, please get in touch with us at Letting Solutions, West Lothian’s first dedicated lettings agency.

We have the experience and know-how to help you to come to terms with regulation, legislation and possible future changes. We can help you through all aspects of a successful tenancy and beyond. For more information on our current hours of service and ways of working, click here.

Please don’t hesitate to contact us, even if you are not a current client. You can ring us on 01506 496006, where our team are waiting to help. Or you can email us at: rent@letting-solutions.co.uk.

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