 Good morning, everyone. Can I welcome you to the 22nd meeting in 2015 of the Infrastructure and Capital Investment Committee? Everyone present is reminded to switch off mobile phones as they affect the broadcasting system. As meeting papers are provided in digital format, you may see tablets being used during the meeting. No apologies have been received. Agenda item 1 is Declaration of Interests. I would like to welcome Clare Adamson, as a new member of the committee, and I will keep that word to declare any relevant interests. No relevant interests, but I draw the attention to my declaration of interest at thejung to the Parliament. Thank you. I would also like to take this opportunity to thank James Daw Substit Gram for his very worthwhile contribution to the work of this committee over the past year. James will remain as a substitute member of the committee, so in the best Rockstar tradition, we may see him make a comeback on future occasions. Agenda item 2 is subordinate legislation to hear evidence on the draft Classical Government Underprise, and Government Planning習慶 perturbations, and, this instrument is laid under affirmative procedure, which means the Parliament must approve it before the provisions may come into force. Following this evidence session, the committee will be invited to consider a motion to approve the instrument under the next agenda item. Following this evidence session, the committee will be invited to consider a motion to approve the instrument under the next agenda item. Can I invite the minister to make an opening statement? Thank you, convener. Good morning. I appreciate the opportunity to give evidence on the private rented housing panel landlord application Scotland regulations 2015. The repairing standard contained in part 1, chapter 4 of the Housing Scotland Act 2006, covers the legal and contractual obligations of private landlords to ensure that a property meets a minimum physical standard. Despite having a statutory right of entry in relation to the repairing standard, landlords have expressed concern about difficulties they have in obtaining entry to their properties in order to carry out inspections and repairs. That may be for a variety of reasons. For example, the tenant may repeatedly have been unavailable to access after making arrangements to do so, or the tenant might have refused access. Section 35 of the private rented housing Scotland Act 2011, which is due to come into force on 1 December 2015, will enable a private landlord to apply to the private rented housing panel for assistance in exercising their legal right of entry in connection with the repairing standard. If a decision is made to assist the landlord, the panel member must liaise with the tenant and landlord to agree a date and time for the landlord to be given access. The intervention of the independent panel member is expected to result in the landlord being allowed into the property in the majority of cases without the need for legal action to enforce entry. Those regulations set out the content of the applications to be made by landlords and make further provision about the deciding of those applications. They should be considered in context of the wider package of measures introduced by the Housing Scotland Act 2014, which includes new measures to strengthen the repairing standard and broaden access to the PRHP by enabling third-party applications to enforce the repairing standard. I believe that the time is now right for implementing the provisions to help landlords to comply with their repairing standards duties, and those regulations form part of the implementation, as I said, of the wider package of measures that will all come into force on 1 December. I invite members to ask any questions that they have. I wonder if the minister is able to tell us how many cases it has anticipated that panel members of this type may have to deal with. We do not anticipate a large number of cases in this. We based it on around 100 or 150 cases a year. We do not anticipate a large number, but we think that it is important that landlords have said that they are unable to exercise their duty that we have the provision to allow them to do so. On the face of it, the extra cost to the Scottish Government seems a bit high, something in the region of £150,000 a year. Can you explain where that extra cost comes from? It is part of the wider package. The costs are at the high side, I would have to say, in the first instance. Those costs are at the very high side, but, as we know, the PRHP is undergoing a lot of change at the moment to take on a lot of more duties and responsibilities, and there is crossover between that in terms of accommodation, some of the administration costs, the recruitment of staff costs, so that they will transfer between some of the other functions that the panel is taking over. It is not all exclusively for this particular section of the housing act because, given the extension of what the panel is doing, it is not going to recruit just specifically for this regulation, so there will be crossover and transfer, and we are certainly something—you make a very valid point there—that something will be set at the high side and we are keeping our eye on it and we will be watching that all the way through. Anyone else? Are you able to say, minister, what mechanisms are in place to review the operation of those provisions and to make sure that they are tweaked where necessary? We will be constantly reviewing them in terms of the private rented housing panel. Once the applications start to receive applications, we will be able to know then exactly how many applications there are, how often applications are made for this particular regulation, whether or not it is beneficial to landlords as well. All of that will be getting reviewed as we progress with all the clauses of the housing bill. Are there any further questions? In that case, I thank the minister and officials for their oral evidence. The third agenda item is the formal consideration of motion S4M-14634, calling for the committee to recommend approval of the draft private rented housing panel landlord application Scotland regulations 2015. I invite the minister to speak to and to move motion S4M-14634. I move that the infrastructure and capital investment committee recommends that the private rented housing panel landlord applications Scotland regulations 2015 be approved. I invite any further comments and questions from members. The question is that motion S4M-14634, in the name of Margaret Burgess, be approved. Are we all agreed? Thank you. That concludes the consideration of this affirmative instrument, who will report the outcome of our consideration to the Parliament. I will now allow a short suspension for a witness changeover. Resume this meeting of the committee agenda item 4 is the private housing tenancy Scotland bill, in which the committee will continue to receive evidence on the bill this morning from the letting agents and landlord representatives in a round table format. Before we commence the session, I inform members, witnesses and those in the public gallery that they will be invited to be upstanding to observe a two-minute silence to commemorate Remembrance Day at 11am. I aim to suspend the meeting at approximately 10.58 and at 11am I will invite all of those present to observe the two-minute silence. Following the short suspension, we will then resume the meeting and evidence session on the bill. In order to allow for a more free flowing discussion on the bill, the committee has chosen to conduct this session in a round table format. However, we are keen to ensure that we receive evidence on all aspects of the bill and therefore the session will be structured around its different sections. Given the time available, it is therefore important that stakeholders seek to speak on those areas of the bill of most importance to them, and you are not obliged to contribute to each section of our discussion this morning. Members will kick off each of the sections of our discussion on the various aspects of the bill, and I will allow other witnesses to respond should they have comments and then committee members can then be brought in if they wish to add to the discussion. I am now going to ask all of us present for our discussion to introduce themselves. I am Jim Eadie, I am the convener of the committee, and I will move to my left. Jonathan Gordon, I represent the RICS, but not just landlords or letting agents, we represent everybody because we have a royal charter that says that we have to represent the public interest. David Stewart, I am a Labour MSP for the Highlands Islands region. Welcome Warwick, from Let Scotland. Alex Johnstone, Conservative member of North East Scotland. Amanda Vivioka, council of letting agents. Katie Dixon, Scottish land and estates. Mike McKenzie MSP, I am a SNP MSP for the Highlands Islands region. Davie Cox, from the Association of Residential Letting Agents. Claire Adamson, SNP central Scotland member. John Boyle, PRS for Scotland, and director of research at Reddian Co. Adam Ingram, SNP MSP for Kerrach Cymnok yn Dun vagly. John Blackwood, Scottish Association of Landlords. Thank you very much everyone. The bill aims to improve the security of tenure for tenants and provide appropriate safeguards for landlords, lenders and investors. That is set out in the policy memorandum. In general terms, do you think that the proposals in the bill achieve the appropriate balance between improving security of tenure and providing those appropriate safeguards? who wants to lead off on that. The simple answer is no, we don't believe that it does provide and have quite safeguards for private landlords. The important thing to emphasise is that we have no objection to greater security of tenure for tenants. Landlords are in the business of letting properties. We want tenants to stay for as long as possible in our properties. However, landlords are investors, they feel that they need the right to be able to bring those tendencies to an end if the need arises. One of the concerns we have under the current regime is the lack of security and confidence that we have in the current grounds for repossession when things go wrong. Normally, tendencies are absolutely fine, tenants act within the confines of the tenancy agreement and are happy to stay on and good relationships are developed between landlords and tenants. That is mainly what happens in the sector. However, sometimes that is not the case and we need adequate protections for both tenants and landlords when that happens. A fear we have with the grounds that are proposed, we had 17 under the current legislation, 16 under the new proposals in the bill and whilst we have lobbied for some of them to be added in and we welcome some of those additions, we do have concerns in losing the right to bring a tenancy to a natural end at the end of the tenancy. We have got landlords and tenants entering into agreements. Willingly, if we are buying now, only tenants would be allowed to bring those tendencies to an end. We believe that that will be a concern, especially with regards to antisocial behaviour in our local communities and those landlords offering student accommodation, so we feel that there is going to be a shortage of student accommodation in the PRS in the future. Who else would like to come in? Dr Boyle? I have deco John's points. We support more secure tenancies and greater flexibility in tenancies. John's amply illustrated some of the issues with what is called the end of no fault possession. The standard framework that has been proposed for the tenancy framework is not going to be flexible enough to deal with certain groups, especially the likes of students, many of whom only want nine to ten months leases. If the landlord is not able to set a defined tenancy period, they may regard letting to students as more risky and complicated, reducing any supply to this key tenant group. Rent controls are our other main concern. Even if they are relatively soft, i.e. they are focused on rent-pressurised areas where direct government permission is needed to intervene, it has likely caused disinvestment and is likely to be seen as the thin end of the wedge by many small and large investors. The evidence that rents are out of control and therefore need capping is pretty flimsy. What I said at the beginning when I introduced myself is that the RICS does not specifically represent landlord or letting agent interests as a royal charter, which says that it must represent everybody in terms of their interests. In that vein, I am a letting agent and work in that sector, but I am a charter surveyor. Just in looking at the market, there has never been any demand from tenants for longer tenancies or for complete security of tenure. What has always been a demand for is better treatment and enforcement of the regulations that exist already. The repairing standard is one of the best repairing standards that there is in any country that I have ever looked at. The electrical security and gas safety and repairing standards in terms of general items, such as the condition of the property, far exceed anything in England or anywhere else in the UK. That has been achieved over the past few years to great success, but it is not enforced at all. We have had one complaint from a tenant that went to the proud rented housing panel, and it is just such a long, laborious process. The tenant was making a complaint about things that they refused us access to fix, which was my excuse for that in front of the committee, but in the end it was not a valid claim. However, the length of time that took, if the tenant did not have heating or the windows were not being repaired and their children's rooms were moldy and the condition of the property was poor, there was no enforcement likely or any visits to that property or anything like that to happen within several months of that complaint that was made to the private rented housing panel. The research that was paid for by the Scottish Government within the private sector tenants review group that recommended a new type of tenancy found no evidence from speaking to tenants or landlords that there was any requirement for greater security of tenure. In general terms, I wanted to get a flavour from around the table of whether people felt that the balance that the Government has struck in the bill was the right one. In very general terms, if you were to introduce security of tenure in the way that you have in the bill, then I believe that the balance is quite a good one in terms of the rights for the tenant and the landlord. However, I do not think that it is something that is required and I think that it will change the market in a not in a good way. Broadly speaking, I support what has been talked about, but the comments that have been made about the student market are demonstrative of how large a part of the market there is that is actually not being adequately catered for in what is currently being set out. The idea for longevity of tenancy is a good one, but it only rarely applies to about 25 per cent of the market, and 75 per cent of the market needs to have greater consideration in relation to its ability to have shorter and more defined terms of lease. I am very supportive of what has already been said. The original tenancy regime, which was created back in the 1980s, was fit for purpose for a much smaller market than exists today. Therefore, looking at this, as is also being done in Wales at the moment, revising the tenancy frameworks that it is fit for the 21st century and 21st century renting is very important. However, in general terms, we do not agree that there is the right balance at the moment. I think that it is weighted in favour of the tenant over the landlord at this point in time. We have got two key aspects of the bill. One is the loss of the no fault possession, and the other is the rent pressure zones. We are worried that, particularly about the student market today, we have heard that there are parts of the market that, although the aims of the bill are very laudable, they will have unintended consequences and will end up hurting the people that they are designed to try to help. I echo a lot of what has already been said. We support the new tenancy. We think that a simpler system where both landlord and tenant understand their responsibilities is very much supported. However, we do not feel that the grounds offered are robust and comprehensive enough to make up for the lack of ability to end a tenant at the end of the contracted period. We echo what Jonathan said. We would like to see more enforcement of the current regulation to ensure that high standards are achieved and that we have a professional sector. I think that, as a letting agent, one of the main concerns that we are going to be is investors coming into the market. I think that, with the removal of the no fault ground and taking away the ability for them to take the property back, we are going to see a fallen investors wishing to buy people with pensions, etc. Just wishing to buy one property, I think that they will be scared of going into the market. They will see it as high a risk and they will look to invest their moneys elsewhere. All of our witnesses have contributed so far. Would any of our members like to come in? Mike, do you want to come in? No, I am all right for the moment. You are okay for the moment, that is fine. I think that that is a useful starting point to our discussion. Can I move on to the initial tenancy period? The bill proposes that there will be an initial tenancy period of six months unless the tenant and landlord have agreed on a shorter, longer initial period. That has been criticised by some of the tenants representative groups, such as Homeless Action Scotland and NUS Scotland, who have told us that they do not see a need for an initial tenancy period. Citizens Advice Scotland and the Living Rent campaign have said that this could be a problem for some tenants, for example, where a tenant is a subject of domestic abuse and needs to leave the property quickly. Do you have a view on that? Can you just, for the record, state what your position is on the initial tenancy period of six months? We think that the initial period, as it is drafted, is suitable. We think that it is essential, so that the landlord has certainty that there is a commitment there for the tenant for a certain period, but it also protects the tenant from certain grounds of eviction, which we think is essential as well. I would agree to a large extent on that one, but when we are looking at only the tenant being able to bring the tenancy to an end, except using the ground, what is the purpose of the minimum six-month tenancy, particularly from the tenant's point of view? It gives a level of certainty, but a minimum tenancy would work with a no-fault possession ground. It would not necessarily work as well when the grounds of possession that exist in the bill are in place, and there is no fault possession ground. Anyone else? Of course, Adam. I just wondered, is it appropriate that a landlord or their agent can evict somebody from their home without a specific reason? You seem to be advocating that the landlord should be able to do that at will. That is our next section. Yes, I know, but he raised the question on the initial tenancy. No-fault possession grounds are used predominantly because they are the easiest method of regaining possession of the property. The current possession grounds take a lot longer to actually go through the courts, as Jonathan was mentioning earlier. Having the no-fault possession ground means that landlords have a degree of certainty that they will get their property back, and when we are talking about the sort of investment that we need into the private rental market to actually deliver the number of houses and the quality of the houses that we have, giving landlords the certainty that they will get their property back if they want it back is actually a very vital part of how the private rented sector has grown since the regulatory liberalisation of 1988 housing acts. You seem to be arguing no balance at all, basically all the balance of power, whereas in the landlord's hands, in those circumstances. I think we need to factor in the difference between the legal framework and what is normal business practice. A landlord is not going to evict a tenant because they've had enough, they want a new tenant. The most effective way of generating rental income is having a long, well maintained tenancy. For a landlord, an investor, for a letting agent, that is how they are making their money, how they are keeping the property afloat, how they are paying the mortgages. Therefore, when a tenant is occupying the property in a tenant-like manner, keeping the property in a good condition, paying the rent on a monthly basis or a quarterly basis whenever it falls due, the landlord and the agent will want to keep that tenant for as long as humanly possible because you don't know whether the next tenant is going to behave in a tenant-like manner, is going to cause antisocial behaviour, is going to damage the property, is going to pay the rent on time. Therefore, whilst we are talking about the legal framework here, we have to factor in what is common business practice. And even when we've got six months, 12-month tenancies, if the tenant is a good tenant, the landlords and the agents will are unlikely to increase the rents at renewal stages because they want to keep that tenant, they want to incentivise that tenant to stay. Therefore, landlord possession cases only come about when there is a problem. It is not, I've had enough of this tenant, I want another tenant because you have to factor in the actual costs involved in ending one tenancy and starting the next in terms of loss of rent. You've also got the void period to cover, letting agent fees a second time, all the marketing activities. So, we are talking a considerable amount of money and the idea of putting up a rent by maybe £10 a week will be negated if that tenant leaves and the landlord will end up making less money because of the void periods and the tenancy change over costs. So, whilst I would argue that the current framework provides an adequate balance between landlords and tenants, we have to factor in both the legal framework and the normal business practices and market economics. Yes, as far as the initial tenancy period is concerned, I wasn't sure whether you approved that or not. We would support the initial tenancy period, but it would make more sense in this context with a no fault possession ground because otherwise, to a large extent, what is its purpose? Mr Blackwood, one issue that I think is important to remember is that the Scottish Government's intention behind the bill was to grant security of tenure to tenants in the private rented sector. The initial period of tenure of let is an important part of granting that security. You will be aware that there are some grounds within the proposed bill whereby landlords cannot use those grounds within initial periods. If there wasn't an initial period, then landlords would be able to use all those grounds. If we are trying to grant greater security, as well as cohesion and stability within our local communities, initial periods of let are essential in order to do that. That is why we would advocate that it is an important part of a new tenancy regime, whatever that period of tenure is. As an important point has been raised about what, if you have relationship breakdowns, in the current regime, we have the ability for tenants and landlords to bring tenancies to an end by mutual agreement. That works very well. If both parties feel it's time to move on, then that can happen. That often happens with tenants who fall out for what, whether in a relationship or not, they approach the landlord and say that there is no longer accommodation that is suitable to us, given our circumstances, can we agree to bring the tenancy to an end? That is an important part of the tenancy regime that should be maintained and is not within the current bill, and that is why, within our submission, we are asking for that to be reinstated. Is there anyone else on the initial tenancy period, Mr Gordon? I understand that it is legally very sensible to have an initial period, otherwise it becomes a short-term tenancy for a number of people who would use it for holidays, or I think that that would be going a step too far. I will come back to the stuff about when you end a tenancy without any reason, because it is not something that is evidenced that people are actually doing that. Within the six-month period, we've often allowed people to leave when they've got circumstances for the FUD to go, and then we've just, if it's been straight away with it, so tenants who've moved into a property and they've had to leave, there was one actually where we took over and there was a domestic violence issue, and we dealt with a support worker who was helping them, and we just managed to meet them, get the keys, got the property cleaned, packed their stuff up for them and advertised it and had it re-lecked within a couple of weeks. A good landlord and a good agent is the type of thing that you need to encourage and better regulation of the sector is something that will help that, but that's not part of this bill. It just needs to be enforced. Other parts of other housing bills need to be enforced better. Did you want to come in, Mike? Yes, convener, and it's slightly tangential, but just to perhaps promote a more a better discussion, because I feel a wee bit we're locked into a situation where, by so far witnesses have suggested that the status quo is almost perfect and that there's therefore no need for the legislation. I'm beginning to think that I must live in a parallel universe where maybe things aren't quite so perfect, because first of all, looking at my inbox, I'm currently dealing with and have had over the last four years a great number of cases that seem to indicate to me that things are not as have been suggested here this morning. And a typical scenario is the tenant complaining about problems with fundamental things like heating systems not working in the winter, and landlords evicting them because they've had the temerity to complain about this and that these faults have been not remedied over several months. And then sometimes in the same property, you find yourself engaging with another tenant with the same problem six months or a year later in exactly the same property, same landlord still not fixed the heating system. And I describe that as just one scenario, but it's typical. And if I add that to my own experiences, because living in the Highlands and Islands, I'm obliged to rent a property in Edinburgh. And if I can say to you that my background man and boy, I built, repaired and managed properties, and I'm absolutely appalled at the experience I find for the first time in my life being a tenant in a private rented sector, both in terms of the quality of the experience and the knowledge of the people that I've unfortunately had to deal with in this sector. So, you know, and I'm not making any of this up. Those are my honest belief that the system is not working well, and yet what I've heard from every witness this morning suggests that it's almost perfect and it doesn't need to be fixed. And I'll offer that, convener, really to promote what I hope can be a more honest discussion. Thank you, Mike. Do you want to come in, Mr Warwick? And then I'll bring in Mr Blackwood and Mr Godd. Thank you. Thank you, convener. Mr MacKenzie, I think you're absolutely right. There is definite opportunity for improvement. I couldn't agree with that more. The cases that you talk about are, I'd suggest, not frequent in terms of how one looks at the overall market. It's not to say they don't exist, they do exist. And compliant landlords, compliant letting agents, we all wish to try and rid the marketplace of that kind of practice. And the reason that we're sitting here right now is because there is a large consensus amongst the marketplace to actually try and get this right so that you don't have that experience. I'm a letting agent as well, one or two of my colleagues here are letting agents, and we would all advocate that our landlord clients support us in trying to deliver good service. And I think we can do that. I have this vision that there's a bigger picture that we're all trying to strive for around this table, which will in the next five to 10 years time deliver a housing market that is very, very different to that which exists today. The tenure mix might be different, the ownership structures and things like that may be different, and as a result of all of that, the kind of circumstance that you're talking about will hopefully have been driven out of the marketplace. So in looking at the kind of changes that we're doing here, it's got to be joined together. And I'm going to digress just for a moment to things like the Chancellor's changes to the tax regime for a landlord. Now I think generally speaking those are a good idea, but it's got to be done in such a way that it joins up with all the other different aspects. So if I then come back to what Mr Gordon was saying, the repairing standards have had regulations in existence for some years in order to address the kind of circumstance that you've just talked about and which I often refer to the kind of the interaction between probably the poor landlord who owns a substandard property led to a tenant who is actually less able to look after themselves perhaps than others. That doesn't obviously apply to you, you're very able to look after yourself and still have had a poor service. So all in all what we're here today to do is to try and create something which actually addresses us. We don't think that things don't need to change, we do, but we've got to make sure that we get the joined up answers. To reiterate some of those points, convener, I think it's important to stress that all the organisations around this table would say that we support a well-functioning private rented sector, that's important for us. One of the deterrents in achieving that is bad landlord practice from landlords and letting agents too. What we feel is that we need stronger enforcement of current legislation to address exactly the issues that you're mentioning within your constituency. It's unacceptable that landlords and letting agents flout the law basically. That should not be the case and action should be taken. Not only should the tenants be granted greater security and not feel the living in fear of being evicted effectively as you're mentioning, but those landlords shouldn't be allowed to operate, they shouldn't be allowed to let. We have existing legislation passed by this Parliament, which is more than efficient in dealing with that. The issue is its implementation, not the law itself. Will you expect your organisation to bring forward proposed amendments to achieve that or not? Yes, indeed, and we're looking at many ways of doing that. What we're trying to do is allow that experience to become a better experience in the private rented sector. That's in all of our interests. We want the PRS to be a housing option of choice, not of last resort. Part of that is the security of tenure. We do understand that, but by taking away that no fault ground, as we refer to it, is disincentivising investors, encouraging them to sell up and move out the sector. Those are good, well-operating landlords in the sector that we want to keep and we don't want to get rid of. Perhaps a half-way house that we've been talking about for some months now is that it would not be better to keep the no fault ground but make the period of notice that a landlord must give to be much, much longer, therefore granting security and encouraging the tenants to take the action in the cases that we've been talking about. Okay, thank you, Mr Gordon. In response to what you said, I remind you again that we don't represent landlords specifically in the RSS, I do. I was a letting agent, but I took over the role of PRS forum chairman in the RSS a few years ago. As soon as I did, the first thing that I did was met Douglas Robertson, who ran the tenancy review group eventually, and told him, because he'd led a consultation in something similar, that they needed to change the tenancy regime, get rid of all the complex paperwork, introduce a new tenancy that was much simpler for tenants to understand and be able to enforce their rights and for landlords to understand the rights as well, so that they could evict tenants, because very often landlords would get into difficulties with tenants not paying, don't have the right paperwork in place in order to be able to evict that tenant. So we're delighted that a new tenancy regime is being brought forward, and we were one of the few advocates of that within the tenancy review group that advocated it and recommended to the First Minister that it should be done. But nobody imagined that this is the position that it would end up in, removing the no-fault ground that has been there, and that's primarily because there isn't any evidence for that. What there is evidence of is some very bad practice in a proportion of properties, which are rented out by landlords who misunderstand the law, think that the property is still theirs in effect, more than it is. They don't understand the fact that the tenants have the right to occupy the property as their home and feel that they're almost just like a visitor in the property, and they can do what they like, they can come and go as they please. That type of practice needs to be weedied out, but those types of landlords will still operate under the radar, and what we need is enforcement of the existing repairing centres, which were strengthened by, again, the RICS, leading on that with the National Electricians Council, recommended that the repairing standard was improved and that's happening this year. There are electrical safety checks, more main smoke alarms, carbon monoxide alarms and portable appliance testing is all mandatory within the next 12 months, and that's all come about through RICS and other landlord bodies here, recommended that this should be done. Those all primarily protect tenants from poor landlords who don't manage the property as well, but what this bill is in danger of doing in our view is putting off the large number of corporate investors who we need in the market to improve the sector. If we take a property that you might live in, imagine that you're living in a one-bedroom flat in Gorgie, where the landlord, we meet them all the time, they have no proper heating system in the property, they have a couple of portable heaters, they have no proper decent windows, so their old single glazing are not particularly great, but you could argue that it meets the repairing standard, because the windows are there, they're not broken, it does have heating that meets the repairing standard, but that landlord says to me, well, why should I put in a gas central heating system and replace the windows? Will I get more rent? And I say, well, no, probably not because there's no properties available and tenants have to take it. What we need is blocks of new build properties, people coming into the markets, corporate investors to improve the sector, and although I do have some sympathies with the no-fault ground and the skew to obtain for tenants personally, I have invested clients, not enough, but ones who want to invest in the sector on a corporate basis build blocks of flats and they are pulling out of the market and making decisions not to, and we've had leads that we've put to them that they are no longer looking at for pieces of land to build houses on, and it's very specifically because of the rent control pressure zones and because of the lack of the loss of the no-fault ground. If you look at the student blocks of flats, as an example, the ones where they're built specifically for students, they do charge far higher rents than maybe I would think they should. £800 a month is the latest one, I believe, coming on, but the level of equality in those properties is amazing. When you go into the properties, they're well maintained, they get service, everything's fixed immediately, and they get a very, very good customer service within those properties. If you go to a typical HMO flat, managed by a landlord himself, it's average quality, but there are a number of properties that I've seen or taken over, managed by agents, where it's hard to believe that people are living there even though there's an HMO licence and we don't understand why the council has granted a licence for it, but it's not within the remit to say that it's not a particularly good condition. If you want to improve the sector, you need more investment, and there is a danger that this bill goes slightly too far just in terms of those two issue rent protection zones. Just to take Mr Mackenzie's point, we, as part of the CLA and a letting agent myself, I'm actively welcoming the proposed regulation of letting agents because I see that that's the one way that we're going to be able to improve the housing stock and make letting agents that present maybe 50 per cent of landlords in Scotland make them accountable with a code of conduct that they have to answer for if they are providing properties that are substandard, lack of communication and lack of repairs, so I actually welcome that. In terms of the minimum length of a tenancy, you've got to remember that a lot of landlords maybe have one or two properties and they're not all getting eight to nine hundred pound a month rent. I mean, my agencies are in Angus and I have properties myself in Angus, and warm bedroom properties are anything from £250 a month up. Now, for landlords, there's costs associated with a landlord putting a tenant in the property. They do all the credit checks, they've got to do all the safety checks when a tenant goes in, and there's lots of due diligence, and they will have a void period where that property is empty that they're accounting for. If they then absorb all of that cost and put a tenant in, and that tenant can leave at any point, after that point, then the landlord will just make a loss. He won't be able to afford to take the risk of making that one-bedroom property, which is affordable housing for some people available. You might be in a scenario where he starts to sell that property, because it's not viable for him anymore. For me, six months—the other thing you have, if you don't have the six months, landlords might start to take shortcuts. They might think, well, you know, this tenant might leave in two or three months. I can't afford to do a credit check or my pat testing, et cetera, so it could have implications on that as well. The other thing that I find my experience of the no-fault ground is anti-social behaviour. Instances by tenants are creating a really happy environment for their neighbours, and the quickest route to sort out that problem would be to give notice on the no-fault ground. It's very difficult and a long process to try and persuade neighbours and people living in that community to give evidence for anti-social behaviour. It can drag on it, and people are quite afraid sometimes to give that type of evidence. By having a no-fault ground to end the tenancy, we'll enable us to deal with that situation quickly for the benefit of everybody living in that community. I was going to do the removal of the no-fault ground for repossession, but I've pretty much done that today. Initially, is there anyone who has anything to contribute in that who hasn't had the chance to do it yet? I'd just like to say that, going back to Mr Mackenzie's point, we don't agree that the current system doesn't work. We very much support what the review group said, and new tenancy is required. It doesn't work for tenants if used to describe their problems. It also doesn't work for landlords, and that's why they're having to use what we're calling the no-fault ground, which is unfortunately named because people won't ask a tenant to leave when there is not a problem or that the property is not needed for a legitimate reason. I would like to read to you from the review group's report. It said, what would be put in its place following the modernisation exercise would be a clear route for landlord repossession, where the tenant was found to be in breach of the new private tenancy or following the expiry of the agreed tenancy term. We're a bit concerned that that hasn't been recognised at all by the Scottish Government of why they're choosing to go against what the review group stated in their final report. Without the no-fault ground, the grounds have to be absolutely watertight in order to get the investment and the confidence from landlords and investors, and at the moment we feel that there are holes there, and therefore the need for the ability to end at the tenancy at the end of the contract is still absolutely required. The Government and some of the witnesses have spoken to have expressed the view that removal of the no-fault ground will increase the confidence of tenants and allow the private rented sector to become a more long-term housing option, and that could, in some cases, be viewed as a positive by some landlords. How do you react to that point of view? It could be a positive if the grounds are robust enough that landlords have confidence. From a rural point of view, we are working on quite a different background to where a lot of that has been drafted, considering that an urban tenancy is probably only about 18 months length that our tenant's tenancies in the rural sector are tenancies for much, much longer than that, and that all works rather well. The no-fault ground is used regularly because the other grounds do not work. It is also often used to a tenant's benefit. We have a lot of landlords who have experienced tenants coming to them and asking for their notice to quit, because they are struggling either with the rent or the location. They want to move near family and services, but in order to get on to social housing, they need to have a notice to quit. In this situation, they are not going to be able to come and ask for a landlord who will not be able to provide that, and that puts tenants in a very difficult position. They will either have to breach their tenancy, or they will have to stick it out in a property or in a location that is maybe not suitable for them. What I am fishing for is that anyone has anything positive to say about the removal of the no-fault ground? Mr Black, would you want to come in? Perhaps looking at it from a slightly different perspective, convener, is that if we had full confidence in the existing system, the grounds for repossession and in the proposed new grounds, we would feel that there is no need for a no-fault ground, because the only reason why a landlord would use a no-fault ground would be when something goes wrong, i.e. there is a fault, but it does not come within the categories of the grounds that we have at the moment, or where the actual grounds that we have are not sufficient, and they do not deal with the problem. Two of them, one being, first of all, anti-social behaviour, is that there is nobody in this land who would actually take a case to the court under the current system on an anti-social behaviour ground, because it is so difficult to prove that evidence through the court. You are requiring on neighbours who often could be living in fear of the tenant next door to them engaging in anti-social behaviour or feeling intimidated by them. Those neighbours need to take action. They need to stand as witnesses or give witness statements under the current regime. They are often frightened to do so, so that leaves the landlord with no alternative in those scenarios than to issue what is called a no-fault ground, the section 33 notice. In the future, if we do not have that, what is going to happen to those communities? How are those neighbours going to feel? It is fine granting greater security for that tenant, but what effect does that have for the wider community? Part of the reason for greater security of tenure is to create sustainable communities. That is an issue that we need to take on board and think, will it actually have that effect or be more detrimental? Under the new system, it is exactly the same ground. We will be needing those neighbours to take action and stand as witnesses, and we feel that that is unfair on local communities to have to be put through that simply for one policy issue. There is no point denying that there is not a problem with the PRS. There are problems with the social sector and with the owner-occupied sector. I do not think that you are living in a parallel universe. I just think that you are probably only seeing a part of the universe. To set things in context, I do not think that you are going to complain or go to your MSP if you are happy in your tenancy. You are going to go to your MSP or to organisations such as Citizens Advice Bureau or Shelter if you are unhappy in your tenancy. That is why you are seeing part of the universe. If you put it into context, those are Scottish Government's own figures. 85 per cent tenancy satisfaction with providers in the PRS. A direct quote from the Scottish Government's review of the private rented sector said, vast majority of tenants are satisfied with their landlord agent and their accommodation. A survey of 6,500 private tenants by letting stats showed just 14 per cent of sitting tenants experienced rent rise. 90 per cent of tenants said that they never experienced an unjustified rent increase. According to the Scottish House condition survey, only 6 per cent of properties were below tolerable standards. For the proposed PRS dwellings, meeting the stringent Scottish housing quality standard broadly reflects that recorded for local authority and privately owned stock. We have to set it in the context that the vast majority of landlords and tenants within the PRS are happy and satisfied within the PRS. The danger is in drafting legislation to tackle those rogue elements of which there is already legislation to deal with through landlord registration and enhanced enforcement areas, which Glasgow City Council has now applied for in Govan Hill. In dealing with those rogue elements, we actually hamper the rest of the sector and its ability to grow. The final question that I want to ask is one that we have already heard particularly from one witness about. Do you believe that the removal of the no fault ground for repossession will affect investment in the sector? Mr Gordon and then Mr Cox have already affected it. In a perfect world where you started with a blank sheet, that is maybe what you would do, but everybody here should be aware of all the discussions about building a private rented sector where you are building blocks of flats that you have in other countries. One of the biggest problems that we have, which I did not quite finish when I was referring to your point, was that the way to get that flat with the poor condition fixed is to have a block of good flats next to it, because then their market rent will suffer because people will not rent it, and they will have to reduce the rent or fix it. The bill does not fix that because, regardless of whether it is a good measure or not, the sentiment that is felt amongst the corporate investors is that, yes, they currently have lots of money floating around within the investment market to invest in things like housing, but why would they invest it here rather than in England? That is the choices that they are making, but very often it is European funds, and they have multiple choices across Europe to do that. If the no fault ground was needed, I think that it is a very good bill, but I just do not think that it is needed. It is not the problem, it does not fix the problem. The problem is the rogue landlords who still do not have a lease that is drafted properly. There is going to be a prescribed lease within the legislation, and if somebody could take a note to please stop calling it a model tendency, because then people will think that they have just got to model it on it, it is going to have specific clauses in it that must be adhered to and copied word for word, then it should be a prescribed lease rather than a model lease. That lease in itself will identify the repairing standard that should be included within your lease at the moment, but very few people do, so tenants rarely understand what their rights are that they can enforce, and by having that and then strengthening the private rent to housing panel, if your heating is not working, you complain to the private rent to housing panel, it is no good to send in a letter to the landlord asking him to give them three months to reply or a month to reply or whatever it is. You need to have immediate enforcement so that you would send somebody out to actually check. Meet the tenant, they can invite them into their home because it is their home and they have the right to bring anyone in, check if there is a problem and then take action on it. That kind of enforcement is, I think, it is not an insignificant proportion, it is not tiny, it is not small but it is small enough that that would not be a huge cost to have that kind of enforcement and have surveyors or other qualified people who sit on housing panels anyway made available to pop in and I would do it for nothing to pop in to properties and check if there is a basic problem. Well Barry Stocker, he can name him, so he was involved heavily in the drafting legislation as one of the civil servants. He is the civil servant who represented the Scottish Government in most of the discussions with stakeholders regarding drafting the legislation. For anyone who is watching at home, who does not know. So Barry has engaged with all the stakeholders like ourselves that are here today and other groups and without naming the other person on the side, there is somebody who is a big advocate who works with investors and is very against the idea of removing no foreground because they want to see better properties and they have said that if they lose their job then they are going to go out and start a vigilante group to go out for the rogue landlords in a jokie way but that is the problem is that rogue landlords are not being tackled and this bill doesn't help that so we need to have good enforcement of what's already there and better investment in the sector to drive up standards. I would echo pretty much everything that Mr Gordon has just said. We are already seeing with the idea of this bill coming into force institutional investors particularly who were looking at Scotland are seeing the other nations of the United Kingdom as better investment opportunities particularly London but now as well Cardiff is going through a very similar tenancy reform programme they've kept the no fault possession ground in the Welsh bill, the renting homes bill in Wales and actually it goes back to something that you were saying around the heating system and being evicted the retaliatory eviction aspect and to try and overcome that one in Wales and in Westminster as well they have kept no fault possession but put restrictions on where tenants complain about quality of the properties and I would echo very much what Jonathan was saying that investors will be looking for regulatory certainty constant changes in legislation do not help in fact they massively hinder investment in the sector it's why organisations such as RICS have been talking for 20 30 years about how do we get more institutional investment into the UK's private rented sector in all nations of the country how do we replicate the sort of levels of institutional investment that exist in most other mature private rented markets Germany France the United States it is because they've got much greater regulatory certainty laws aren't changing on such a regular basis and they don't have the problems again echoing what other stakeholders have said around the enforcement aspect why do you think it's not possible for there to be stronger enforcement of existing legislation and the end of the no fault repossession why can't they be I would argue that they're two they're two very different issues enforcement is one of the biggest problems in this industry not just in Scotland but across the United Kingdom we just don't have the necessary level of enforcement activity and something that we're very much arguing for is that local authorities the prosecuting bodies should be able to keep the fines those fines should be ring fence for greater enforcement activity so that at the moment in the times of austerity that we've got local authority environmental health departments trading standards departments are revenue drains on council resources as opposed to revenue generators if we can flip that balance we can have more enforcement officers doing more prosecution to actually rid the rogue element of the sector but I don't think this bill will actually assist in that it's looking at a different issue whereas I would argue that the big problem that we have is that the legislation exists and there is a lot of very good legislation in Scotland and it's coming in Scotland under the letting agent regulation we need proper enforcement to get rid of a tiny minority who bring the entire industry into disrepute okay thank you mr Fyorca go back to mr johnson's point about the no fault ground and will it have an impact on investors we're talking about large investors but you've got to take yourselves out of the cities and look at the small towns and villages around scotland which doesn't make it viable for large investors to invest in that area to provide housing and the people that are buying houses in that area are the small landlords that have probably lived in that small town that are buying that property and it's those people that are worried and those people that are scared that the no fault ground will take away their flexibility to take their property back and it's those people that will stop investing and that will have a huge impact in the very rural and small towns and villages across scotland Mr Blackwood and Lynn it's really to pick up on Amanda's point there that she was making convener that at the end of the day landlords are investors in the sector not just as institutional investors or in our big cities but in our rural communities as well too and if you're telling any investor on any sector that you know what we're going to limit potentially your ability to sell this investment to move back into it if you want to use it for your own use or indeed bring it to an end when the situation goes wrong then that naturally will have an effect long term on investment in the sector and that's what none of us want. I agree with a lot of what has been said particularly from a rural perspective our members aren't necessarily going to run away from from their housing stock they may look however to to assess it and unfortunately it'll be the affordable housing that they're currently offering that will probably take the first cut if they do decide to change their portfolio at all. The other thing I just wanted to mention is that we do have a private rented sector champion who was appointed by the Scottish Government to attract more institutional investment. I don't want to speak on his behalf but as far as I was concerned during the consultation stage he had very similar concerns to what we're talking about. I just wondered if our guests agree with me that over the last 15-20 years the private rented sector has represented not a good investment but a superb investment and that the evidence for that is the growth of the private rented sector a phenomenal growth we've seen over a fairly short period of time the evidence is the continuation of the availability of finance for the sector and buy to let mortgages and such like continuing right throughout the credit crunch and that the evidence for that is in the huge differential between the cost of home ownership and home rental and so what we're talking about I just you know just to put this in context is perhaps the difference between this being a superb investment and maybe not quite such a superb investment and I think you made your point well. Who wants to tackle that? I'm keen to be get through as much of the bill as we can. Mr Gordon. So the superb investment part of it is primarily related to the capital value of the property and one of the things that I'll come on to later when they talk about rent controls is that it's the capital value of the property and the lack of available land for housing and the cost of land for housing and the value of housing that is the problem it's not the rental price and it's not the condition of the rent properties related to that income so most of our landlords we've got probably 50 percent I would guess we started eight years ago and maybe 50 percent are didn't really mean to be landlords they couldn't sell their property or wasn't able to sell their property and get their money back for their mortgage and they are renting out the property and especially with all the new changes that we've actually advocated in new smoke alarms and things like that some of them are making no money this year or or previous years so it isn't really the rental that's the issue it's the capital value of the property that's making a superb investment and that's a separate issue but it is still a stupid idea. No not in every not in every area so only in some areas so the value of your property that you bought in 2008 in Falkirk will have gone down by a significant value and you will be making significant losses and you will be renting out your property at a loss as well based on the mortgage that you're paying and that's the only example outside of Edinburgh I have but I'd imagine other people of examples of course. I think that again it's important to set it in context. The average gross yield on a biotelect property UK wide is 5.8 per cent net yield is around about 3 per cent you can compare that with the net yield on commercial property which is around about 6 per cent as mr Gordon said I think you know the reason that most investors are in the biotelect sector isn't because they're making a killing on rents it's for the capital appreciation over the long term. If you go back 40 years in Scotland say back to 1975 the average annual capital appreciation in real terms is 1.8 per cent which is fine if you think compound that over 40 years and you've probably got a decent pension but it's fairly modest and it swings and roundabouts between 2001 and 2007 if you get into the housing market in 2001 between 2001 and 2007 property prices doubled. If you get into the housing market in 2007 it's likely in real terms on average you'll be making a loss of around about 10 to 15 per cent and that again varies by location across the country. Some of the studies that have been undertaken on comparing home ownership with rental accommodation in my view are very misleading what they tend to do is to just look at the mortgage against the rent paid very simplistically for different house types across the country they don't take account of the size of deposit that's been put down for the mortgage property they don't take account of the refurbishment they don't take account of other costs such as insurance what we need is a better kind of evidence base I think. We're going to move on to another section and clear Adamson's going to introduce that. It's something we've also already touched on is trying to get a bit more information about the effect on the student and holiday light part of the economy in this area and I was just wondering if there is an exception in the bill for student accommodation in which relates to status of the landlord where it is an educational institution but educational institutions also do holiday lights in areas as well and I just wondered if you had any comment about that part of the bill. Mr Borek. Thank you convener. I think this is an area which is of great concern to the industry as a whole. Tourism is something that needs to be looked at and the leisure industry that looks for the holiday lights but to start with if we can look at the student side which you've introduced there the student by its very nature is probably going to rent from for a period of four years at the most they're going to graduate move on in their lives and in my experience as the letting agent there are two requirements from the students one is either they wish to rent their accommodation on an annual basis so that they don't get moved out in order to accommodate holiday lights although there are the others who actually wish to rent for nine or ten months to allow for the whole day activity to take place now the floor I think in the way that the bill is drafted at the moment means that the typical student is going to be presented with two different things on the one hand they're going to be offered an opportunity from the university accommodation which is going to be telling them they can have it for nine months then the rest of the industry the private landlords who've got the HMO properties and that kind of thing are going to be offering them something totally different which is actually currently what is suggesting is that the tenants are going to be offered to come into a property and at their behest at some stage in the future three or four of these tenants are going to get their heads around the idea that they've got to serve a notice to leave on the landlord to say when they're going to go now we'll probably come to talk about that in a little bit more detail but the my initial response to your question is that there is a huge area around here which needs to be investigated Dr Boyle has talked about some statistics and things like that I think there's a huge area around this particular part of the marketplace as well that actually needs to have some statistical elements brought into it so that we can actually examine what the market needs because this doesn't meet what needs at the moment Mr Blackwood Just to pick up on some of those points again I think that it's a particularly unique sector the student sector in Scotland we're talking generally about security of tenure for all tenants and you can argue why should students be any different to anybody else but it is a unique sector and I think that cognisance of that should be given in any production perhaps of a new ground for repossession my initial reaction is I think it's unfair that particular landlords like the educational providers have the right to bring the tendency to an end but then individual investors who are in the same marketplace are not allowed to do that we would say that's anti competitive one of the reasons why it's a good idea to have that perhaps ground for repossession is in order for students to plan for the future so that they know where they're going to be the next term maybe in the first year they're in halls they're within these educational establishments but that's for a fixed period then they have to move on and and often they choose to move on you know students many of us have been there where you think it's a great idea to share with your pals in a flat you don't want to be in halls anymore and then a year later you decide something different but nevertheless that's the marketplace but importantly parents are looking for their kids to be accommodated so the market is such that at the beginning of the year around spring time Easter time they're actually looking to secure accommodation for the next academic year so September October time now the students themselves might not be too worried about that but I'm sure their parents are because they want to get the best value for money that they possibly can and know that their son and daughter are not going to be scrambling for accommodation at last minute we've taken away the no fault ground and not having a provision for student accommodation that will mean that that market will change dramatically so there'll be fewer properties available when students are actually looking for the properties what will that mean inevitably rents will go up and there'll probably be a sacrifice of accommodation standards as well too so overall we don't feel that that's productive for the sector at all the answer just to remind everybody there are three different parts of the student sector so those are the part that's excluded that's owned and operated by the universities themselves and they won't operate under this tendency and they don't operate under the current short-short tendency then there's the investment market where they've built blocks of student housing specifically for the student market and they rent out the rooms as well as represent the RCS here I've represented the RCS on the PRS working party which is run by Jerry Moore and he's not here today but that's looking at getting more investment into the sector so they are dealing with the investors who have these student blocks and are considering building more of them in Edinburgh and there is a big fear that that some investments will be withdrawn if this goes ahead and some of the current investments will fail to meet just basically their targets and they will have funding for running those developments and they'll have planned for 10 months to let some of them to students and then renting them out for the summer to the festival or whatever in Edinburgh in particular and to change something and change their business model when they've already invested some of these blocks have just still been built at the moment and they've invested in them I think is an unfair move to make and some exemptions should be made if not allowing a new ground for eviction but the biggest thing is that everybody that's been to university knows that you plan ahead for your accommodation and these blocks need to plan for their new people coming in and be able to offer them accommodation if students are able to stay in their property as long as they want and then just tell them well I'm off I'm quitting university I'm going around the world and say they're suddenly leaving at any particular time how's that that room is then going to be empty and how are they going to fill it in March when there's no new students coming in so it's not a clever idea to include students and I don't really understand why it got included in the first place I don't think anybody's asked for it shelter have not asked for it none of the organisations that I'm aware of asked for it perhaps other than the national union of students in their considerations but that students are living in rooms for the term and then leaving very often and to consider them amongst normal working people or people who are renting a home is totally different. So one thing that the RSS was particularly concerned about which is in the third sector so having mentioned that one I think that's a big issue but a separate issue is in all the HMO properties and other properties rented to students in Edinburgh where again for the festival has anybody spoken to the tourist sector or visit Scotland about the impact this is going to have on availability of accommodation so already there is a huge shortage of accommodation and we know of a letting agent which specifically focuses on Edinburgh festival lets and they work with the students the students clean the properties clean all the bedding and get the properties ready for the people coming for the festival for that month of august and all that requires huge amounts of planning by not just the owners but the agencies working on their behalf for all these tourists from America or wherever who are coming and thinking about coming next year how are they going to plan for that it's just so a major rethink has to happen regarding that for both those types of properties for the individual investor with the next more property what was my last word so I think that was a major part of our our thinking within our forum was that they need to consider and discuss this in more detail with the Edinburgh festival organisers and Visit Scotland just in terms of general tourism for Edinburgh and other areas because I guess tourism I don't know Glasgow and Aberdeen but they must require that kind of accommodation during the summer as well. Thank you Mr Gordon and my apologies for the distraction. The policy memorandum in paragraph 68 for the bill states that the Scottish Government considers that all tenants including students should have the same security of tenure and that practices could be adapted in order to medicate the impacts of the new tenancy such as engaging effectively with tenants to establish their plans to remain or to give up the tenancy and marketing the properties for a shorter time frame. Is there something that people recognise could be possible? We've only got a small number of HMO properties and we try to engage with them in the current system. It is almost impossible to engage with students to understand what their plans are already. If they then realise that they don't have to do any planning at all until they decide to leave it will be well the sector won't survive it in the same way as it functions at the moment I don't think. Dr Boyle, there's a question there about how the market will adjust. I think there's a kind of a hope in what's being written in the document at the moment that the market will just kind of adjust in an unspecified way but it'll be all right. 75 per cent of students are in HMOs who aren't staying at home. If enough of those private sector landlords decide to rent to students as opposed to young professionals, there's plenty of demand for young professionals, places like Edinburgh and Glasgow for accommodation, if renting to students becomes more risky and complicated and they can't get the yield by letting out during the festival, they're going to move across the market. They're going to leave the student market and they're going to move to another part of the market. That's going to reduce the supply, as Mr Black would say, of student stock quite considerably. I think that that's a real danger. However, the other risk is how the purpose-built student accommodation providers react. They've been in this market building a lot of accommodation, including in Scotland, in recent years. That's a quote from Unite from the second consultation. They're one of the largest providers. In the event that there is no fair opportunity to assess student accommodation in Scotland, students may want to select the security provided by the English and Welsh legislation as we would not be in a position to guarantee a room in Scotland in advance to receiving notice from the current tenant. Again, it's going to make Scotland a less attractive place to be building that type of stock. I know from speaking to some of the purpose-built student accommodation providers, confidentially, that some of them are thinking, even thinking, of converting some of their existing student stock, going to planning and converting it into stock for young professionals, of which they think that there is ample demand in places like Edinburgh and Glasgow. We'll lose even more student accommodation. This is something over the last nine months that the sector picked up on very quickly and has been making representations quite strongly to Government on this. It still seems as if it's something that it's almost the settled will of the Government that we're not going to change this. Students are going to get the exact same rights as other tenants, and we will see how the market adjusts. My warning is that, if something isn't done about it, then I wouldn't want to be a student in early 2018 after this had been implemented. Maybe just very briefly come back in a point with regards to the practicalities and how the market might adjust. Everything is planned in advance from the holiday accommodation through to the beginning of the next term and new tenants moving in. Well in advance, landlords are in the habit of signing leases. Obviously, a lease cannot be agreed unless they know they will have vacant possession at x date. Therefore, the landlords won't be in the position, even if the tenants are looking for that and saying, can I do this in the future next year? There's a new group wanting to move in. Sorry, we won't be able to secure that accommodation for you at this stage. The final point was just with regards to holiday accommodation. That's done well in advance, too. People are looking to plan holidays months and months in advance, and it's not just festival accommodation but sporting activity or whatever throughout the whole of Scotland. So, again, landlords wouldn't be in the position to offer the accommodation for tourists during the summer period, for instance, in advance, because they wouldn't know that that property is going to be available. So, again, it will have an adverse effect on tourism locally as well as, obviously, future student accommodation, which means everybody will be looking at the last minute and they'll have to pay more for the accommodation, which need not be the case. Mr Bonock. Thank you, convener. I won't repeat what all my colleagues have been saying, but at the end of the day, the intent that is written here about engaging with the tenants is great. That's exactly what we do at the moment. In doing that, we actually rely on what is embodied in the legislation. We're using the legislation and engaging with the student population in order to achieve a workable outcome. So, this idea about having engagement with them is great. That's what we do right now, but that engagement, if we haven't got the right legislation sitting behind us, won't work. And somewhere along the line, we need to have something that allows us to give to the tenant, depending upon what they choose, either nine or 10 months or a 12-month tenancy, which we know is going to come to an end or can be renewed. There are a number of different options that actually work really well at the moment, and I advocate that we try and learn from the experience that currently operates and see how we can actually travel that into this bill so that we can actually get something that functions. I've already discussed, to a certain extent, the no-fall eviction, but there are a number of legitimate grounds for eviction. I wonder how our witnesses feel about those legitimate grounds. Other than that, we've already heard about the anti-social tenant problem. Other than that, can you give examples of particular problems that you think may arise with those grounds as they're laid out in the bill? There are a few, so I'll try to be as brief as I possibly can. If you look at renterias, first of all, if you try and timeline how long it would take under the new system, it could potentially be longer than what we have under the current system in order to take action. At the moment, if there's renterias, a landlord can issue the section 33 notice, the no-fault ground, so they can do that by giving two months notice. The current ground requires three-month renterias before you can take action. Now, what we've been lobbying the Scottish Government to do is to say, can we actually take action, i.e. instigate action, at an earlier stage? At the moment, under the proposals within the bill, you will have to have the tenant who's in renterias for three months, or consistently so for three months, before issuing the notice to leave, which will have a month's notice period on it. Now, that's in order to gain a mandatory ground for repossession effectively if there are more than a month in renterias, which is fine. I don't, in principle, have an issue with that. But it's actually how long it will actually take to go through the legal process. So effectively, if you do a timeline, you could be five, six, maybe even seven months down the line before you can actually get before the tribunal for them to make a decision. And then quite rightly so, the tribunal will be saying if eviction is granted, then it would be another month's hence or quite rightly, as I say. So that actually could be a protracted period of time where what we're asking for is, could we instigate legal proceedings at an earlier stage in the sense of to get to the state of the hearing? And then at the hearing, they, of course, can decide whether you've actually got a substantive ground for repossession or not. So we have not so much, I can say, on the right and the rights contained within the ground. It's how long the process is going to take and in reality that could be potentially longer than what we've got at the moment. We've got a number of unknown quantities here. We're thinking about the current court system, how long and how expensive that is for all parties and the public plus as well too. But under the new tribunal system, we're hoping that will be quicker, less adversarial, so it will be more inquisitorial, all of which we welcome and think is a very positive step. But it's still going to take time to go through that process and we don't know how long that's going to be. So we have concerns about the period. With regards to the ground, the mandatory ground for repossession and rent arrears, then that's, of course, one month rent arrears, therefore it's a mandatory ground for repossession. But there is a potential that a tenant, if granted security of tenure for life effectively, could constantly be almost one month in rent arrears forever. And there'd be no legal grounds that the landlord would have to take action to repossess that property or reclaim that money. And we feel that's inequitable, then that's essentially unfair there. And we have mentioned the antisocial behaviour ground. We have lobbied for the abandonment ground to be put in there, so we welcome that and we thank the Scottish Government for taking heed of that. However, you're not allowed to use the antisocial behaviour ground within the initial period of let, which could be six months, could be a year. So if somebody abandons the property, sorry, I mean the abandonment ground, if they abandon the property, then effectively what will actually happen is you would have to wait six months or 12 months before using that ground, which ultimately means that property is lying empty all of that time. And that's unfair too. So the abandonment ground should be used at any point during the tenancy. Assuming it's genuine abandonment and the tribunal has decided such and has granted the repossession. So there's too many issues that we have with the existing grounds. Okay, thank you Mr Blackwood. I think I'm going to move now to suspend this meeting in advance of the two-minute silence at 11 o'clock and I'll advise all of those present when that is. Ladies and gentlemen, can I ask members, witnesses and those in the public gallery to be upstanding to observe a two-minute silence to commemorate remembrance day? Thank you very much everyone. We'll now continue. Mike, did you want to? Yes, thank you, convener. My next question to a certain extent has been pre-empted, but last week the committee heard from Shelter who were concerned that the ground in relation to eviction for rent arrears was to draconian. They described a scenario whereby a tenant that may be fell into parcel arrears in the first month of a tenancy made the next couple of months' payments but was unable to catch up when arrears from the first month would be subject to eviction, despite the fact that that may not be in the landlord's interests really as well as the tenants. I just wondered what you felt about that. There seems to be a kind of different interpretations of this, so I'm interested to hear from witnesses how they feel about that. It would be discretionary, so it's not a mandatory ground for eviction, so if a landlord was to do that, was to take action for that reason, then it would be up to the tribunal obviously to decide whether does that warrant eviction effectively. The nature of the tribunal is to be more inquisitorial, so it's looking at the situation, why is that the case? You know, they may be lost their job, you know, it's just fallen in hard times or whatever, they have got a plan to pay that up or they're seeking money advice, you know, solutions, whatever. To be honest, I'd be very surprised at any landlord that would take such action and go to such extremes for just partial rent arrears. Unless, of course, as I'm saying that perhaps they're deliberately doing it just to be short of the one month, which is a potential pitfall here, and that could be for many, many months, and I think, well, that's unreasonable, they're just trying not to pay almost a month's rent. So, again, the tribunal would look at that case on its own merits, so I think there's fair safeguards there for tenants in that situation. I think, in fairness, there's a balance has been struck in how it's been drafted, it's just potentially how long the process could take, not knowing how long it will be by the time you apply to the new tribunal system and actually have your hearing. That's a very useful insight. I think that we just have to keep in mind that the maximum deposit a landlord can take is only two months, the equivalent of two months rent, so if they can't be evicted until three months, that's where they start taking action, and then we don't know how long of a set will take until the tenant actually leaves, which is a further period that probably rent won't be paid, so you're already well out of pocket before you even begin to decide if there's any repairs or damage that's been done to the property. Okay. Anyone else? Mr Gordon? Just on that point, I think that it's worth remembering, because I'm not sure it's specifically been said that 70 or so percent of landlords are individuals with one property or one or two properties, and they often just became a landlord by accident, so they bought a bigger house, they kept told of it either because they couldn't sell it or because they thought that would be a good idea for a pension, but until it becomes a pension and they're paying a mortgage, the budgets can be very tight, and so although the tenant should be protected, I think that's the first job of the tribunal to protect the vulnerable tenants where they can with the discretionary liability on that rent thing, it's important to remember that we've got a landlord who's moved from another agent because they were not collecting rent on a tenant and they weren't pursuing it well enough or so they thought, but there were deeper problems in that, but that landlord in particular has moved into a property and had to rent out that property because they couldn't sell it to get enough to pay off the mortgage, and they're on the verge of becoming homeless or losing the property because they can't afford to keep up the mortgage payments, and we've given them, I should say one phrase, we've given them no management fees for six months to help them because their budgets were that tight, and we've managed to fix a lot of the problems in that property, but it must be remembered that there are significant numbers of the sector who are just doing their best and they have very tight budgets as well, so losing a month or two's rent may sound not too much for a business, but they should be treated as a business in some ways, but it must be remembered that they are just normal people who maybe have a property that's going to be their pension when they retire, and that's it. Looking at tenants that rentory is and looking at the inability for the no-fault ground, I think it's going to force landlords to be more and more selective about who they put in their properties, so people that maybe have had a history of non-payment of rent, those landlords, new landlords will not be prepared to give them a second chance, so any risk at all associated with putting anybody in their property is going to be heightened, and we're going to see those tenants that maybe have got a property being forced to the lower end of the market and more into the rogue landlords. I think that we really need to take that into consideration of the impact all of this legislation has had on the ability of tenants to find good properties with the landlords. I understand that some landlords are able to take out rent insurance to insure themselves against the rent of non-payment. I've only become aware of this recently, but do any of you have any experience of rent insurance? Yeah, one jungle. It's yours positive though. I think one of the concerns, as you imagine, are insurance products, and if there's a way of getting out of paying, then some of these products will find a way of doing that, so often landlords find it's just not cost effective to have such insurance policies, because there's so many caveats under which it would not pay out, or indeed to require the tenants to fulfil certain criteria about their financial ability to pay, whether they're on benefits or not, et cetera, et cetera. It means that the actual products, they're obviously geared up to make sure that there'll be fewer and fewer claims as possible. They do exist in the marketplace, but I think that fewer and fewer landlords and agents are actually using those products because of literally their ability to pay out if you even needed to do that. Fins of excesses are large, and we did offer them to all our clients at one point, and nobody took them. What we do is we do a robust referencing system. The first thing that we want as an agency is we want to have a tenant who will look after the property and pay their rent on time. We do have tenants who go through a referencing process and they don't quite meet it. We sometimes ask for a higher deposit, not more than the two months, but we'll only take just over one month normally, so we might take a slightly higher deposit. We might ask them for a guarantor even if they're not a student and their parents can step in. Any reasonable property and reasonable condition in a decent area in Edinburgh that we advertise at the moment, we are inundated with people wanting to view the property and take the property. Rather than trying to work with good tenants, we will be looking for the most robust, definite reference checking process, so we will be trying to strengthen that. It may be that people who we would have a guarantor will not do that anymore and just move to the next person. It does change the market a bit, and I think that you've got to be cautious about what you wish for if you're working in the sector where you're trying to help tenants. You might make it more difficult for your tenants that you're trying to protect. Just one final question, convener, and we've already touched on the business of the anti-social tenants. Just to correct perhaps what a slight misapprehension that MSPs, I think, see perhaps more of the universe than you might assume, because some of the complaints that are brought to our attention in the matter, for instance, of anti-social tenants, on investigation, you find that they are not reasonable. I think that there is a difficulty here that the legislation is attempting to resolve. That is that the person that constitutes an anti-social tenant in some eyes is not really all that anti-social perhaps in other eyes. Yet evicting somebody from their home can be really quite a harsh penalty. You can commit certain criminal crimes of some significance and not find yourself the victim of a penalty as severe as losing your home. Just wonder what your comments would be in resolving this in a general way. Do you feel that the mill does offer reasonable opportunity of evicting anti-social tenants or not? Mr Cox, I think the answer would be no, we don't think it's sufficient. It falls down, generally, because it is a discretionary ground rather than a mandatory ground. As I think Mr Blackwood mentioned earlier, trying to use the existing anti-social behaviour on the ground is exceptionally difficult. One of the main problems, and a house in multiple occupations is probably the easiest example to use, where you've got potentially four or five people, unrelated people living together. If one is causing anti-social behaviour, it's going to be the other people in the property, the neighbours that are complaining, but with it as a may, as opposed to a must, there's no guarantee that if the other people living in the property give evidence against that single person who's causing or making their lives a misery and the court then doesn't uphold it, that person is coming back to live with those other four people, which will make the living situation very, very difficult. There will be fear of retribution against the people that have testified, and therefore we're actually talking more a personal safety ground as much as anything for landlords, for neighbours, for other tenants living in the property, where there is the anti-social behaviour situations going on, there's intimidation, there's threatening, and therefore a landlord will not use that ground at the moment. As a discretionary ground in the bill, I would be very surprised if any landlord or agent actually uses it for fear of the consequences if they're not successful. Mr Blackwood, just to again come in on that point that we've already been talking about today, I appreciate that, but a thrust of the bill is about creating strong, sustainable communities and how the Scottish Government believes that that's really important, where tenants can feel through the security of tenure that they are part of that community and they can contribute in much more fulfilling way to that community. Coming with that is also a responsibility to act neighbourly, and you're quite right in saying that of course what's anti-social behaviour to one might not be to another, but we have to be cognisant of the expectations and the needs of our neighbours too. Ultimately it'd be up to any tribunal to decide whether there's enough evidence or whether it's good enough to grant and warrant eviction, and I would put the power within the tribunal to make a balanced and a proper decision on that. My greater concern is not about trivial issues because in most cases trivial issues can be dealt with or the landlord quite frankly would be turning around saying, you think I'm going to put out a good decent tenant who's actually paying the rent, complying with a tenancy agreement just because quite frankly you don't like them. That's unacceptable and I hope the landlords would take a strong view on that too, and ultimately as I say the tribunal would anyway. Our issue is really where it's actually real anti-social behaviour that is disrupting our communities and we feel landlords have a duty under the 2004 act to take action, but under this new bill they'd be stymied in any action that they could potentially take. Okay, thank you. We need to move on, Siobhan. My first question's already been answered, so I've just moved to my second. 46 of the bill provides that during the initial period of lease the landlord can end the tenancy using any one of the five out of 16 eviction grounds. Are you happy with the bill's approach in that regard? I'd just like to repeat what John had said earlier that we'd like to see the abandonment ground added in there as well so that a landlord can take swift action if they've got good reason to believe that a property has been abandoned. So you don't disagree with the list as it is, you're just like an addition to it? That's right. Is that a consensus there? With that in particular in our submission we're mentioning grounds 9, 14, 15 and 16. That could be added to that list. Thank you, Mr Gordon. Yeah, I think I concur with all that and just maybe an abandonment. Could something be done whereby sheriff's officers are not that expensive, so if you're able to serve a notice on the abandonment ground and then take your property back if nobody comes back to that notice to say, yes, I am living here, that could speed things up. Okay. Do any of the members have any questions on that? If not, I'm going to ask Adam to introduce the next section. Okay, issues associated with the tribunal and Mr Blackwood is already concerned about the length of time it would get, the process to get to tribunal. Maybe you could comment on that, but also I'd like some comments about your confidence on whether the tribunal will improve access to justice for landlords or have you any particular concerns about how it's going to operate? Convener, if I may start by declaring an interest, I hold a public appointment as a member of the private rented housing panel and the homeowner's housing panel side be one of those people, so I have a vested interest, obviously, in discussing the panel and its jurisdiction. Importantly, in saying that, though, I think that a tribunal service is a much more appropriate way of doing justice. It would be consistent, and as I say, in one of those members of three members who would constitute the committee who would make a decision on this. The specialist in housing law, the specialist in their field, are much different to what we have under the current court system. It's less adversarial at the idea of sitting round a table, it's discussing the issue, it's coming up with solutions potentially, which might not be eviction, so it's looking at the situation from a much more holistic perspective. Tribunals, we know, are much less expensive to the public purse, too, and they can happen locally as well wherever they need to be convened, so I think that there's great positives in the new tribunal system. My concerns about how long was, as with any system, whatever system we have, if you can't apply until after three months, well, after three months you'd be issuing the notice to leave, which would take you to four months, potentially of rent arrears, and then you're applying to the tribunal, which, with the best role in the world, could be another month, two months before that could actually be arranged locally to you, so you could be without rent for five, six months easily, which isn't the intention of the initial ground. So all we're asking for is can we raise proceedings at an earlier stage, which would still protect the interests of the tenant, because ultimately it would be the tribunal that would decide if that ground was warranted. Anyone else? Shelter Scotland last week suggested that tribunals should have discretion to adjourn tribunal proceedings, for example, to monitor payments relating to rent arrears or to monitor attendance behaviour in antisocial behaviour cases. What's your view on that? Katie, I think that I should say that. Thank you. Can I just go back to the first point? We very much welcome the tribunal system, but we very much ask that we do have an underestimation of the resources that are required. That needs to be well staffed and well resourced so that it can deal with cases quickly, until it proves itself that it can be considered a risk, although albeit a nicer option than what we currently have, which we know definitely doesn't work. The discretion to adjourn would be very concerned about that. It adds an additional risk to a risky system. We don't know how long that could go on for. Will it be that a tenant will be given another six months? If it's got to the stage that the landlord is taking them to the tribunal, there's obviously a problem, and it needs to be dealt with robustly. Just briefly, on that point, the tribunal service does have an ability to adjourn, so any tribunal could be adjourned if the panel members deemed that appropriate. The final point was on wrongful termination. Could I ask for your views on the provisions that are in the bill? Again, it was hinted that the proposed compensation of up to three months rent was, at some points, limited and needed to be significantly higher, as it is in some cases just now, I believe, for wrongful termination. I think that it's pretty balanced what the proposal is, but you might not be surprised to hear me say that from the private rented perspective. I think that it's important that whatever comes out of this as the final act is that it has teeth and it is robustly enforced. That's one theme that we've been bringing through this whole evidence session. There is no point in having law, which effectively will not be enforced or not do the job that it's intended to do. Quite rightly, as we want a well-functioning private rented sector, we want landlords to be complying with the law. Quite frankly, if they're taking advantage of that, then there should be adequate provision to take action against them. I would say that the three months are adequate, to be honest. The issue is going to be in evidencing that and actually proving that. We could be talking about regaining possession if the landlord wants to sell it. The counterargument to that is well, what does that mean? That there's the provision that it has to be on the market and they've given a time frame to put it on the market. But markets can change. You might find that you're not able to sell the property. Does that mean that you should be penalised as a result of that? Likewise, you want to repossess it for your own use or for family members' use. It could well be the case with some properties. You want to repossess it to put, perhaps, anelodily relative into it because it might be nearer to your own home so that you can provide care and support for them. It might well be, sadly, that in the process of giving the required notice, which is a considerable number of months, that that person might actually have to go into residential care or they might pass away, for instance. Therefore, the intention for which you raised that notice in the first place no longer applies, but it was genuine. Again, there could be evidencing issues around those issues. I think that it's important that we have them. We also believe that the three-month strike is the right balance. We also need to—I think that the fear here is that a landlord would take a three-month fine on the chin to get rid of a bad tenant. However, we have to remember that a three-month fine wouldn't be the end of a sanction for a tenant. The risk for a landlord, sorry, would be that the landlord registration could be evoked. They would not repeatedly use that because they would lose their whole business and it would not be worth it. The other point to make is that there actually wouldn't be any reason for people to wrongfully evict, apart from, possibly, the circumstances that John has covered, which I don't think should count as wrongful eviction. If the grounds are watertight, they will use the grounds. They won't need to think, I've got a real reason to get rid of them. What ground can I fit it into? It might not fit well. They'll just use the appropriate ground and it'll be no reason to wrongfully evict people. I'd like us to move on, but we are tight for time. David Stewart is going to take us through the issue of rent pressure zones. I want time to address that, David. I'm interested in the witnesses' views on the rent pressure zone proposals on the bill. Is there evidence of excessive rent increases throughout Scotland? Witnesses, I'm sure, will be well aware that from our evidence session last week that the proposals are that local authorities must make the application to the Scottish Government under affirmative procedure. They will grant, or otherwise, that application. It's normally for a five-year period. There's no minimum or maximum size, so it could be, for example, an estate, a village, a town, a city, or indeed the whole of the local authority area. The other issue is that, if it is granted, the rent increase would be CPI plus 1 per cent. Witnesses will probably know that the current rate of CPI is minus 0.1 per cent at the current rate. To add on the final element at this stage, there was some debate about the index, because ironically CPI doesn't cover housing costs, which seems a little bit odd, and the RPI is a much better indexed if you're just looking at purely housing costs. There's quite a lot of meat there, but I think it's a very interesting area, so I'll be grateful for witnesses' views. The most important thing to remember is that the rental market is a market. It's primarily based on getting a return and a yield on your investment in the property. Whenever we consider the rent for a property, the first thing that we do is we look at what the yield would be if you calculated it somewhere between 4 per cent and 6 per cent. Very often, that's what the rental is, even when, in areas where people think that the rent is of sword, that's because the property value is sword. What the Government should be doing is tackling housing prices and that would control rent prices. If you tackle rent prices, you can completely skew the market in housing altogether. Our view is that, as saveres, that doesn't really make any sense. When we're doing home reports, I don't do home reports, when saveres are doing home reports, they're looking very carefully at the comparable evidence in the market. They have to put in a rental figure and they have to consider what the local markets are and the market rents are, but they also have to think about the yield on the property. By having any restrictions on rent, that can have an impact on that. The second problem with rent control zones is that there are two problems with that. One is that it provides a definite level of uncertainty for all investors because they will not know what's going to happen, whether a council is going to suddenly decide to try to introduce one. That's probably the biggest thing that's going to put off individual and institutional investors, is that uncertainty. Investors, particularly at the corporate level, are just not going to look at it if that comes in in certain areas. As I said, we speak directly to a small number of investors, but I'm sure that Dr Boyle speaks directly to many more. They're just saying that if that is enacted as it is, they will not invest here. They may well come back and consider it again when things change or when markets change again, but, as it stands, it can invest elsewhere and they don't need to invest here. The second problem in that rent pressure zones is that there's no way of defining what's happening with rents. It's all about existing tenants raising rents on those. All the headlines are about advertised rents. We advertise all our properties on RightMove or Zoopla. That data is publicly available, but nobody knows what I increased the rents on in my existing stock on the existing tenants. I can tell you that we assessed all the rents this year in all our properties, and we wrote to about 30 per cent of our landlords where we thought the rent had fallen behind the market. There was only one landlord who wanted to increase the rent. We caveated every email saying that, of course, this is a good tenant who's staying there, not causing any problems and inspections or good you might want to consider not increasing the rent, but this is what the market's done. None of them wanted to increase the rent apart from one. That was only by a very marginal amount, because they wanted to try to keep pace with their other costs. There's a danger that you're going to change the market again in ways that don't suit the tenant either. Briefly, I think that rent pressure zones are a poor idea. If one looks at what has happened in the booming oil market or the market in Aberdeen in the last few years, market forces have corrected that probably more quickly than any activity in rent pressures. To pick up a little bit on what Mr Gordon has said, and I think that Dr Boyle is probably the best one to answer this, and I mentioned earlier on the student market, there is a real shortage of data relating to real facts and figures about what's happening in the marketplace. I'd really encourage everybody here to come together with a view to actually bringing together data. Within my office, I have an internal system that takes the information from the energy performance certificate, which every advertised property has, which has got the floor area on it and the energy efficiency rating. We then calculate a rent per square foot or per square metre per month, and we can analyse on a street-by-street basis what is happening to all the rents in our portfolio. That takes a bit of working on, and nationally it would take quite a bit, but we need to get something like that so that we've got hard-and-fast figures. Finally, the solution to a lot of that is the supply of property. If we get the supply coming into the marketplace... Dr Boyle? I do that kind of thing for a living, but if you put me up against the wall and say what's the average rent achieved in Scotland today, I'd have to be honest with you and say, I don't know. I think that somewhere between around about £500 and £750 per calendar month, but it entirely depends on what index that you're looking at. All of the methodologies and all of the indices have their different strengths and weaknesses, but there is no definitive rental index in Scotland that tells you at any one time what's happening with rents anywhere in the country or by property type. In Ireland, they've got a private residential tenancies board that tracks every single rent. A bit like the register of Scotland tracks every single house sale, it tracks every single rent in the country. Ireland's got a definitive database of rents and how they are changing in a way that we don't. There is a complete lack of data, but there are serious holes in the data sets that we have to try and decipher what's happening with rent movements. The evidence is mixed, but the bulk of the evidence would seem to suggest that rents have not been rising above inflation anywhere over a period of time, take it back to 2008, 2009 or 2010. In fact, nominal rents, not even adjusting for inflation, but nominal rents in Scotland fell between 2008 and 2011. Once you adjust for inflation, there's certainly only one place in Scotland where they were markedly above inflation but only for a short time, and they're now coming down, and that was Aberdeen. That's because you had a bubble both in the house prices and with the oil price, and you had incomes rising as well, which caused rents to rise in that particular part of the world. Whether you use RPI or CPI is an interesting question. The advantage of using RPI would be that it does take account of housing costs. The disadvantage is that it is no longer an officially designated statistic by the ONS, although it still reports on it. However, if you were looking for some kind of inflation measure, I would have thought that you would have had to look for one that incorporates housing costs in some way. That's well worth exploring further detail with the ONS. Just to reiterate Mr Warwick's point, what rent rises do is that it's a signal to the market to increase supply, but once you've got a rent control in there that depresses the rent below the market level is fairly basic economics, you get a reduction in supply. Places like San Francisco and Stockholm and Sweden, where that has happened, that's what you've got. If you want to rent a flat in the city centre, your letting agent will tell you to come back in 10 years because that's the size of the waiting list. If you're happy enough to go to the suburbs, you'll only have to wait about seven years. For the investment or the investor market, it's probably, as I said earlier, it's going to be seen as the thin end of the wedge, and we'll see Make Scotland appear less attractive than other parts of the British Isles for this type of investment, particularly build to rent, which is a potential game changer in getting new supply going in this country. It's interesting going back to the island example again, that in the island, as I said, they collect very accurate rental data. In Dublin over the last year, rents have gone up 10 per cent on average, that's marked. The island thought very closely about introducing rent controls but backed off because they were worried about the impact on supply, they rode back pretty much at the last minute. I would only make one final point. There was a Movers and Shakers conference, which I attended, and there were a number of other people here who were at that a couple of weeks ago in Edinburgh. That was to bring together all the investors, the developers, the housing associations and the Government. The housing minister made an announcement on the new bill and its measures at that conference. I would ask people to go and look at the list of attendees at that conference. There were very few of the big action investors and funds present. The following week, they had a similar conference down south, they were all there. I think that shows where Scotland is now on the radar for this type of investment. I think that's very interesting the points made by Dr Ball. If I could just read into the record, the information that we got from SPICE, our independent information service, have looked at the Government publications and they looked at figures between 2014 and 15. The annual change in average private rents by property size was 1.6 for a one-bedroom, up to 3 per cent for a one-bedroom and shared property to 2.8 for a three-bedroom. The crucial point, as Dr Wells touched on this, is the regional disparities. As you would expect, Greater Glasgow Lothian and West Lothian are at the top of the league. Because of the difficulties with oil price, particularly Aberdeen and Aberdeenshire has fallen quite dramatically. However, one interesting point from Mike McKenzie and my own area is that our Gailan butas actually shot up quite surprisingly. They have gone up to mid-table. The regional disparities are really quite interesting. Those figures in terms of annual increases are quite useful as well. However, the key point that I think I made is that we have effectively got a deflation of position in terms of CPI currently, so you've got to bear that in mind when you look at those comparisons. I actually agree with a lot of what has already been said in terms of the investment where there is rent control in one part in a small part of the country and a small part of one country. Investors, be they landlords or institutions, will look for somewhere else to invest. I would also agree that CPI does not take into account cost of housing. With the changes to RPI, I know that the valuation office agency at the moment is in the final stages of creating CPIH, CPI plus housing, which they are hoping will become the new national measure of inflation. I would suggest that, as you are going through the bill, you should speak to the valuation office agency and see whether that would be a more appropriate barometer. However, one of our main concerns is that rents go up generally in line with house prices, and the problem with that situation at the moment is that we do not have enough house building in this country. If you artificially impose controls on rent prices, one investor will go elsewhere, but those that remain will be much more selective about which tenants they take, as has already been raised in response to the rent arrears section. When we have increasing demand in places like Edinburgh and Glasgow, meeting stagnating supply, where are the people once supposed to live? When demand increases, what we are going to have is agents and landlords being much more selective in who they take. Therefore, low-income people, people who have had homelessness issues, anti-social behaviour issues and rent-aired issues, are highly unlikely to be able to secure a good-quality tenancy, which means that the people that the bill is designed to help and those provisions are designed to help will hurt them the most. They will be the ones that will be pushed into the hands of the rogue operators and criminal operators at the bottom of the sector. Therefore, the very aims of the provisions relating to that will have exactly the opposite effect. Concurring, convener, with a lot that has already been said. Importantly, we are talking about supply and demand. If we have a shortage in housing, we are going to pay more for it, so that can result in rents increasing. It is important to acknowledge that we are talking about efficient Government statistics and ONS statistics. Talking about 1.6 is an average increase across Scotland, which is much less than what it is in other parts of the UK. That does not seem to indicate that we have an overall problem here, albeit that it will have regional variations. Scottish Government, in its second consultation on the bill, recognised that heavy-handed regulation of sectors, even locally, can have an adverse effect on the marketplace. It says that heavy-handed regulation of rents could jeopardise efforts to improve affordability through increasing supply by discouraging much-needed investment. We have to be very careful about that and not frighten investors here in Scotland. As people are talking, it is almost like it is too simplistic rent control. If you think about economics or any kind of supply and demand, if you are considering rents, you must consider the capital value or the cost of running that property. If the Bank of England puts interest rates up to 5 per cent and everybody has got their back to their mortgages and their mortgages are shooting up, they are not allowed to increase prices on the rent on their property while they are going to go bust. If you compare it to any other market, it just wouldn't work. Milk prices are supposed to be too low at the moment, which they probably are for farmers. If the price of wheat doubles, the cost of the milk going to the supply chain has to go up. If the cost of supplying a property to the rental market goes up, the price has to be adjusted. You need to tackle the source of the problem rather than trying to tackle the outcome, which is rent rising. There is no evidence that rents have risen too much, as Dr Boyle said. There were a number of years in Edinburgh when I was working where rents were not rising at all, even when property prices were rising. Some of the recent rental increases in Edinburgh have just been catching up with that underlying yield of between 4 per cent and 6 per cent gross yield. There is no evidence for the requirement for rent controls. What there is evidence for is the requirement for more housing. The committee also took some evidence and suggested that rent pressure zones should be intramesured until further research is carried out into different models of rent control and the potential effects. Do you agree? I suppose that we should look at best practice as well. If you take an analogy, I think that it is in the Netherlands where rent increases are linked to quality. If you increase the facilities in the flat or the house that you have got, there will be links to increasing rent. How do the witnesses feel about those points? Dr Boyle? Kath Scanlon is probably the best source for international evidence on rent control. She is at the LSE and she is sitting widely on the subject. She made a very good point at a shelter conference that there is a real danger in cherry picking an aspect of a country's housing market policy. I assume that you can drop it in to your own housing market and for it to have a benign or even positive impact. Germany has had rent controls, but it is interesting that rents in Berlin have gone up far faster than they have in Edinburgh over the past few years—far faster, markedly different. They have almost got a benchmarking approach to setting rent levels. However, both Germany and the Netherlands and a number of other countries that have rent controls have had this system or housing market system for a very long period of time, so everyone has had time to get used to it and adapt to it, both investors, landlords and tenants. What we do not have here is that incentive packages to landlords in the sector are far greater than they are here. In Germany, for example, rent losses can be offset against other income in your tax returns. They also have a planning and a legislative system that promotes housing supply. In Munich, they build around about five units per 100,000. In most of the main Scottish cities at the moment it is about two and a half. If you combine measures to increase supply, greater incentives for landlords and an institutionalised housing system that has been around for 30 to 40 years, then yes, rent controls might work. However, I would think that you would have to have all those combinations and measures in place. The proposals for rent pressure zones only apply to sitting tenants, but there has been some suggestion that should also apply to new tenancies as well. What can I ask the witnesses what their views on those proposals are? My understanding from the proposals within the bill is about offering predictability of rents and not controlling rents, and that has been very clear from the Scottish Government. That is probably a wise move in the sense that you do not want to deter potential investment in the future by controlling any market, even though it is still controlled by the back door. It is important to emphasise that and recognise that. We are looking at creating communities where tenants in the private sector can have security of tenure once in a tenancy and predictability of their rent levels in the future. That is the most appropriate way to deal with it, rather than tackling the market itself. The only downside of that is, of course, that it is very well having predictability in potentially what your rent could go up in rent pressure zones. The market is completely without that control, which is partly the point that has been made. If you are a tenant in one of those tenancies, whilst you have protection of predictability and security of tenure, then to move on to another similar property in that given area might be more difficult for you because you might not be able to afford it. Hence, that is why we have those issues in comparable areas in other parts of the world, as well as where they have introduced similar rent controls. I turn to the issue of rent pressure zones. The issue of rent increases in the provisions in the bill to challenge a rent increase. A section 19 of the bill provides that a landlord may increase the rent payable under the tenancy by giving the tenant a rent increase notice, with the minimum notice period proposed being three months. Section 17 of the bill provides that the landlord cannot increase the rent more than months in a 12-month period. That is a question more for Mr Cox. Your organisation's evidence suggests a shorter notice period in three months for rent increases. I am interested in knowing the justification for that and what real benefit it would provide to the landlords, particularly as in practice. Some landlords only increase their rents at the end of the tenancy. Exactly. One of our concerns was when considering section 17, clause 17, that it can only be once every 12 months. Having to have a three-month notice period effectively means that you have to calculate what the rent is going to be three quarters of the way through a tenancy, particularly in light of the ability to go to the rent officers and the appeals to the first two or tribunals after that. If the tenant disagrees with what the rent will be, we do not know—as we have talked about—that the markets do change quite regularly. Three months is a long period of time to say that your rent will go up by x in three months' time. If the market suddenly changes for one reason or another during that time or the market does not move as fast as the agent or the landlord expects it to, that would open up the landlord through no fault of their own, merely trying to predict what the market will do at points in the future to complaints to the rent officers and first-tier tribunals. We would shorten it to either one month or two months, but we would recommend one month. We had a strong opinion against that. Overall, we felt that it was sensible to have just a clear understanding for everybody what can and cannot happen, so that brings it into line with commercial uses. You would know when the rent reviews are going to be and when that would happen. I can see the argument for the difficulty in thinking three months ahead, but I personally do not have an issue with that. I just think that it is quite a good idea for tenants to know and be able to plan for what they are having to do in their budgets as far as possible in advance. We supported what the staff did as well. The majority of our members do not review rents more than once per year anyway, so that fits in with what they already do. We are happy with the three months then. We do not see a problem with having to give tenants more notice. I will move on to another issue in that case. Succession following the death of a tenant. Section 54 of the bill provides that a private residential tenancy is not terminated by the death of the sole tenant. Section 55 sets out that if the deceased tenant leaves behind a partner who has occupied the left property as his or her only or principal home, then the partner can inherit the tenancy subject to specific criteria being met. What does witnesses think of that? Mr Black, what did you want to say? Yes, certainly with regards to section 56. This was a concern for us with regards to the security of tenure continuing after physical death of the tenant. Obviously, there are practical implications here for us. As a landlord myself, sadly, I have come across a situation where we have had to deal with a tenant who has sadly passed away, who has no relatives, who has no estate, who has no will, and there is a requirement here for the executor to give notice to the landlord. In that scenario, there is no executor, and the only way of getting one would be by asking the court to appoint an executor, which is a bit pointless if there is no estate and, of course, resultantly no will from that. What we need to do is, in a way, help, support the moving on of that tenancy from the physical death of the tenant there. This is, obviously, assuming that there is no succession by partners, so tenant living on their own to enable that property to get back in the marketplace and for somebody else to move into it. We feel that the proposal is inequitable and, basically, there should be a similar proposal to social housing. Why should it be different in the private rented sector? We do not have a problem with succession to a partner. We think that it is reasonable under most circumstances. We would like to see it restricted to one succession, such as it already is in the 1988 act. We think that the continuation brings a complication, though. As I have already discussed, what if there is no executor? What if notice is not given? What if there is no funds to pay the continuing rent? We also believe that if a successor should already be identified in another clause of the bill, it already says that the lander should be notified if someone is living as a married partner. The lander will already know if the partner is there to succeed the tenancy. I was going to support everything that was just being said. Again, I raised the issue of tenants that die in test date, because it can and will cause significant problems trying to regain possession and get the property back into use. My final question is whether there are any areas that we have not covered in our discussion this morning. This is your opportunity now to put those on the record. I would like to bring up two additional grounds that we would like to add to the list of the current 16. First of all, I do not think that either of those would take away from the security of tenure for tenants. I think that they are very reasonable grounds to propose. The first is that in a rural situation, in order for a rural business to grow and develop, it is often necessary to expand your workforce. A lot of this workforce needs to be cited to be accommodated on site. We therefore would like to see a ground included that we could ask a family or a current tenant to leave in order to accommodate that new employee. The final one is a more open one. If we can accept that the no fault ground has gone, the only other way that we can see to give full safeguard that we have been promised to a landlord is to allow a landlord to take a case to the tribunal for any other reasonable circumstance. It would be totally discretionary, but it would give that safeguard in very unusual circumstances, if not necessarily a fault of tenants, that the landlord could make their case and regain possession of that property. I just wanted to raise one additional point as well. It is a minor one, but it is in relation to statutory terms in schedule 2, particularly regarding access. It says that the landlord will give the tenant at least 48 hours notice that the landlord requires access for the purposes of carrying out work on the let property or inspecting the let property in order to determine the work, if any, to carry out. In the cases of a broken boil or something like that, it is not always practical to give 48 hours notice. I am sure that we have all dealt with plumbers, electricians and tradesmen that say, well, I can come this afternoon or I can come next Tuesday. At which point the landlord or the agent will have to say, we can't come this afternoon, you will have to come in a few days time because I have to give the tenant at least 48 hours notice. We would just ask that in that section it is caveated with where practically possible and we have to take into account the other factors that weigh on a landlord or an agent's ability to get somebody into the property to undertake works. Are there any other comments, Mr Gordon? Just on the ground about, the RACS agrees that where a business has been renting out a property and then needs to employ somebody who would normally have stayed in that property, so if they are a farm worker and they don't need a farm worker anymore, then circumstances change and they did. They should be able to have a ground similar to the one for religious purposes where they could end the tenancy if they needed it back for a new employee. The second thing is more of a general point, just in terms of reminding anyone listening, that the RACS does not specifically represent landlords interests. As the majority of the things that I have worked on in my role for the past few years within the RACS have improved protection for tenants and have been very specifically focused on things related to the tenant rather than the landlord, so it is important to remember that the landlord bodies that are here as well, I think that that applies to them, that they want to have a good sector that works well for everybody. There is always going to be a disagreement over the rent side of things because of whether they believe that the market should be allowed to operate or not, but when it comes to considering what should happen, we all want to see things improved. Regardless of how small you think the rogue element is, tackling that rogue element is the important thing, rather than tackling everybody, and it is a distraction sometimes to focus on changing things that are not going to help them. The loss of the no-fault ground and the rent control measures will not protect the tenants that shelter and other bodies are concerned about. They will, in my personal view, potentially make things worse by reducing the supply in the market. I said earlier that the average of 2.7 homes built per 1,000 people in Scotland's main cities is 100,000, which has really been our anemic build rate, but 2.7 homes built per 1,000 people and, in German cities, it is 5 per 1,000 inhabitants. Any other corrections or comments? What we have not mentioned already is that clause 38.3 talks about an instance where a tenant gives notice to the landlord but then decides that they do not want to leave after all. The landlord has a right to refuse that. However, we are unsure as to what legal ability they would have to be able to regain possession of the property. We would regard that there needs to be an additional ground there for repossessing the property where the tenants have given prior notice. I would like to go back to the student issue, just one final comment, which is that the consumer is at the heart of the bill and what we are trying to do is deliver a product for them. I would like to suggest that, considering how the bill is adjusted, we think in terms of what the students want from either university accommodation or private landlord accommodation, and then look at a consistent delivery of accommodation from all those sources. Anyone else? In that case, Mr Warwick, you have the final word. Can I thank our witnesses for attending today's session? It has been a long session, but I hope that you feel that it has been a productive one. I am sure that the members of the committee feel that it has been. The next meeting of the committee is on 18 November. The committee will take further evidence on the private housing tenancy Scotland bill from council representatives and legal bodies. That concludes today's meeting, and I now close this meeting of the committee.