Our regulation of social housing in Scotland: Our response to consultation feedback - February 2024

A message from George Walker, Chair

In June 2023 we launched a discussion paper in which we invited our stakeholders to give us their views on our emerging thinking on potential changes to our regulation of social landlords in Scotland.  Then in October last year we consulted formally on our proposed new Regulatory Framework for social housing in Scotland. 

The Framework sets out how we regulate both Registered Social Landlords (RSLs) and the housing and homelessness services provided by local authorities. You can read the consultation documents here.

We received responses from 52 individuals and organisations.  You can read the responses from those who agreed we could publish here.  Jump Research, a consultancy specialising in qualitative and quantitative research, independently analysed the consultation responses.  You can read the independent analysis of consultation responses here.

We held discussions with tenant representatives, social landlords, organisations who work with people who are homeless and other service users, and with our wider stakeholders including lenders and funders. We spoke about the consultation at conferences and events.

Thank you to everyone who has shared their views on the proposed Regulatory Framework and associated statutory guidance. Your feedback has been invaluable and it has helped to shape the final Regulatory Framework and statutory guidance.

In this paper we describe the changes we have made to the final Regulatory Framework and statutory guidance.

Overview of responses & what we have changed

We set out below the broad themes from the consultation feedback and have highlighted where we have made changes to the Regulatory Framework and statutory guidance beyond those we proposed in the consultation. We have also resolved a small number of minor consistency issues across the documents. 

Overall, most respondents agreed with most of the proposals we set out in the consultation papers.

Annual Assurance Statements

Most respondents agreed with our proposal to amend the statutory guidance on the Annual Assurance Statement (AAS) to include a provision to enable us to require landlords to include explicit assurance in the AAS.  Many respondents flagged the importance of us providing sufficient notice of any specific assurance requirements and some concerns about requests for new information which landlords had not previously been collecting. Many also flagged the importance of guarding against a year-on-year accrual of specific assurance requirements.   

We will provide landlords with as much advance notice as possible of any specific assurance requirements and we will aim to communicate this to landlords by the end of March and by no later than the end of April each year.  We will be clear that any specific assurance requirements will be in relation to information which landlords will already be considering as part of their assessment of compliance with current Regulatory requirements. We will also aim to have each specific assurance requirement for one year only, unless there is a good reason to maintain the requirement.  We have amended the statutory guidance to reflect these aims.

Annual Return on the Charter

Almost all respondents agreed with our proposal for a comprehensive review of the Annual Return on the Charter (ARC) during 2024, involving relevant experts and people from the social housing sector.  We will establish an appropriate working group, or groups, to work with us to consider all of the indicators in the ARC.  We will also work with these groups to develop appropriate indicators for tenants and resident safety, including on damp and mould. We will aim to include in this exercise the development of appropriate indicators for the Social Housing Net Zero Standard following the conclusion of the Scottish Government’s consultation on the proposed Standard.

We will then consult formally on the revised ARC indicators later this year, with the new ARC being in place for collection year 2025/26 and landlords providing us with the first revised return in May 2026.  We will continue with the existing ARC for collection years 2023/24 and 2024/25.

Regulatory requirements

Most respondents agreed with our proposals to strengthen the emphasis on landlords listening to tenants and service users, including by introducing a requirement that landlords provide tenants, residents and service users with appropriate ways to provide feedback and raise concerns, and ensure that they consider such information and provide quick and effective responses.  Some respondents highlighted that landlords already provide such routes for tenants, residents and service users to provide feedback and raise concerns, and asked that we clarify the rationale for the proposed change.

During the consultation we acknowledged that many landlords do indeed provide tenants and others with effective ways to provide feedback and raise concerns.  We confirmed that the change was to ensure that the Regulatory Framework gave the appropriate emphasis to landlords listening to tenants and service users.

We have amended the relevant parts of the Regulatory Framework as we proposed in the consultation.

Notifiable events

Most respondents welcomed our proposals to provide greater clarity to our approach to Notifiable Events and to emphasise that only the most significant and critical events required to be notified to us. Many respondents also welcomed our restatement of the importance of landlords being able to discuss any potential Notifiable Events with their Regulation Manager.

We have made changes to the statutory guidance on Notifiable Events to ensure it is clear that we require landlords to notify us of the most significant issues only and to emphasise that having a number of notifiable events is not necessarily an indicator of poor performance.  We will publish an annual report on the type of Notifiable Events we receive and what we do with them to give landlords and others visibility on how we deal with these.  There was strong support for our proposals to do this to help landlords better understand how we use this information.

Regulatory Status

Most respondents agreed with our proposal to retain three regulatory statuses and to amend the wording of the second status to enhance clarity, including the Regional Network of Tenant and Resident Organisations, the SFHA and the Chartered Institute of Housing.  UK Finance restated its preference for four regulatory statuses rather than three to provide greater consistency with approaches in other parts of the UK. 

Some RSLs expressed a concern that the proposed revised wording – “non-compliant – working towards compliance” – may have greater implications for potentially breaching loan covenants than the current wording.  This was also raised in discussions with lenders and with the systemically important RSL forum, and subsequently by the SFHA; we believe this illustrates that there was uncertainty around the definitions of the statuses, and highlights the importance of our proposed change in the wording to make it clearer when a status is non compliant.

We understand the argument for moving to four statuses, but we believe that the use of three statuses has worked well in the Scottish context and reflects our statutory objective.  We have, however, amended the wording in the second regulatory status to make clearer that this is a non-compliant status, as it is under the current Regulatory Framework.  We will continue to keep the effectiveness of the approach to regulatory status under review.

Significant Performance Failures

Almost all respondents supported the proposal to amend the Regulatory Framework to enhance clarity on when and what tenants can bring to us and how this fits with the other routes for tenants to complain to their landlord and the Scottish Public Services Ombudsman.

We have amended the Regulatory Framework to reflect the changes we proposed in the consultation document.  We will update our factsheet for tenants to reflect this approach and to include illustrations of what is a complaint and what should be brought to us.  

Statutory Guidance

We have amended the guidance on the ASS and Notifiable Events to reflect the changes we set out above.

A number of respondents suggested that we merge the statutory guidance on How to request a review of a regulatory decision and How to request an appeal of a regulatory decision.  We agree that this is a sensible change, and have merged these two pieces of guidance.

We have received a small number of comments on the statutory guidance on financial statements.  We will consider these when we review the guidance following the publication of the revised versions of FRS 102 and the Housing SORP.

For the rest of the statutory guidance, we have made the changes as proposed in consultation, along with a number of minor changes to improve consistency across the documents.

Impact Assessments

We used the consultation process as an opportunity to seek feedback on potential impacts that our proposals could have on tenants, people who are homeless, other service users and landlords.  We used this feedback to finalise our combined Impact Assessment covering:

• Equalities Impact Assessment;
• Fairer Scotland Duty Assessment;
• Island Communities Impact Assessment;
• Children’s Rights and Wellbeing Impact Assessment; and
• Business and Regulatory Impact Assessment.

We set these out at appendix 1.

Next steps

The updated Regulatory Framework and statutory guidance will go live from 1 April 2024. 

We will engage with stakeholders in the coming months to develop proposed indicators for the Annual Return on the Charter, with the aim of consulting formally on these later in the year. 

Appendix 1: Combined Impact Assessment

Purpose

• Here we provide an impact assessment of the changes to our Regulatory Framework. There are various elements to this assessment:
  • Equalities Impact Assessment (EQIA);
  • Fairer Scotland Duty assessment (FSDA);
  • Island Communities Impact Assessment (ICIA);
  • Children’s Rights and Wellbeing Impact Assessment (CRIA); and
  • Business and Regulatory Impact Assessment (BRIA).

We prioritise the interests of tenants and other service users

• Tenants and other service users are at the heart of our work. We protect the interests of tenants and other service users by regulating service providers effectively. We do not directly provide services to them or resource those services; we regulate landlords who resource and provide services to tenants and other service users.  There are therefore no budgetary changes that we require to impact assess.
• The assessment here is therefore proportionate to our role. The scope of our assessment also reflects the small number of material changes we have made to our Framework.  The changes we assess are as follows:

1. A provision added to the statutory guidance to enable us to require landlords to include explicit assurance in the AAS on a specific issue or issues.
2. Initiate a comprehensive review of the Annual Return on the Charter which we will consult on in 2024. The review will have a focus on indicators for electricity, water, fire, asbestos and lift safety.
3. Strengthen the emphasis on landlords listening to tenants and service users to include a requirement that landlords provide tenants, residents and service users with straightforward ways to provide feedback and raise concerns, and ensure that they consider such information and provide quick and effective responses.
4. Streamline our approach to Notifiable Events to ensure that landlords bring the most critical issues to our attention while not being overburdened by notification requirements.
5. Amend language to improve transparency and clarity of the regulatory statuses.
6. With regards significant performance failures (SPFs), enhance clarity on when and what tenants can bring to us and how this fits with the other routes for tenants to complain to their landlord and the SPSO.

• Through our changes we aim for positive impacts on tenants and other service users through our regulation of social landlords. We also aim for positive impacts on our other stakeholders where this does not affect our ability to meet our statutory objective to regulate to protect the interests of tenants and other service users.  It is these aims that informed and shaped our changes.

The elements of our assessment

Equalities Impact Assessment

• Evidence shows that some of the most vulnerable people in Scotland use landlords’ services and many have a range of the protected characteristics that are named in the Equality Act 2010. We also know that some tenants and other service users have a combination of protected characteristics.  Intersectionality is the term sometimes used to refer to combinations of protected characteristics.  The experiences of some people can be shaped by their simultaneous membership of different equalities characteristics e.g. being disabled and female.  Furthermore, there can also be intersectionality between equality characteristics and the other areas or challenges below e.g. when the equalities intersectionality occurs with someone who is at socio-economic disadvantage and/or lives in a remote rural setting.
• The assessment here does not seek to analyse these interactions given their complexity but in how we regulate we nevertheless recognise the potential overlapping challenges for some tenants and service users and aim to take them into account.
• We are subject to an equality duty under the Housing (Scotland) Act 2010, which requires us to perform our functions in a way which encourages equal opportunities and in particular the observance of the requirements of the law relating to equal opportunities.
• We are also subject to duties under the Equality Act 2010. This duty requires us, as a public authority, in the exercise of our functions, to have due regard to the need to:

• • eliminate unlawful discrimination, harassment and victimisation and other conduct that is prohibited by the Equality Act 2010;
  • advance equality of opportunity between people who share a relevant characteristic and those who do not; and
  • foster good relations between people who share a protected characteristic and those who do not.
• Homeless people are not specifically named as a protected characteristic group but in our work we often regulate to protect their interests through an equality and diversity lens.
• We have a specific duty to safeguard and promote the interests of Gypsy/Travellers who use official sites provided by social landlords. A great deal of evidence suggests that many Gypsy/Travellers face challenges in their daily lives because of unfair treatment or discrimination.
• Our Equalities Statement says more about our commitment to equality and diversity, and what we expect of social landlords.

Fairer Scotland Duty Assessment

• The Fairer Scotland Duty came into force in Scotland from 1 April 2018. It places a legal responsibility on listed public bodies in Scotland to actively consider (‘pay due regard’ to) how they can reduce inequalities of outcome caused by socio-economic disadvantage, when making strategic decisions.
• We are not a listed body, and so the specific duties do not apply to us. Nevertheless, we aim to act in the spirit of the duty in a way that is relevant and proportionate to our role, status and activities. This is why we undertake this assessment here.
• Socio-economic disadvantage can be described as:

• • low/no wealth;
  • low income;
  • area deprivation;
  • socio-economic background; and
  • material deprivation.
• Evidence shows that many tenants and other service users have one or more of these disadvantages.

Island Communities Impact Assessment

• The Islands (Scotland) Act was passed by the Scottish Parliament in 2018. The measures it contains, like the ICIA, are designed to improve outcomes for island communities.
• Tenants and other service users living on Scottish islands can face particular challenges around distance, geography, connectivity and demography, so our changes aim to take these into account. The same can also be said of rural and remote rural areas of which there are many in mainland Scotland.  So in our assessment we consider islands, rural and remote rural areas.
• In our assessment we consider whether there are potential island, rural and remote rural impacts which differ from the overall Scotland impact or whether there are any barriers which may unfairly disadvantage islanders or those living in rural and remote rural areas.

Children’s Rights and Well-Being Impact Assessment

• In December 2018, the Scottish Government laid before the Scottish Parliament the Progressing the Human Rights of Children in Scotland: 2018-2021 Action Plan and the Progressing the Human Rights of Children in Scotland: Report 2018, in line with the duties placed on Scottish Ministers under Part 1 of the Children and Young People (Scotland) Act 2014.
• The CRIA element of the legislation and policy in Scotland is a tool for public bodies to assess the extent to which their strategies and policies impacts the interests of children and young people.
• Scottish Government data show that a significant number of children and young people either living in social housing, are waiting for social housing or are in temporary accommodation.

 Business and Regulatory Impact Assessment

• We consulted with landlords and representative bodies throughout the consultation process.
• BRIAs help to assess the costs, benefits and risks of changes to our Framework that may have an impact on the public, private or third sector but tenants, other service users and social landlords in particular.
• In this element of our assessment we aim to take account of the five principles of better regulation. Namely that regulation is:

• • transparent,
  • accountable,
  • proportionate,
  • consistent; and
  • targeted where appropriate.

 The impacts of our updated Regulatory Framework

• Below we provide an impact assessment of the key changes to our Regulatory Framework.
• In how we regulate we will consider what more we can do to help ensure positive impacts are maximised and negative impacts are mitigated. We will continue to speak to our stakeholders and monitor the impacts of our work.