We have previously blogged on the terms of the Housing (Scotland) Bill (the Bill) as presented at stage 1 of its progress through the Scottish Parliament. The previous blogs can be found here and here. And whilst the parliamentary debate on stage 1 of the Bill only took place on 28 November 2024, the Scottish Government has released an announcement on 31 October 2024 which sets out some of their intentions for stage 2 of the Bill. The full wording of the announcement can be found here.
What does the announcement say about rent controls?
Whilst perhaps short on detail, what the Scottish Government has said is that it is still “committed to delivering long term rent control” and whilst amendments are not yet available, what is suggested in relation to rent controls that will apply in rent control areas (RCAs) is that:
- That rent increases of CPI + 1% (capped at 6%) will be allowed
- This will apply to “in tenancy” rent increases and increases in between different tenancies for the same property
This presents a change in approach from the Bill as originally presented at stage 1 in that as originally presented the Bill did not set out what any controls would be in RCAs, but just set out what sort of provisions may be put in place. The original wording of the Bill indicated that any actual controls within a RCA would be set out in further regulations issued by the Scottish Government.
What about exemptions or exclusions?
The Bill as initially presented, also set out exemptions and the possibility of certain types of properties being excluded and the announcement suggests that it is “essential” that this aspect is subject to further consultation with interested parties. It is understood that, in particular, the Scottish Government is looking at possibly excluding mid-market rent properties and even scale “build to rent” properties from any rent controls that may apply in RCAs. Indeed, the announcement suggests that the Scottish Government will also look at possibly allowing “above rent cap” increases in certain circumstances and whilst not explicitly stated in the announcement it is understood that they are also prepared to look at how situations where properties are being let at “below market levels” for example where long-standing tenants leave a property and where the landlords have not increased rent for years may be dealt with and has asked for proposals from landlord representatives in that regard. This is all to be subject to further consultation in “early Spring 2025”.
Summary
Overall, this is all beginning to look like a simplified version of the rules we already have relating to Rent Protection Zones as set out in the Private Housing (Tenancies) (Scotland) Act 2016. The main difference here is (assuming the Bill is not varied in this regard) that local authorities have a duty to report to the Scottish Government by 30 November 2026 on the rental conditions in their areas (with a recommendation) and it is thereafter up to the Scottish Government to decide whether a RCA should be put in place. Beyond that, it is important that the various stakeholders engage in the forthcoming consultation to make sure that their voices are heard as this may be the last opportunity we get to try and ensure that the Bill meets the needs of everyone within the private rented sector, in as balanced a way as possible.
If you require any further information or advice, please contact us or watch our blogs for further updates.
