2024 proved to be another rollercoaster year for landlords and property investors in Scotland. With a wave of new legislative, regulatory, and tax changes, many of us are reeling under the weight of all the changes the PRS has seen.
Changes to the Repairing Standard
From 1st March 2024, several new requirements were added to the Repairing Standard. As a landlord, it’s crucial to ensure your properties comply with the following:
- Lead Testing: Landlords must now carry out lead testing to ensure water supplies meet safety standards.
- RCD Protection: Electrical installations must be equipped with Residual Current Devices (RCDs) to improve tenant safety.
- Fixed Heating Systems: All properties must have a fixed, permanent heating system.
- Food Preparation and Storage: Properties must provide suitable, safe access to food storage and preparation areas.
End of the Cost of Living (Tenant Protection) Act
The Cost of Living (Tenant Protection) Scotland Act 2022, which introduced rent controls and a moratorium on evictions, ended on 31st March 2024. This brings some relief to landlords, but further legislative changes are already in motion.
The Housing (Scotland) Bill: What You Need to Know
In March 2024, the Scottish Government introduced a new Housing (Scotland) Bill. This legislation aims to enshrine the proposals from the New Deal for Tenants Consultation into law. Key provisions include:
- Rent Controls: Proposals to introduce permanent rent controls and adjust rent increase procedures.
- Joint and Several Tenancies: Changes to the Private Residential Tenancy (PRT) to prevent tenants from being “trapped” in joint tenancies.
- Personalisation and Pets: Tenants may gain greater rights to personalise properties and keep pets.
- Stronger Eviction Protections: Additional safeguards for tenants during eviction processes.
The first stage of the Housing (Scotland) Bill passed through Parliament on 29th November 2024, with further scrutiny and voting to follow. During these stages, amendments can still be introduced to revise the Bill.
Rent Control Amendment: CPI + 1% Cap
In a significant announcement on 31st October 2024, the Housing Minister confirmed an amendment to the rent control proposals. For properties located within Rent Control Areas (RCAs), rent increases will be capped at the Consumer Prices Index (CPI) + 1%, with a maximum increase of 6%.
While this amendment offers some clarity, concerns remain about how these controls will impact investment and the broader rental market.
Increase in Additional Dwelling Supplement (ADS)
From 5th December 2024, the Additional Dwelling Supplement (ADS) increased from 6% to 8%. This tax applies to the purchase of rental properties, second homes, and holiday homes.
Upcoming Changes to EPCs
Energy Performance Certificate (EPC) regulations are also set to evolve. Expected reforms include:
- New EPC Rating System: Clearer information on energy efficiency, heating system performance, and running costs.
- Redesigned EPC Certificates: A phased redesign based on user feedback.
- Reduced Validity Period: EPCs will now be valid for 5 years instead of 10, ensuring information is more current.
- Enhanced Quality Assurance: Stricter governance for EPC assessors to improve consumer confidence.
A Welcome Change: End of Temporary Rent Restrictions
In some positive and somewhat surprising news, the Scottish Government has announced the temporary restrictions on rent increases will be withdrawn at the end of March 2025. From 1st April 2025, if a tenant appeals a rent increase, the rent will be set at the open market rental value – even if this is higher than the landlord’s original proposal.
What Lies Ahead for 2025?
Now we are well into 2025 the direction of travel remains the same as last year with yet more change on the horizon.
While the lifting of temporary rent restrictions is a relief, permanent rent controls remain on the table. The Housing (Scotland) Bill is still working its way through Parliament, with two more stages of scrutiny and potential amendments.
We continue to advocate for changes, particularly around easing between-tenancy rent controls. We believe these measures could deter investment, push up rents for properties, and create significant market distortions and ultimately hurt tenants.
If the Housing (Scotland) Bill becomes law later this year, additional secondary legislation will be required to outline how these new rules will be implemented in practice.
Staying Informed and Prepared
For landlords in Scotland, staying ahead of regulatory changes has never been more critical. We encourage you to review your property portfolios, ensure compliance with new standards, and prepare for further changes as 2025 progresses.
We will continue to monitor developments and advocate for fair, practical policies that support both landlords and tenants in Scotland’s evolving rental market. Stay tuned for further updates as the year unfolds.
