On 12 January 2023, the Scottish Government published their First Report to the Scottish Parliament on the Cost of Living (Tenant Protection)(Scotland) Act 2022 (the Act). The Act came into force on 28 October 2022 and introduced the rent freeze and moratorium on evictions that had been announced earlier on 6 September 2022, affecting both social and private rented sector tenancies. The report can be found here.
The First Report
The report laid out the Scottish Government’s intentions regarding social tenancies, updated the economic position, as well as detailing consultees’ responses following a call for evidence. In relation to the private rented sector (PRS) the Scottish Government’s position summarised was that it was “under continued consideration”. Following that report and with the end of the initial six month period fast approaching on 31 March 2023, the Scottish Government has confirmed their further intentions going forward. The announcement made on 19 January 2023 can be found here.
Continuation for the PRS
The Scottish Government’s intention is to seek to continue the Act for another period of six months (the Act provides for the possibility of two extensions of six months each) from 1 April 2023 until 30 September 2023. In relation to the PRS, what has been outlined is as follows:
- The current rent cap of 0% to be replaced to allow mid-tenancy rent increases of up to 3%;
- The limit for seeking a rent increase for up to 50% of any increased prescribed property costs is to be increased from 3% of the total rent payable under a tenancy to 6% of the total rent payable;
- The eviction moratorium currently in place for certain eviction grounds/grounds of possession is to be continued;
- The increased level of damages for unlawful evictions is also to remain in place.
Whilst this is the intention of the Scottish Government, the proposed changes still require to be agreed to by the Scottish Parliament, and it is understood that the draft regulations have been laid before the Scottish Parliament for approval.
Other sectors
Whilst strict controls are to remain in place for the PRS, social tenancies and student tenancies will have the rent freeze removed from 1/4/23. It appears that the justification for the disparity in treatment of the different sectors is down to an agreement the Scottish Government reached in December 2022 with social landlords for “below-inflation rent increases” for 2023 to 2024 (although on average in certain areas this is specified as 6.1), as well recognising that new student tenancies commencing in the academic year 2023 to 2024 would not be covered by the Act anyway.
The future?
Whilst the continuation of the Act will no doubt be of concern to many landlords and agents in the PRS (along with a possible further extension), what is perhaps of more concern to the PRS is the statement by the Scottish Government that it is their intention to “bring forward a new Housing Bill… as soon as possible after the 2023 summer recess”. That new Bill is slated to include “long-term rent control measures”. What they will look like is not known at this stage, but it follows the Scottish Government’s recent consultation “A New Deal For Tenants” and their commitment to a national system of rent controls by the end of 2025. The questions therefore on many people’s mind are whether the cost of living crisis is being used as a basis to accelerate such plans and therefore whether such plans have been fully thought through or not?
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