The Scottish Government has announced amendments to the Scottish Cost of Living Crisis Act, capping rent rises at 3% and extending the current eviction ban. The amendments to the emergency legislation will come into force on 1st April 2023.
The Cost of Living (Tenant Protection) (Scotland) Act 2022 legislation was introduced in October 2022 due to the cost of living crisis, aiming to support tenants. The emergency measures froze residential rents and restricted residential evictions – you can find full details of this in our previous article, New rules for landlords in Scotland – The Cost of Living Crisis Act.
What are the current rules for landlords in Scotland?
Residential rents
Currently, a cap of 0%, termed the “permitted rate”, applies to a rent increase notice served on or after 6th September 2022.
Residential evictions
Landlords can serve notice as normal if they wish to end a tenancy. If the tenant doesn’t leave during the notice period, the landlord can apply to the First-tier Tribunal (Housing and Property Chamber) for an eviction order as normal. However, the legislation delays a landlord from enforcing an eviction order issued by the tribunal, in some circumstances for up to six months.
There are some exemptions to these, as explained in our previous article.
What are the Cost of Living Crisis Act amendments?
The Scottish Government announced the amendments to the Cost of Living (Tenant Protection) (Scotland) Act 2022, published on the scot.gov website.
Residential rents
The key amendment concerning private landlords is the cap on residential rents:
- If landlords choose to increase private rents, then the rise will be capped at 3% of the existing rent
- The safeguard for private landlords will be amended, allowing them to apply to a rent officer at Rent Service Scotland to increase the rent by up to 6% to help cover certain increases in costs incurred by the landlord in the previous six months
As under the current legislation, these costs include:
- mortgage/standard security interest
- insurance premiums (not general buildings/contents insurance premiums)
- service charges paid by the landlord which the tenant is responsible for under the tenancy
Full details on the amended rent cap can be found on the gov.scot website (rent cap).
Residential evictions
There is no change to the ban on residential evictions; the enforcement of eviction orders remains subject to a delay of up to six months.
There remain a number of grounds for exemption from the ban, as laid out on the scot.gov website (evictions).
Legislation extended to 30th September 2023
The amended temporary legislation is expected to be in place for a further six months, from 1st April – 30th September 2023. The Scottish Government then has the option to extend the measures for a further six months, if deemed necessary. The Scottish Ministers are required to report on the changes every three months.
Cost of Living Crisis Act amendments – Industry response
We continue to acknowledge that those who rent their homes are more likely to be financially vulnerable than those who own property. However, we remain disappointed that the legislation does not balance the need to protect tenants and the continuing cost pressures that landlords are experiencing.
Scottish Association of Landlords’ legal challenge to Cost of Living legislation
The Scottish Association of Landlords (SAL) are actively representing the concerns of landlords, and together with Scottish Land and Estates (SLE) and Propertymark, submitted a joint petition (a formal application to a Scottish court) on 20th January, requesting a judicial review of the Cost of Living (Tenant Protection) (Scotland) Act 2022.
If the review is successful, the legislation may be ruled to be unlawful and parts or all the Act may be repealed. Alternatively, the government may be encouraged to consider and implement financial assistance for landlords. We now need to await a response, as the court decision-making process can take several months.
John Blackwood, SAL chief executive, released a statement on 20th January, saying:
“So far, the result of the Scottish Government eviction ban and rent freeze has been just as concerning as we predicted. Landlords selling up loss-making property is further reducing housing supply, despite ever increasing demand. The result is the cost of finding a new home is actually increasing for renters.
“While the Scottish Government sees fit to raise council and housing association tenants’ rents, so social landlords can do repairs and improvements, they fail to realise that private landlords are faced with similar financial pressures. The Ministerial statement in parliament last week and yesterday’s announcement make it perfectly clear the Scottish Government plans to continue with eviction ban and rent increase restrictions in the private rented sector (PRS) beyond 31 March. Landlords have had enough. We must stand united to protect our property interests by challenging this unfair legislation in court.”
Response from At Home In Edinburgh
While we fully support the need to protect financially vulnerable tenants, the cost of living legislation does not consider the implication on hard working landlords who are now facing increased mortgage rates. As a minimum, we believe that the government should be offering financial assistance to landlords who are adversely affected by the legislation. Without this, we fear landlords will begin to exit the sector, causing further pressure on PRS supply.
We will continue to provide feedback to SAL on behalf of our landlords and tenants. This will help ensure that SAL can continue to represent the private rental sector as robustly as possible.
What happens next?
For now, we await the findings of the judicial review petition. In the meantime, we will continue to work with landlords and tenants to try and keep good tenants in their homes for as long as possible. Our team are here to support you and to answer any concerns or queries you may have, so please do get in touch. Give us a call on 0131 229 4001, email via our contact form or pop in and see us at 39 Warrender Park Road, Edinburgh, EH9 1EU.