The Scottish Government has confirmed the rent increase procedure which will apply when the rent cap legislation ends on 31st March 2024.
A Reminder of Current Restrictions
The emergency Cost of Living legislation, which was brought in to support tenants, will have been in place for 18 months by 31st March 2024. The emergency measures initially froze residential rents. Amendments to the legislation came into force on 1st April 2023 which restricted rent increases in most cases to 3%.
The rent increase procedure from 1st April 2024
From 1st April 2024 a landlord can propose a rent increase of any amount. If the tenant wishes to challenge the increase, they can refer it to the rent officer, who must apply a tapering formula to the increase. The tapering formula considers current market rents.
If the tenant does not challenge the increase, the amount proposed will take effect at the end of the notice period.
Rent increases are still subject to the underlying rules which state tenants must be given three months notice of a rent increase and only one increase in any 12 month period.
The tapering formula and market rents
If the proposed rent increase is disputed by the tenant, it will be subject to a tapering formula. In summary:
- If the gap between the current rent and the market rent is 6% or less, then the landlord can increase the rent by the proposed amount, as long as this is not more than market rent.
- If the gap between the current rent and the market rent is more than 6%, the landlord can increase the rent by 6% plus an additional 0.33% for each percent that the gap between the current rent and market rent exceeds 6%.
- The upper limit to the total rent increase cannot exceed 12% of the current rent.
The above procedures only apply to mid-tenancy increases. There is no restriction on how much landlords can increase rents by between tenancies.
Rent increase notices issued prior to 1st April 2024
For clarity, any rent increase notices issued on or before the 31st March 2024 are still capped at 3%.
This means, the earliest a rent increase calculated under the new procedure can take effect is three months after the notice is issued in April 2024.
Short Assured Tenancies
The above procedure does not apply to assured and short assured tenancies which contain a rent increase clause in the tenancy agreement. The rent for these types of tenancies can be increased in line with whatever is stated in the rent increase clause.
Next Steps
We are pleased that the government are relaxing rent restrictions, providing much needed relief to some of our landlords. The new tapering system is undoubtedly more complex than the previous process, but At Home In Edinburgh will advise you on the appropriate rent increase amount and carry out any calculations.
In the lead up to 1st April, we will review your property’s rent against current market rents, and look at when your rent was last increased, so that we can advise you if a rent increase is appropriate.
As there are no restrictions on rent increases between tenancies, we will continue to adjust rents to market level when re-advertising your property.
Please remember that we are here to guide and support you through these new rules for landlords. Just get in touch with us if you have any concerns or queries – no question is too small.
Give us a call on 0131 229 4001, drop us an email, or pop in and see us at 39 Warrender Park Road, Edinburgh, EH9 1EU.