The Emergency Cost of Living Rent Cap in Scotland comes to an end this April 

New Rules for Scottish Rent Increases Starting in April

The Scottish Government’s emergency Cost of Living (CoL) legislation, which went into effect 18 months ago, will expire on March 31, 2024.

What was the Cost of Living (CoL) Rent Cap?

In response to the cost of living crisis emergency rent cap legislation was laid in the Scottish Parliament. The CoL rent cap and eviction moratorium protections legislation was implemented to provide tenant protection from proposed rent increases or possible eviction.  The emergency measures initially set an annual rent cap of 0% on existing tenancies; in April 2023, this cap was increased to 3% (with the possibility of rent increases of up to 6%; however, landlords would be required to submit evidence that satisfies strict requirements in order to exceed the 3% threshold).

What Will Happen After 31 March 2024?

Subject to parliamentary approval, existing tenant rents will be subject to a more flexible cap on rent increases beginning April 1st. From 1 April 2024, a rent increase of any level can be requested by the landlord, subject to the underlying rules requiring at least three months’ rent increase notice and only one increase in a 12-month period. The new system of rent increases for the private rental sector will still seek to protect tenants to a certain degree. If a tenant believes a rent increase is too much, they can file an appeal, and the landlord (or agent in our case) must present evidence that the level of the open market rent (the rent that would be attained if the property were advertised for rent on the open market) justifies the increase to the existing rent.

Rent increases will be based on open-market rents

In the event that you increase the rent and have a tenant who wishes to dispute a rent increase, either party may apply for rent adjudication from rent service Scotland or the first-tier tribunal. The new rent will be determined using a tapering system, with the final decision possibly involving rent adjudication by a rent officer. The important points regarding the tapering system for in-tenancy rent increases are:

• If the open market rent is 6% more than the present rate, an increase of up to 6% can be imposed instantly.
• If the open market rent is more than 6% higher than the current rent level, and the landlord wishes to raise the rent by more than 6%, a tapering system applies, in which the rent can only be raised by a third of a percentage point for every additional 1% (on top of the allowable 6%) that the open market rent is higher.
• The maximum annual rent increase for properties in the private rented sector will be 12%.

We are working on it

It’s important to note that we will take care of all the complicated parts when we look at rents for existing tenants, ensuring their protection. This will also enable landlords to react to an increase in costs and reinvest in our private rented sector.

Even though the new tapering system makes setting rents harder, landlords in the private rented sector are glad about it. This means that if rents go up a lot, like they have over the last two years, we’ll be able to keep rents on existing  tenant leases closer to prices on the open market so there aren’t big differences.

Given the imminent changes to rent caps, we’re postponing any annual rent reviews until the beginning of April, when we’ll return to providing recommendations to landlords about prospective price increases for their leases as they approach the 12-month anniversary of their last review.

Rents in the Open Market Remain Unregulated

It’s important to note that open market rents will remain unregulated, so we’ll continue to promote properties for rent at a price we believe is suitable and realistic for each property in each specific location.

If you require additional information or want to discuss the rent amount for your property in advance, please contact your Portfolio Manager.