(Please note a new blog on this topic was published on 9 June 2023)
Update 30 March 2023: The proposed changes were all approved by the parliament.
This blog looks at the Scottish Government’s planned changes to the rent freeze and evictions pause introduced by emergency legislation, the Cost of Living (Tenant Protection) (Scotland) Act 2022 (‘the Act’) with the aim of protecting tenants through the cost-of-living crisis.
The measures in the Act initially apply to 31 March 2023 but they can be extended for two further six-month periods.
The Act requires the Scottish Government to review and report on the whether there is a need for the measures. The first report (‘the report’) was published on 12 January 2023. On the same day, the Minister for Zero Carbon Buildings, Active Travel and Tenants’ Rights, Patrick Harvie MSP, made a statement in the Parliament. He confirmed that, in the Government’s view, the provisions in the legislation remain necessary and proportionate. The evidence in the report referred to the updated economic context such as projections for continued high levels of inflation, increased energy costs and falls in real disposable income.
The Minister confirmed that the social sector rent freeze will not apply from April 2023 onward following a voluntary approach on rent increases with social landlords.
On 19 January 2023, the Scottish Government made a further announcement on its approach to the continuation of the rest of the Act.
The remainder of the blog considers these changes in more detail.
The Scottish Government plans to remove the rent cap for social housing and social housing rents will increase below inflation
The Act introduced a cap on rent increases for existing tenancies. As the cap is currently set at 0% this has effectively frozen rents.
Social landlords (councils and housing associations) don’t apply rent increases until the start of each financial year in April, so the rent freeze hasn’t yet impacted on them or their tenants.
During parliamentary scrutiny of the legislation, groups representing social landlords voiced their concerns about how a rent freeze from April onwards might affect them. A key argument was that this would impact on their long-term business plans and their ability to invest in building new social homes and their existing stock.
Instead, the government has agreed a voluntary approach with groups representing social landlords on below-inflation rent increases.
For councils, rents are expected to increase by around 6.4% on average, equivalent to around an extra £5 per week (around £22 per month), while housing associations report planned increases of around 6.1%. These increases are below the inflation level of around 11% at the time data was being collected.
Social landlords may set rent rises below or above these average figures. Each social landlord will set their own rents following consultations with their tenants as legislation requires them to do.
Subject to parliamentary approval, regulations will remove the rent cap provisions for social housing tenancies from 26 February 2023, allowing social landlords to give their tenants notice of any rent increase applying from April onwards.
The Scottish Government plans to increase the private rented sector rent cap to 3%
A different approach has been taken for private rented housing. In his statement to Parliament the Minister explained that there were:
“…distinct differences in operation between the social rented sector and the private rented sector. Private renters still face economic challenges, and there is not the opportunity to agree a collective voluntary approach in the private rented sector, given the sector’s very different nature.”
Scottish Parliament, Official Report 12 January 2023
However, the Scottish Government recognises that the cost crisis may also be affecting some landlords and therefore plans to allow within-tenancy rent increases of up to 3%.
The Act also currently allows private landlords to apply to Rent Service Scotland to increase their rent by a maximum 3% to cover specified increases in costs in limited circumstances. This limit will be increased to 6%.
Most private landlords let homes with a private residential tenancy which requires them to give their tenants three months’ notice of any rent increase. Draft regulations provide that, subject to parliamentary approval, the rent cap will increase on 1 April 2023, meaning that landlords with a private residential tenancy can serve a rent increase notice from that date giving three months’ notice.
The Scottish Government has also confirmed that a housing bill, which will include some form of longer-term rent control measures would be introduced in the Parliament as soon as possible after the summer 2023 recess.
The private rented sector rent cap is particularly controversial.
One of the concerns has been the potential for unintended consequences such as a reduction in the supply of private rented accommodation as some landlords may leave the market. The report on the Act noted that that it was difficult to assess wider impacts of the Act as, “…there is limited data available to date due to the relatively short period of time that the Act has been in place. This is, however, being continually monitored and considered.”
A group of organisations representing private landlords, the Scottish Association of Landlords, Propertymark and Scottish Land and Estates have submitted a petition to the Court of Session seeking a judicial review on the legislation arguing that the legislation is disproportionate and unfair.
The Scottish Government plans to suspend the rent cap for student housing
Most student accommodation providers set rents at the start of the academic year and are not normally increased during the academic year. Furthermore, as the rent cap only applies to existing tenancies, it will not apply to new tenancies at the start of the academic term in the autumn.
Given this, the Scottish Government states that the rent cap is effectively not impacting on student housing and “as such, the necessity and proportionality of the measures has been reconsidered in light of this emerging stakeholder feedback and evidence.”
As the rent cap for student housing will be suspended it means there it the potential for it be revived in the future if there is evidence that it would be proportionate and necessary.
The Scottish Government plans to extend the pause on some evictions
Landlords can still serve their tenants with notices to end their tenancy and the courts/Tribunal can still hear eviction cases. However, if an eviction order is granted by a court/Tribunal in certain circumstances it can’t be enforced for up to 6 months.
There are exceptions and some evictions can still go ahead, for example, where a tenant has substantial rent arrears or where the tenant is being evicted for antisocial behaviour.
These provisions will be extended, as will the Act’s provisions that increase the civil damages that can be awarded for an illegal eviction.
Next steps
If the regulations are approved the measures that are being extended will apply 30 September 2023. The Local Government, Housing and Planning Committee will be taking evidence from stakeholders on the regulations on 21 February 2023 and will hear from the Minister on 28 February 2023.
The Scottish Government must regularly review the necessity of the Act and the next report on the Act is due to be laid in the Parliament by the middle of April 2023.
It’s possible that the measures could be extended by a further six months until the end of March 2024. Any provision in the Act can also be ended early or suspended with parliamentary approval.
The Scottish Government’s Cost of Living website provides details of support for anyone struggling with the cost-of-living crisis.
Update 30 March 2023: The proposed changes were all been approved by the parliament.
Please note a new blog on this topic was published on 9 June 2023)
Kate Berry, Senior Researcher (Housing)
Cover image: SPICe