Cost of Living – Rent Cap Expiry and the Eviction Moratorium

In 2022, in an attempt to offset rising rent costs resulting from inflation to the cost of living, the government brought in a temporary rent cap and eviction moratorium protection for private tenancies. This was introduced through the provisions set out in the Cost of Living (Tenant Protection) Act 2022. The initial time limits set out by the Act have been extended several times.

The final extension will terminate on 31 March 2024.

The Scottish Government has been working on a strategy for moving out of the current provisions in order to return rent to open market values, whilst still maintaining the protection of tenants by allowing them to challenge unreasonable measures.

In January 2024, the Scottish Government announced their proposal to extend the provisions of the 2022 Act in relation to rent adjudication for a further 12 months to 31 March 2024, providing an enhanced system of tenant-initiated rent adjudication, introduced by a set of new temporary regulations.

If parliamentary approval is given, the regulations will modify the rent adjudication process for the 12-month period.

Tenants can refer their landlord’s rent increase notice to a rent officer at Rent Service Scotland or to the First Tier Tribunal for Scotland (Housing and Property Chamber).

Any decision on rent adjudication the rent officer or the Tribunal would use a tapered formula, as summarised below:

• Calculating the percentage gap between the open market rental value and the current rate of rent. This calculation in turn sets a maximum limit on the percentage in which the Landlord can increase the rent by. The Rent Adjudication (Temporary Modifications) (Scotland) Regulations 2024 sets out that:
  • If the gap between the market rent and the current rent is 6% or less, the landlord can increase the rent by the proposed amount on the basis that it is not greater than the market level.
  • If the difference between the market rent and the current rent is greater than 6%, the landlord is entitled to increase rent by a maximum of 6% plus a further 0.33% for every percentage that exceeds 6%. However, the increase cannot be greater than 12%. 

Neither the rent officer nor the Tribunal can set a higher rent than that requested by the landlord within their rent increase notice.

In terms of the eviction moratorium coming to an end, the 6-month delay in enforcing most eviction grounds will no longer be in force and evictions are subject to the post provisions requirements.

The proposed regulations are temporary and are intended to bridge the gap in anticipation of the Housing Bill which should become legislation in early 2025 which will provide long term rent control measures for private tenancies.

If you are unsure what your rights are as a tenant or landlord of a private residential tenancy following termination of the rent cap provisions or the introduction of the temporary rent adjudication or you would like more information, please contact a member of the Real Estate team who would be happy to assist.

Disclaimer 
The matter in this publication is based on our current understanding of the law.  The information provides only an overview of the law in force at the date hereof and has been produced for general information purposes only. Professional advice should always be sought before taking any action in reliance of the information. Accordingly, Davidson Chalmers Stewart LLP does not take any responsibility for losses incurred by any person through acting or failing to act on the basis of anything contained in this publication.