As we approach the 31st March 2024 end date for the tenant protection legislation, the Scottish Government have announced a new procedure to tackle challenges from tenants facing rent increases. As of 1st April, landlords can propose rent increases of any amount, with the new procedure being put in place “to provide a level of protection for private tenants which remains far greater than anywhere else in the UK”, according to Tenants’ rights minister, Patrick Harvie.
If a tenant wishes to challenge their rent increase, they will be referred to the rent officer who will implement a tapering formula.
The formula has been summarised by SAL as follows:
- If the gap between the market rent and the current rent is 6% or less, then the landlord can increase the rent by the proposed amount, as long as this is not more than the market level. This level cannot be challenged.
- If the gap between the market rent and the current 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%. However, the total rent increase cannot exceed 12% of the current rent.
- Both cases are also subject to the requirement that the rent officer cannot set a higher rent than that requested by the landlord.
If the increase proposed by the landlord is higher than that allowed through the tapering formula, then the rent officer will set the rent at the lower level.
Any rent increases from 1st April onwards that are not challenged by the tenant will take effect from the end of the notice period.
The new procedure is an attempt from the Scottish Government to support landlords that have felt restricted with the rent caps in place whilst feeling the increase pressure from the rising cost of living and to encourage reinvestment into the Scottish private rental sector.
Whilst lifting of the rent caps is long overdue and very much welcomed by landlords, many feel the damage has already been done.
John Blackwood, chief executive of the Scottish Association of Landlords, said: “While the Scottish Government has finally recognised the need and benefits of landlords investing in their properties, their actions and rhetoric to date have already significantly harmed the ability and desire for many to do so.
“The rent freeze exacerbated Scotland’s housing crisis, making rented properties no longer viable for many landlords who have chosen to sell. This has decreased supply and only increased costs for tenants and means the Scottish Government has a long way to go to rebuild confidence and secure the kind of investment that is needed to help solve Scotland’s housing emergency.”
David Gibb, Operations Director for Tay Letting, matches John’s sentiments that the Scottish Government’s decisions up to this point have damaged the relationship between landlords and tenants within Scotland saying, “The Scottish Government has for a number of years chosen to ignore the advice from professionals and trade bodies who have a working understanding of the sector. They pressed ahead with legislation which reduced supply and has caused prices to increase substantially over the last 18 months. Whilst the removal of the restrictive legislation is welcomed, we need to see the Scottish Government work with the Private Rented Sector to encourage investment, which will help us solve the housing emergency we current face in Scotland.”
At Tay Letting we encourage our landlords to implement a yearly rental increase in line with inflation that aims to protect landlords’ investments and also avoid drastic rental increases for tenants.
You can find full details on the transitional measures from the Scottish Government here, as well as illustrative worked examples under the new proposal.
