Your guide to the Scottish rent cap and moratorium on evictions

The Scottish government's programme for 2023/2024 has committed to introducing a new Housing Bill to deliver its strategy, "A New Deal for Tenants" - which may include a more long-term plan for rent controls in Scotland.

However, for now, a rent cap is in place, set at 3% in most instances since April 2023, until March 2024. This was part of the emergency measures introduced under Cost of Living (Tenant Protection)(Scotland) Act.

What are the current rules under the rent cap?

The Cost of Living (Tenant Protection) (Scotland) Bill 2022, including a rent freeze and moratorium on evictions, was in place from 6 September 2022 until the end of March 2023. Any rent increase notices issued on or after 6 September 2022 were void - yet rent increases issued before this date are still valid.

From 1 April 2023, rent increases have been capped at 3% - although private landlords can apply to increase rents up to 6% to help cover certain costs. Enforcement of evictions will also continue to be "prevented", with certain exemptions.

The current rent cap only applies to the private rented sector, as a separate agreement was reached to keep rent increases below inflation for the next financial year in the Scottish social housing sector.

The government is also considering making rent controls in Scotland a permanent feature, according to its Programme for Government 23/24.

What are the conditions of the rent cap?

The rent cap applies to all existing private residential, assured, and short assured tenancies.

Landlords can reset rents between tenancies, yet new tenants will enter into a new agreement knowing that they are protected from any rent increase.

While the rent cap is in place, landlords can't increase their tenant's rent by more than 3% of their current rent - aside from in certain set circumstances.

Are there any exemptions from the rent cap for landlords?

There will be scope for a landlord's "prescribed costs" to be considered for those eligible to make a rent increase. These include:

• Interest payable for the mortgage or "standard security" of the rental property
• Insurance premiums relating to the property - for example, landlords' insurance
• Service charges that are part of the contract with the tenant as part of the tenant's rent

Landlords would need to apply to Rent Service Scotland to increase rents to cover up to 50% of the increased costs, and any increase will be limited to a maximum of 6% until at least September 2023.

What has been the impact of the rent cap?

Propertymark data appears to suggest that the cap has not had the desired effect of making renting more affordable for tenants.

Fifty percent of its Scottish agents reported higher rents month-on-month in April 2023, while the number of properties available dipped in May 2023 versus May 2022.

Combined with rent price data, Propertymark says that "landlords in Scotland are increasing rents between tenancies to cover their costs and anticipated costs due to a fear of ongoing rent control legislation.” 

What is the moratorium on evictions?

The moratorium on evictions won't stop a landlord from taking steps to apply to the courts for an order to evict a tenant, but it prevents the enforcement of eviction actions until the restrictions end, unless an exemption applies.

Exemptions include:

• Evictions for "antisocial behaviour, criminality, tenant abandonment and where a lender intends to sell the property
• If a landlord intends to sell the let property to alleviate financial hardship
• Where a landlord plans to live in the property due to financial hardship
• Substantial rent arrears of six months’ rent

If the proceedings for an eviction order started before 6 September 2022, the restrictions don't apply.

How will the rent cap be enforced?

Tenants will be able to refer a rent increase to a Rent Officer to confirm if it's in line with the rent cap. This could be used in instances where rent includes energy costs, for example, and is therefore not straightforward. 

For any unlawful eviction, the bill will amend the Housing (Scotland) Act 1988 to assess damages based on a "multiplication of the monthly rent".

How will this legislation affect student tenants in Scotland?

The new policy document highlights that a large number of students in Scotland live in  halls of residence and in purpose-built student accommodation - 47,500 in a typical year.

While the government has received assurances that there is "little appetite" for these accommodation providers  to increase rents mid-tenancy, it recognises that this is not a certainty.

The new measures will therefore apply to these student accommodation providers, to give more assurance to student tenants that their rent will not increase mid-tenancy.

However, a cap on student rents from April 2023 until at least September 2023 will be "suspended", taking into consideration the annual nature of student contracts based on the academic year.

Why was the bill introduced?

The new bill aims to respond to the "emergency situation caused by the impact of the cost crisis on those living in the rented sector in Scotland."

The measures aim to help stabilise housing costs for tenants, reduce the impact of evictions or being made homeless on the health and wellbeing of tenants, and help avoid evictions by landlords that want to raise rents between tenancies.

This article is intended as a guide only and does not constitute legal advice. please visit parliament.scot for more information.