What will happen after the 31^st March 2024 regarding Scottish Government’s Rent Cap?

From the 6^th September 2022, there was a temporary cap on rent increases for private tenancies in Scotland. This was part of the Scottish Government’s wisdom to lessen the burden to tenants on the impact of the cost-of-living crisis. The cap was set at 3% and is expected to stay in place until the 31^{st of} March 2024.

The government’s current proposal is that from 1 April 2024 landlords can issue a rent increase notice up to the current market value of the property. The tenant could then refer the increase to the rent officer for adjudication if they felt it was too high. The rent officer would be able to restrict the rent increase through a tapering mechanism. The larger the difference between the current rent and the open market rent, the larger the increase which would be permitted by the rent officer subject to a maximum figure yet to be announced (but likely to be in the region of 10-15%).

These proposals are still under consideration and SAL will notify members as soon as a firm announcement is made about rent increase procedures from 1 April. Rent increase notices issued before 1 April are still subject to a 3% cap, even if the increase doesn’t come into force until after that date.

Assured or short assured tenancies which contain a rent increase clause in the contract terms are exempt from the current rent cap and are also expected to be exempt from the proposals set out above.

Q: Can I increase the rent to market value after March 31^st 2024 if I have implemented the 3% increase in the last year?

A: No, if you have increased your rent by 3% in the last 12 months you cannot increase it to market value until 12 months has passed since the 3% increase.

1. Can rent for an active tenancy can be increased by any amount?

A: No, to prevent steep increases post-rent cap expiration, the government plans to introduce temporary charges to the rent adjudication process. These measures lasting a max of one year and subject to regular review aim to protect tenants during the transition. We doubt most landlords will seek steep rental increases. We know that many landlords have helped tenants throughout the uncertainty of covid and the cost-of-living crisis.

Q What are the new temporary changes?

A: When the emergency rent cap is removed the Scottish Government plans to amend the rent adjudication process so decisions must be based on the lowest of the three comparators:

• Open market rent
• The new rent proposed by the landlord
• A maximum “reasonable” increase for that tenancy, which will be defined by a new taper calculation.

Unfortunately, with less than three months to go we do not yet have firm legislation on the rent increase cap. However, the potential plan set out by the Scottish Government does seem sensible for both landlords and tenants. As an experienced letting agent, we do not foresee any of our landlords requesting for rents to be increased at an unreasonable level and we will always advise them of the market value and what we believe is a suitable increase. Rent Officers will monitor these closely and ensure all landlord and letting agents are being fair and reasonable.