What does new rent freeze legislation mean for landlords and tenants?

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New legislation placing a temporary cap on rent increases and eviction bans has been passed by the Scottish Government. 

The Cost of Living (Tenant Protection) (Scotland) Bill gives ministers temporary powers to cap rents for private and social tenants until the end of March 2023. It means also evictions will only be allowed under certain circumstances. 

At the same time, damages for unlawful evictions have been increased to a maximum of 36 months’ worth of rent. 

Who does it apply to? 

The rent freeze applies to private residential tenancies, assured tenancies, and short assured tenancies in Scotland. 

It doesn’t apply to: 

  • New tenancies (because you can set the rent from the start of the new tenancy) 
  • Common law tenancies 
  • Regulated tenancies under the Rent (Scotland) Act 1984 

What does this mean for landlords? 

The rent cap is set at 0%, meaning Scottish landlords can’t increase their rent during the rent freeze. As a landlord, you hope to make a profit on your property, but it's important to make sure your rental price is in line with other homes in the area if you want your tenant to stay for the long term. 

However, there are exceptions to the rent freeze where a landlord faces increased property costs, mortgage interest payments and some insurance costs.  

If this applies to you, you will need to apply to Rent Service Scotland to increase your rent by up to 50% of the additional costs you’ve faced in the preceding six months. Landlords must let the tenant know that they have made an application. 

To protect tenants, rent increases of this kind will be limited so that rents cannot increase by more than 3% of the existing rent. The existing protections for tenants that only allow a landlord to raise rents once every 12 months will still apply.  This means that an application to raise rent for certain costs can only be made if the rent has not increased for 12 months. 

What about student accommodation? 

The legislation, which was approved by 89 votes to 27, also covers student accommodation and provides for a six-month moratorium on evictions. 

Landlords will still be able to increase rents between tenants. 

What does it mean for tenants? 

The Scottish Government said the temporary legislation “balances the protections that are needed for tenants with some safeguards for landlords”, who may also be impacted by the cost crisis. 

Tenants should continue to pay their rent during this time. Anyone struggling to pay their rent, or worried about paying their rent in the future, should discuss this with their landlord as soon as possible. There are sources of help for people who are experiencing financial difficulties which may be useful. 

What if a landlord has issued a rent increase notice before the new legislation? 

For tenancies where a rent increase notice was issued before 6 September 2022, the rules and protections which were already set out in laws before these temporary changes were introduced will still apply. 

This means that: 

  • Landlords must have used the correct type of rent increase notice for the type of tenancy. 
  • Landlords must have given the tenant the correct amount of notice for the type of tenancy, and followed all other rules set out in law for rent increases for that type of tenancy. 
  • Tenants may have a right to challenge a rent increase by applying to Rent Service Scotland or to the Tribunal. 

What about evictions? 

Similar to the rules that were in place during the pandemic, the Bill will not prevent landlords serving a notice to leave or notice of proceedings. Landlords will still be able to make an application to the Tribunal or the Sheriff Court, and the Tribunal or Court will still make a decision on whether to issue an eviction order. However, there will be a delay in the eviction order being enforced by Sheriff Officers. 

Where a landlord is prevented from enforcing an order for eviction while the moratorium is in effect, the enforcement of that order can only be delayed for a maximum period of six months. 

Many current applications lodged with the Tribunal or Court before the emergency legislation comes into force will not be affected by the emergency measures. 

What will happen in the future? 

The legislation, which was fast-tracked through the Scottish parliament's scrutiny process, can be extended over two further six-month periods. The Scottish Ministers would need the agreement of the Scottish Parliament in order to do this. 

The Scottish Government says no decision has been taken yet about the use of these emergency measures after 31 March 2023. 

If the rent cap rises above 0%, tenants will be able to apply to Rent Service Scotland to check that new rent proposed by the landlord is not above what the cap allows. 

What does it all mean? 

Nicky Lloyd, ESPC’s Head of Lettings, says: “The new Cost of Living (Tenant Protection) (Scotland) Bill will significantly impact the use and ownership of landlords’ properties.  

“When it comes to renting your property out in Scotland, it’s important that you are aware of every step of the process so you don’t end up with any nasty surprises. Make sure you stay up to date with the rent freeze legislation so that you have the right processes and safety nets in place if anything goes wrong. 

“If you need advice on the new legislation, reach out to ESPC Lettings and we will be happy to help.” 

You can read more details on the legislation on the Scottish Government website or contact ESPC Lettings for insights on how this may affect you. 

ESPC Lettings 

If you’re interested in entering the buy-to-let market or are a landlord looking for advice, a new letting agent or a full property management service, ESPC Lettings can help. As a letting agent based in Edinburgh, we can assist with all stages of renting out a home, from finding the right property to sourcing tenants to property maintenance. 

Get in touch with the team today on landlord@espc.com or 0131 253 2847.