The Scottish Government caused shock waves in the residential property sector in September 2022 when it announced a temporary rent freeze for existing tenancies and a prohibition on evictions for all rented housing (including student accommodation) as part of its measures to address the cost of living crisis. Whilst efforts to help those struggling to deal with rising costs are to be welcomed, the Scottish Government was criticised by both the private and social rented sectors for the manner in which it used emergency legislation to impose the rent freeze without prior consultation.
That emergency legislation required the Scottish Government to seek evidence from key stakeholders as to the effects of the legislation and the need for it to be extended. Having gathered such evidence and following the criticism it has faced, the Scottish Government announced on 19 January 2023 that, subject to approval in the Scottish Parliament, the following changes will be made:
- following an agreement with social landlords to keep any rent increases well below the rate of inflation, the freeze on rent increases for the social rented sector will expire on 26 February 2023 to allow time for rent changes to take effect from the end of March 2023;
- the freeze on rent increases for purpose-built student accommodation will be suspended from 30 March 2023 in recognition of "its limited impact on annual rents set on the basis of an academic year";
- the freeze on rent increases for the private rented sector will be removed on 1 April 2023 and replaced with a 3% cap on rent increases. It will be possible to apply to increase private rents by up to 6% to cover specified costs;
- the prohibition on evictions (subject to limited exceptions) across all sectors will continue; and
- the increased penalty for unlawful evictions will continue to be up to 36 months' rent.
If the above measures are approved by the Scottish Parliament, the rent cap for the private sector and the prohibition on evictions will remain in place until at least the end of September this year. However, the Scottish Government also announced that it will be bringing forward a Housing Bill shortly after the summer recess which will include proposals for "long-term" rent controls in the residential sectors. The effect of any rent control on the sector will depend on the exact terms of the legislation but one has to hope that the Scottish Government will take a pragmatic approach that allows investment in this sector to resume at pace to deliver the residential development volumes which the Scottish Government itself committed to in its long-term national housing strategy.
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