Soon after the Scottish Government published their first report on the impact of the legislation, they laid the draft Cost of Living (Tenant Protection) (Scotland) Act 2022 (Amendment of Expiry Dates and Rent Cap Modification) Regulations 2023.
Once approved the Regulations would mean that from 1 April 2023, the Cost-of-Living legislation would be amended so any increases in private rents will be capped at 3%. Furthermore, the prescribed costs safeguard for private landlords will be amended, allowing them to apply for increases of up to 6% to help cover certain increases in costs in defined and limited circumstances.
Local Government, Housing and Planning Committee
At the Committee session, the Minister said, “economic analysis that shows that the unprecedented economic position has not yet changed fundamentally and that many households in the private rented sector, in particular, continue to struggle.” Harvie added, as rents in the private rented sector are generally significantly higher [than the social rented sector], allowing for a maximum 3% rent increase equates to a similar average rent increase for tenants in a two-bedroom property, which is the most common property size in the private rented sector.
On increased costs to landlords, Harvie said, additional safeguards for landlords are there. If they face additional prescribed property costs during the specified period, they can apply for an increase of up to 6% through Rent Service Scotland. Adding, he thinks that strikes the appropriate balance between tenants and landlords, who will in a significant number of cases face significant challenges through the cost-of-living crisis.
In relation to the moratorium on evictions, the Minister said, there is a necessity to give a level of protection, not only by pausing evictions to allow people more time to find new accommodation but by having significant measures to create disincentives for unlawful eviction, which remains a serious problem in Scotland.
Rent controls
The Minister confirmed that longer-term work on rent controls is ongoing by the Scottish Government arguing, “Our view, which is also acknowledged in the report on rent control by the cross-party group on housing, is that regulated markets can be attractive to investors. Indeed, we regularly make that case in relation to the long term.”
Propertymark has been invited to join a stakeholder engagement group to support the ongoing work to develop a national system of rent control for Scotland. The first meeting is later this month and meetings will run until the end of August.
Propertymark evidence
We know that the legislation is continuing to have an effect on landlord and agent confidence, with the majority of agents we engaged with still seeing landlords exiting the market. In December 2022, 85% of our member agents surveyed said that landlords had expressed a wish to sell their properties, this has now risen to 89% in February 2023.
The legislation remains disproportionate to the scale of the problem in the PRS, with most Propertymark member agents telling us that landlords had not increased rents in the last few years. Those who are now needing to increase rents are doing so because increased costs including rising interest rates have made renting out their property unaffordable.
An agent in Lanarkshire told us that one of their landlords’ mortgage payments had risen from £151 per month to £560, meaning that a 3% increase in rent would not even meet their additional costs. We now have 94% of agents saying that landlords would be inclined to increase rents between tenancies because of the Act to cover impending and rising costs.
What happens next?
Members of the Committee voted through the proposed change in regulations by five votes to two, with Conservative MSPs Miles Briggs and Annie Wells voting against the move. The extension will now be voted on by all MSPs in a plenary of the Scottish Parliament before it is finally approved. Propertymark will continue to challenge this disproportionate and ineffective legislation and gather further feedback from our member agents in Scotland.
