Scottish Government to remove the 3% rent cap. Is it good news for landlords and tenants?

The Scottish Government has laid regulations to remove the 3% rent cap.  Once approved in the coming weeks, new rent control regulations will come into effect from 1^st of April 2024 that are less onerous for landlords.

From 1^st of April, landlords will be able to raise rents by any amount they wish.  However, Tenants who already have the right to challenge unfair increases to a rent officer at Rent Service Scotland, will have greater protection to limit any increase.

The rules will allow a Rent Officer to limit any rent increase to a maximum of 12%, but only if a tenant raises a formal objection.

Whilst we do not believe rent controls work or are desirable, the removal of the 3% cap is to be welcomed.  It will allow landlords, who typically only increase rents modestly to existing tenants, greater flexibility.   For tenants it provides them with greater certainty on rent increases.

In practice, we work with our landlords and tenants to make sure any increase is both fair in the market place and affordable to the tenant.

The regulations will temporarily modify the rent adjudication process for 12 months so that on making a decision on adjudication, the rent officer would use a rent taper formula as follows:

• If the gap between the market rent and the current rent is 6% or less, then the landlord can increase the rent by the proposed amount, as long as this is not more than the market level.
• If the gap between the market rent and the current rent is more than 6%, the landlord can increase the rent by 6% plus an additional 0.33% for each percent that the gap between the current rent and market rent exceeds 6%. However, the total rent increase cannot exceed 12% of the current rent.

This has the effect, that if the rent increase proposed by the landlord was more than 24%, the maximum increase would be reduced to 12%.

In addition, the delay in carrying out eviction notices will be scrapped from 1^st of April 2024.

More details are available on:

https://www.gov.scot/news/continuing-rent-protection-for-private-tenants/

If you have any concerns, do get in touch.