What could this mean for the PRS?
The eviction moratorium and the rent cap are scheduled to end on 31 March 2024. Scottish Ministers plan to bring forward transitional measures in order to avoid “significant and unmanageable rent increases for tenants” when the emergency measures end. Scottish Ministers published draft regulations on 24 January 2024 setting out their proposals.
What is proposed?
Rent adjudication based on market value would be replaced by an upper and lower taper system based on the lowest of three comparators:
- Open market rent;
- The new rent proposed by the landlord; and
- A maximum ‘reasonable’ increase for that tenancy, defined by a new ‘taper’ system.
What is the tapered approach?
Tapering involves an upper and lower percentage cap on rent increases based on the difference between existing rent and open market rent. The proposed lower and upper limit is 6 and 12% respectively.
- If the difference between existing rent and open market rent is 6% or less the increase would be permitted provided it did not exceed the market rent
- If the difference is above 6% but less than 24% tapering would apply to any increase whereby 0.33% increase would apply for every percentage point that the market rent is above the tenant’s current rent plus 6%. E.g. gap between the current rent and open market rent is 8%, the rent increase is capped at an increase of 6.7%
- If the difference is more than 24%, the most the rent could be increased by is 12%
Please note these limits are subject to change. It is expected measures will be put in place for a maximum of one year and would be subject to regular review with the ability to extend year on year. Scottish Ministers have plans to re-introduce long term rent controls in Scotland as part of the New Deal for Tenants strategy. Accordingly, we can anticipate this system remaining in place until rent controls are introduced.