Changes in Scotland’s Private Rented Sector

Since September 2022, there have been regulations in place to control rent increases and safeguard against evictions for privately let residential properties, established under the Cost of Living (Tenant Protection) (Scotland) Act 2022. However, effective April 1st, 2024, these restrictions, including the 3% rent increase cap, will be lifted.

To mitigate the risk of significant rent hikes, pending parliamentary approval, the process for rent adjudication will be temporarily adjusted for one year, starting April 1st, 2024. This adjustment aims to provide a fair approach to resolving rent disputes during this transitional period.

Here’s what landlords need to know about rent reviews in April:

Private residential tenants can dispute a rent increase, with disputes reviewed by Rent Service Scotland or the First-tier Tribunal.

Rent will be determined based on the lowest of three figures: the open market rate, the rent requested by the landlord, and a comparator based on the difference between the market rate and the current rate.

Proposed regulations necessitate the use of a rent taper formula if a tenant applies for rent adjudication:

• If the rent increase is 6% or less than the market rent, the landlord can increase the rent by the proposed amount.

• If the gap between the market rent and the current rent exceeds 6%, the landlord can increase it by 6% plus 0.33% for each percent that the gap exceeds 6%. The total rent increase cannot exceed 12%.

Read the Rent Adjudication (Temporary Modifications)(Scotland) Regulations 2024 here..

As demand for rented property rises, many privately let properties with existing tenants now have below-market rent due to the 3% cap in place since 2022. This is likely to lead to widespread rent increases across the country, although the full impact on the market remains to be seen.

Before these restrictions are lifted, further changes are set to take effect on March 1st, 2024, with new measures being added to the Repairing Standard, which applies to all privately let residential properties and Short Term Lets. These include:

• Safe Kitchens

• Fixed Heating System

• Safe Access to Common Parts

• Consent to Work on Common Parts

• Safe and Secure Common Doors

• Residual Current Devices

• Properties must be free of lead pipes, or a water quality test must be carried out.

• Other fuels, such as oil installations, must meet the same repair standards as gas and electricity installations.

For full information regarding the changes to the Repairing Standard, click here. While many properties will already meet these additional requirements, there is a risk, primarily to older tenancies, that may not meet the new requirements, necessitating additional works.

For further discussions on how these changes affect your property, please contact our professional letting agents at Bell Ingram.