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The Scottish government has made a U-turn on the rent freeze they implemented, converting it into a rent cap instead, in response to landlord feedback.
Effective from April 1st, the government’s newly introduced rent cap limits rent rises in the private rental sector to between 3% and 6% within a twelve-month period.
The changes facing approval involve the capping of private rent increases at 3%. There could be exceptions,
Under a safeguard where certain criteria demonstrate a need to cover given costs. If this is the case, the cap may be increased up to 6%.
Evictions will still be under a limited ban (although landlords can still send a valid eviction notice and get an eviction order). Increased damages for unlawful evictions of up to 36 months’ worth of rent to remain applicable.
Lastly, the student accommodation rent cap will be suspended.
The CEO of property management company DJ Alexander Scotland, David Alexander, has welcomed Scottish Government’s U-turn. He said:
“Given the level of feeling from landlords, property investors, the build to rent sector, universities, the farming community, and others that the rent freeze was damaging the sector and reducing the availability of homes for tenants it is appropriate that the Scottish Government has seen sense and adopted a more conciliatory approach. To do anything else would have simply exacerbated the current housing shortages.”
According to the Head of Policy and Campaigns at Propertymark, Timothy Douglas, the rent cap is not an adequate solution:
“We have been engaged fully in the development and implementation of the Cost of Living Act, representing our members’ views every step of the way.
“Whilst rent cap legislation continues to create uncertainty, agents and landlords will welcome a rise to three percent, but this is clearly not enough.
“The bigger concern is also the Scottish National Party and Scottish Green’s desire to push on with permanent rent controls with a new Housing Bill to be produced this year.
“It is vital that we ensure that the residential property sector in Scotland is investible and that is what Propertymark will continue to campaign for.”
Director of Insurance at Goodlord, Oli Sherlock, added:
“A rent freeze is a knee-jerk reaction which, although it might help some tenants in the short run, is unsustainable and has the long-term impact of pushing more landlords out the market and squeezing the availability of rental homes.
“A price cap is a more sensible step forward than a freeze, but it’s still not addressing the key issues facing the market today.
“We have an economic and regulatory environment that is driving landlords away from the sector and not enough homes to go around.”
‘Disproportionate and unfair’
However, a coalition of landlords and letting groups are campaigning for the courts to intervene and complete a full review of Scotland’s rent control and eviction ban legislation.
Their view that the measures are ‘disproportionate and unfair’ is they feel worsened by the fact that the social rented sector are to have rent controls lifted from April 2023.
To that end, a petition has been submitted by the group to the Court of Session in Edinburgh, seeking a Judicial Review. Within it, the group has flagged 5 key issues they feel need to be addressed. These centre around the imbalance of the measures between the social and private sector, the lack of consideration for the financial position of tenants and landlords and the lack of penalty for rent arrears.
They further assert that the legislation constitutes a breach of the European Convention of Human Rights.
Chief executive of the Scottish Association of Landlords, John Blackwood, stated:
“So far, the result of the Scottish Government eviction ban and rent freeze has been just as concerning as we predicted. Landlords selling up loss making property is further reducing housing supply, despite ever increasing demand. The result is the cost of finding a new home is actually increasing for renters.
“While the Scottish Government sees fit to raise council and housing association tenants’ rents, so social landlords can do repairs and improvements, they fail to realise that private landlords are faced with similar financial pressures.
“The Ministerial statement in parliament last week and yesterday’s announcement make it perfectly clear the Scottish Government plans to continue with eviction ban and rent increase restrictions in the private rented sector beyond March 31. Landlords have had enough.
“We must stand united to protect our property rights by challenging this unfair legislation in court.”
Landlords across Scotland will undoubtedly be hoping that the Scottish government take on board the criticism of the laws they have implemented and choose to reverse them.