Cost of Living (Tenant Protection) (Scotland) Bill: What does it mean for landlords?

The much-anticipated rent freeze and eviction ban legislation, announced by Nicola Sturgeon on 6 September 2022 in response to the cost of living crisis, has now been put before the Scottish Parliament as ‘emergency legislation’. With significant cross-party political support, it is expected to pass swiftly through Parliament and be given Royal Assent (the first in Scotland for King Charles) within a matter of days.

The Cost of Living (Tenant Protection) (Scotland) Bill, amends the existing legislation on rent and evictions for private and social rented tenancies – including private residential tenancies, assured / short assured tenancies, Scottish secure tenancies, short Scottish secure tenancies and student residential tenancies.

Rent controls

The effect of the Bill is that landlords will not be able to increase rents until at least 31 March 2023. The Bill also provides for the Scottish Ministers to extend the amendments beyond that date - to 30 September 2023, or even 31 March 2024.

For social landlords hoping to increase rents from 1 April 2023, they will be unable to do so because the Bill prevents them from serving valid notices of any rent increase during the preceding rent freeze period.

However, there is scope within the Bill for the Scottish Ministers to introduce a ‘rent cap’ instead, by increasing the permitted rate of rent increases from the initial 0%. This would allow landlords to increase rents up to the new permitted rate, to be determined by future regulations.

For landlords of private residential tenancies and assured / short assured tenancies there are provisions in the Bill which would allow them to claw back up to 50% of an increase in the interest payable on a mortgage, insurance premiums (excluding general building and contents insurance), or service charges.

Unfortunately, such provisions are not replicated for social landlords, but social landlords will still be able to increase charges, including service charges, payable under the tenancy agreement. This is not to be taken as a ‘loophole’ for social landlords to try to recover increased costs from tenants, given that any such charges must already be provided for in the tenancy agreement and increases are subject to consultation and taking into account the views of tenants.

Restrictions on Evictions

Landlords will be relieved to see that there is not a blanket ban on evictions under the legislation – which will hopefully alleviate some of the concerns which were realised by landlords and communities when the initial COVID emergency legislation was enacted.

Under the Bill, landlords will still be able to evict tenants on the grounds of anti-social and criminal behaviour.

Also, decrees for eviction can be granted and evictions carried out where a tenant has accrued ‘significant rent arrears’, being arrears of over six months’ rent or at least £2,250 for social housing tenants, subject to the ‘reasonableness’ test being satisfied.

In other cases, enforcement action for eviction orders will be prevented until after 31 March 2023, or later if extended by regulations.

Conclusion

The Bill offers some comfort for private landlords and introduces provisions allowing them to evict tenants if they need to sell the property or live in the property themselves to alleviate financial hardship, or where the tenant has accrued substantial rent arrears.

Ultimately, further clarification is required to determine the full impact of the new Bill, and the Bill is subject to possible further amendments in Parliament today and tomorrow. In any case, it looks to be a challenging time ahead for tenants and landlords.

If you are looking for advice on the issues raised in this article, please contact our Public Sector and Housing team.