- Asked by: Donald Cameron, MSP for Highlands and Islands, Scottish Conservative and Unionist Party
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Date lodged: Wednesday, 15 February 2023
Submitting member has a registered interest.
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Current Status:
Answered by Patrick Harvie on 14 March 2023
To ask the Scottish Government for what reason it is allowing private landlords to increase rents by up to 3%.
To respond to the emergency situation caused by the impact of the cost crisis on those living in the rented sector, the Cost of Living (Tenant Protection) (Scotland) Act 2022 introduced a temporary, variable rent cap, initially set at 0% and in place until 31 March 2023.
Our recently published first report to Parliament on the emergency Cost of Living Act, and Statement of Reasons , provided updated economic evidence demonstrating the continued pressure being placed on private rented households due to the ongoing cost crisis. In light of this, the Scottish Government have brought forward regulations to extend the rent cap for the private rented sector for a further six months, along with the moratorium on enforcing evictions – which will continue to apply across all sectors.
While the focus of the emergency measures continues to be on protecting tenants, the Scottish Government recognises that the ongoing impacts of the cost crisis may also be being experienced by some private landlords. Mortgage interest rates, which had been on an upward trend since the end of 2021, experienced a further sharp increase after the UK Government Growth Plan / Mini-budget on 23 September 2022. The average advertised five-year fixed rate rose from 4.75% on 23 September to 6.51% on 20 October, before falling to 5.95% on 22 November.
The Scottish Government is of the view that it would therefore be proportionate to raise the rent cap in the private rented sector to allow within-tenancy rent increases of up to 3% from 1 April.
The voluntary approach to rent setting taken by landlords in the social sector is intended to equate to an approximate average rental increase of less than £5 a week (or less than £22 per month) across the country. As rents in the private rented sector are generally significantly higher than those in the social rented sector, allowing a maximum rent increase of 3% for rents in the private rented sector equates to a similar average rent increase for tenants in two-bedroom properties (the most common property size in the private rented sector). There will be variation around these averages, with higher increases for three-bedroom and four-bedroom properties and lower increases for one-bedroom properties. The Scottish Government considers that this will give a measure of parity to landlords in the private and social sectors in monetary terms, while continuing to protect tenants from unaffordable rent increases during the cost crisis.
While there may be some households where even the modest rent increase allowed under the 3% cap causes an increase in financial hardship, we consider that the amended rent cap will ensure that rent increases are proportionate and therefore continue to protect households against high rent increases while the cost crisis is ongoing. The increase to the rent cap will mitigate against a disproportionate impact on private landlords who may also be experiencing increased costs due to the cost crisis, allowing them to maintain their properties and meet other expenses. We are also proposing that private landlords could, alternatively, opt to apply to Rent Service Scotland for a rent increase of up to 6% if they have had an increase in their defined, prescribed property costs within a specific period.