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Rent Freeze and moratorium on evictions (Scotland)
The rent freeze and moratorium on evictions
Emergency legislation in Scotland – under the Cost of Living (Tenant Protection) (Scotland) Bill 2022 – has now been passed; to freeze rents and establish a 6-month moratorium on evictions for both the private rented and social sectors, until at least 31 March 2023.
This will be backdated to 6 September 2022 and will last until at least 31 March 2023. Any increases landlords issued after 6 September and before the legislation was passed will be void.
There will be exceptions to the rent freeze and the moratorium, and increased damages for any unlawful evictions during this time frame.
How long will the new emergency cost of living legislation last?
The Cost of Living (Tenant Protection) (Scotland) Bill 2022, including a rent freeze and moratorium on evictions, is now in force and will be backdated to 6 September 2022 until at least the end of March 2023.
These measures could be extended to 30 September 2023 and then again to 31 March 2024, after the measures have been reviewed to check that they’re still “necessary and proportionate” in relation to the cost of living crisis.
How will the rent freeze be delivered?
The rent freeze or rent cap will apply to all existing private residential, assured, and short assured tenancies.
Landlords will be able to “re-set rent levels between tenancies”, yet new tenants will enter into a new agreement knowing that they are protected from any rent increase.
A “maximum permissible level of rent increase” will be introduced, set at 0% until at least 31 March 2023.
Any exemptions on landlords?
There will be scope for a landlord’s “prescribed costs” to be considered for those eligible to make a rent increase. These include:
- Interest payable for the mortgage or “standard security” of the rental property
- Insurance premiums relating to the property – for example, landlords’ insurance
- Service charges that are part of the contract with the tenant as part of the tenant’s rent
Landlords would need to apply to Rent Service Scotland to increase rents, to ensure the increased rent fits within the above costs. Any increase will be limited to a maximum of 3% of the current rent, until at least 31 March 2023.
How will this new rent cap be enforced?
Tenants will be able to refer a rent increase to a Rent Officer to confirm if it’s in line with the rent cap. This could be used in instances where rent includes energy costs, for example, and is therefore not straightforward.
For any unlawful eviction, the bill will amend the Housing (Scotland) Act 1988 to assess damages based on a “multiplication of the monthly rent”.
What is the moratorium on evictions?
The moratorium on evictions won’t stop a landlord from taking steps to apply to the courts for an order to evict a tenant, but it prevents the enforcement of eviction actions until the restrictions end, unless an exemption applies.
Exemptions include:
- Evictions for “antisocial behaviour, criminality, tenant abandonment and where a lender intends to sell the property
- If a landlord intends to sell the let property to alleviate financial hardship
- Where a landlord plans to live in the property due to financial hardship
- Substantial rent arrears of six months’ rent
If the proceedings for an eviction order started before 6 September 2022, the restrictions don’t apply.
How will this legislation affect student tenants in Scotland?
The new policy document highlights that many students in Scotland live in halls of residence and in purpose-built student accommodation.
While the government has received assurances that there is “little appetite” for these accommodation providers to increase rents mid-tenancy, it recognises that this is not a certainty.
The new measures will therefore apply to these student accommodation providers, to give more assurance to student tenants that their rent will not increase mid-tenancy.
Why has the bill been introduced?
The new bill aims to respond to the “emergency situation caused by the impact of the cost crisis on those living in the rented sector in Scotland.” The measures aim to help stabilise housing costs for tenants, reduce the impact of evictions on being made homeless on the health and wellbeing of tenants, and help avoid evictions by landlords that want to raise rents between tenancies.
Does this ban breach landlord rights?
Four groups representing landlords and letting agents have now instructed a top King’s Counsel to consider whether the ban breaches their rights.
The Scottish Association of Landlords (SAL), Propertymark, the National Residential Landlords Association (NRLA) and Scottish Land and Estates (SLE) have created the coalition to fight the Scottish Government action.
The Scottish Government’s Cost of Living (Tenant Protection) Scotland Bill was approved by Holyrood on October 6 by 89 to 27 votes.
There have been concerns that the SNP and Green MSPs had chosen to “ram this Bill through” in only three days this week for “cheap political headlines at the expense of actual solutions”.
The coalition has instructed the Lord (Neil) Davidson of Glen Clova KC, Advocate at Axiom Advocates, to examine if the legislation breaches the individual rights of landlords in Scotland, including a breach of the European Convention on Human Rights.
SAL and the coalition has said it will “consider all legal options available to them” if Lord Davidson’s opinion makes clear a breach of landlords’ rights has occurred. His decision is due within the next month.
Ministers have been accused of exacerbating a housing crisis “they have created” by failing to encourage enough investment in building homes and warned the rent freeze would deter construction.
Our thoughts …
This rent freeze risks pushing landlords out of the private rental market at a time when housing stock is needed more than ever.
Introducing a rent control could very well mark the end of the sector. Investors may decide to look elsewhere for their buy to let investments, creating many more issues for the Scottish Government further down the line.
All I can say for now is the best of luck to the four groups taking on the Scottish Government with regards to this bill. #havewordswithpatrickharvie #scottishgovernment
Support ..
#SAL
#propertymark
#NRLA
#SLE
Nykky, Owner at iLet Property Services.