Written by Samir Younes and Amy McVey

Emergency legislation

The Cost of Living (Tenant Protection) Scotland Act (the Act) was passed by MSPs on 6 October 2022 and came into force on 28 October 2022. This emergency legislation, announced by First Minister Nicola Sturgeon in September 2022, is intended to help tenants in Scotland through the current period of economic uncertainty in two ways. Firstly, the Act temporarily restricts landlords from increasing rent due under existing residential tenancies, stabilising tenants’ housing costs, and secondly, the Act imposes a widespread moratorium on evictions of residential tenants. This legislation was the first in Scotland to be given Royal Assent by King Charles III.

Summary of protections

Restriction on increasing rent – the Rent Cap

The restriction on increasing rent is achieved by providing for a ‘rent cap’ to be included in existing legislation affecting tenants, namely the Private Housing (Tenancies) (Scotland) Act 2016, the Housing (Scotland) Act 1988 and the Housing (Scotland) Act 2001.  

Under the new provisions, a landlord may not increase the rent payable under a tenancy by more than the “permitted rate”. The “permitted rate” is set at 0% from 6 September 2022 until 31 March 2023, although the Scottish Ministers may amend the “permitted rate” by way of further regulation.

This restriction applies to the majority of private rented tenancies and social rented sectors, including student residential tenancies (notwithstanding, in the latter case, any power or permission to increase rents which is contained within the student residential tenancy documentation).

However, statutory assured tenancies (i.e. tenancies beginning before 1 December 2017, which have not been converted to a "private residential tenancy" under the Private Housing (Tenancies) (Scotland) Act 2016) or contractual tenancies not currently governed by the existing process under the Housing (Scotland) Act 1988, i.e. statutory assured tenancies where the landlord varied the terms of the contract in the year following the conversion of the assured tenancy to a statutory assured tenancy under the 1988 Act, and contractual tenancies which include a term making provision for an increase in rent, are not caught by the new provisions in the Act.

It is important to note that the restriction will not affect rent increases formally notified to a tenant before 6 September 2022. Landlords also have the option to apply to a Rent Officer to make an order increasing the rent to cover certain prescribed costs, including mortgage interest payments on the particular property, insurance and service charges. However, any such increases as may be permitted by a Rent Officer are subject to a further cap.

The Act provides that the restrictions are initially in place until the end of March 2023, although Scottish Ministers have the power to extend them until 30 September 2023 and then again until 31 March 2024. Should the Scottish Government decide to extend the restrictions, considering whether the provisions remain necessary and proportionate in connection with the cost of living.

Moratorium on evictions 

The Act specifically prevents the enforcement of eviction orders (decrees) for a maximum of 6 months from the date on which decree is granted (or until the Act expires or is suspended, whichever is earlier).

The Act contains a number of exceptions to the prohibition, which are fact and circumstance specific and will require to be considered carefully in each case to assess their relevance. These include criminal behaviour, anti-social behaviour, substantial rent arrears, the landlord wishing to sell or live in the relevant property and cessation of employment (where the tenancy is related to or conditional on that employment).

Landlords who unlawfully evict tenants in breach of the provisions of the Act are liable for an increased maximum damages figure equivalent to 36 months’ rent.

Unintended implications?

As emergency legislation, this has been introduced very quickly through the Scottish Parliament. Landlords’ associations and housing associations have already expressed concern regarding the possible impact on their and their members’ own financial position in the short term, as well as the longer term impact on the residential property market as a whole. We expect the Act, and its effect in practice, will be of interest to other stakeholders, including funders of social housing and/or residential developers, operators or investors.