Legislation Update – Answers for Landlords

Rent increase and eviction ban Scotland

Following our last blog on the rent increase and eviction ban issued on 6^th September 2022, Cairn have been working hard in the background to obtain answers for landlords on how this will work in reality.  We have received update today that The Cost of Living (Tenant Protection) (Scotland) Bill has now been published: Cost of Living (Tenant Protection) (Scotland) Bill 2022: overview – gov.scot (www.gov.scot)

Overview of Bill

The Scottish Government have produced this Bill, as it is believed that people who rent in Scotland are the most at risk of poverty due to the financial crisis. The emergency measures have been implemented to:

• Protect tenants with the cost of living crisis by stabilising housing costs
• Lessen stresses and impacts on the wellbeing of tenants by evictions being banned.
• Give tenants more time to find alternate accommodation when facing eviction
• Reduce unlawful evictions and also raise the level of damages paid to a tenant by the landlord if unlawfully evicted.

If passed, the Bill intends to place an immediate ban on rent increase notices and a moratorium on evictions until at least 31st March 2023. Wording has also been included to allow legislation to be extended by two further periods of six months with Parliamentary approval. However, there is a requirement for legislation to be examined and reported on, every 3 three months to ensure that the Bill is proportionate and reflects the changing economic crisis.

Rent increase ban

The emergency legislation aims to set a permitted rate of rent increase, known as the ‘rent cap‘. The cap will be set to zero from 6th September 22 to at least 31st March 23. However, the Scottish Government do have the powers to vary this cap to take into consideration the economic crisis on a wider scale which we sincerely hope will be investigated, as it is not only tenants whom are struggling from the current crisis. The cap applies to any rent increase proposed on or after 6th September 22 and no rent increase can be issued whilst the cap of zero is in place. This legislation does not affect rent changes/increases between tenancies.

The legislation does take into consideration the impact the cost crisis is having on landlords and has been updated to allow landlords to apply to a Rent Officer to increase the rent to cover some of the ‘prescribed costs‘ in the preceding six months.

• Prescribed costs are mortgage interest payments (for the let property) and landlord insurance (other than buildings or contents insurance) / service charges which the tenant is responsible for per the terms of the lease which the landlord has had to pay.

The landlord will be required to provide evidence to the Rent Officer and where authorised, the landlord would be able to increase the rent by the lower of 50% of the increase in the ’prescribed costs‘ in the preceding six months, or 3% of the current rent level. Landlords and tenants will also have the ability to appeal the Rent Officers decision via the First-tier Tribunal for Scotland.

Rent increases issued before 6th September 2022

It has been confirmed in the legislation that rent increase notices issued before 6th September 22, will still be enforceable after the required 3 month notice period to the tenant. However, tenants also has the right to apply to the Rent Officer to challenge any notices issued if they believe the increase has been set at an unfair level.

Eviction ban

The moratorium will stop enforcement action for induvial evictions over the next 6 months. However, safeguards have been implemented to allow enforcement of evictions in certain circumstances, these include:

• Cases of antisocial behaviour and criminal behaviour
• Cases of abandonment
• Substantial rent arrears (where at least 6 months worth of rent is owed at the point the eviction order is issued)

Eviction applications submitted / orders issued before 6th September 2022

If an eviction order is granted before this legislation comes into force, or if a landlord has submitted an application for eviction with the Tribunal before the legislation comes into force, the case will not be affected by the moratorium. This also applies to an eviction notice issued to the tenant before 6th September 22 as these should still be enforceable in line with current legal requirements.

Increases damages for unlawful evictions

These changes have been implemented to discourage landlords from conducting unlawful evictions and if passed, seek to increase the award to tenants to the maximum amount of 36 months worth of rent. There is also a requirement being placed on the Tribunal to notify the relevant authorities (Police / local authority / landlord registration), that an order has been made against the landlord.

With the ever changing legislation being implemented on private residential landlords, it is imperative that landlords employ reputable and qualified agents to manage their properties in Scotland. This will ensure legislation is being followed and that the most recent and correct advice on how to manage tenancies is being received. At Cairn, we have fully qualified and friendly staff waiting to assist landlords with management of their properties, we also have an in-house Compliance Manager who is both ARLA and LETWELL qualified to assist landlords with more difficult tenancy issues. Please do not hesitate to contact us to obtain further information on our management services.