Emergency legislation covering temporary rent control measures, that was
introduced during the cost-of-living crisis, will end after 31
st
March 2025. While the Scottish Government aims to maintain certain tenant
protections, the end of this rent control will allow for more flexibility
for landlords setting rental prices.
Introduction of the measures in 2022
The measures were introduced in 2022 to help people during the
cost-of-living crisis. The National says, “The rent control measures
introduced in 2022 were
introduced to temporarily freeze rent increases for private and social
tenants
, and for student accommodation with the cap set at 0% from September 6
until at least March 31, 2023.”
The cap was then adjusted to end on April 1 st 2025.
Housing minister Paul McLennan told
The Herald
: “The temporary changes to rent adjudication were in place to support the
transition away from the short-term rent cap that was in place under the
Cost of Living Act. They were in place for a year to manage the risk of
very steep increases in rents for tenants if there was a return to market
rent in a single step…”
Announcement of the measures ending in March 2025
The Scottish Housing News says: “Starting from April 1, any rent increase
notices issued will no longer be subject to the temporary controls. This
means that if a tenant appeals to the rent officer or tribunal, the rent
will be set at the open market rental value, even if it is higher than what
the landlord initially proposed.”
Despite this, the government has admitted they are still planning to
re-introduce permanent rent controls in the future. Proof of this is implied
through the Housing Bill currently going through Parliament to bring these
controls into force. However, it is unlikely that the implementation of any
new rent control legislation will be enforced before 2027.
Housing minister Paul McLennan told
The Herald
: “Supporting tenants is a priority for the Scottish Government and we will
continue to engage and work with stakeholders, including tenants’ groups.”
He also went on to say, “We intend to lay regulations to ensure any
application for a review of a rent increase received before April 1 is
decided in line with the temporary changes.”
Impact of the temporary rent controls on BTR projects
Dan Smith at RESI Consultancy Works believes that, “The temporary rent
controls had a significant impact on Build To Rent (BTR) projects.”
A report by
Rettie
brought attention to the fact that approximately 14,000 BTR homes in
Scotland are currently delayed due to concerns from investors over ‘policy
stability.’ This equates to about £2 billion in potential construction work
in cities like Glasgow, Edinburgh, and Aberdeen.
In contrast, Purpose-Built Student Accommodation (PBSA) developments, which
were not placed under the same rent restrictions in 2022, have seen
continued growth. Some developers even shifted their focus from BTR to PBSA
projects during the rent control period.
Effects of the lifting of the temporary measures
Dan Smith, RESI Consultancy Works, says: “As Scotland prepares to lift
these temporary measures, the key question remains: Will this policy change
be sufficient to restore investor confidence in the BTR market, or has the
uncertainty of recent years caused lasting hesitation?”
Dan says that when you stall or stop “the pipeline of new beds” then the
market forces are interrupted – building up a larger supply, lower
occupancy, more competition, and rent reductions.
“Combine this with planning reform and Scotland may just have the means to
alleviate the housing crisis in part.”
Landlords may also be facing a confidence rise amid legislative changes due
to the
impending Renters’ Rights Bill.
