Capping of rent increases on referral or appeal: equality impact assessment results

Background

The 2016 Act introduced a range of measures to tackle high rents and to provide private tenants with greater protection against excessive rent increases. This included the ability for a tenant with a PRT to challenge a proposed rent increase to protect tenants against the possibility of landlords using large and unjustified rent increases to force tenants from their homes where they are otherwise complying with their tenancy agreement.

Section 24 of the 2016 Act provides for tenants to make a referral to a Rent Officer (Rent Service Scotland). Where an application for a rent adjudication is received by Rent Service Scotland, the Rent Officer will base the determination on an assessment of the open market rent for the property. This may have the effect of agreeing the proposed increase, decreasing the proposed increase, or increasing the rent above the increase requested by the landlord (for example, to bring it in line with the open market rent if the increase proposed by the landlord was below this).

To date, usage of rent adjudication under the PRT has been limited despite efforts to raise awareness of the right for tenants to make a referral for rent adjudication. Since measures under the 2016 Act became operational, only 181 applications were made to Rent Service Scotland until the measures were temporarily suspended by the Cost of Living (Tenant Protection) Act 2022. In two out of the 181 rent adjudications the rent was set above that requested by the landlord.

This is significantly lower than the estimated number of applications outlined in the Financial Memorandum prepared for the passage of the 2016 Act, which estimated there would be approximately 1,650 applications a year.

There is some anecdotal evidence from telephone enquiries to Rent Service Scotland that indicates some tenants do not submit an application to Rent Service Scotland due to concerns the process may increase their rent.

Similar rights to seek a determination of rent directly through the Tribunal exist for private tenants with Assured Tenancies under the 1988 Act. While no new Assured Tenancies can be created, a small number of applications continue to be made to the Tribunal in connection with existing tenancies.

Provisions in the Bill amend the rent adjudication processes in the 1988 and 2016 Acts to ensure that the rent set by the Rent Officer on referral or by the Tribunal on appeal or referral cannot be higher than the rent proposed by the landlord in the rent increase notice. Instead, the rent determined will be the lower of either the open market rent or the rent proposed by the landlord in the rent increase notice.

Further information about the background, rationale and policy intention behind the Bill as whole and the individual measures are set out in the Policy Memorandum which accompanies the Bill. The Bill, Policy Memorandum and other accompanying documents are available from the Scottish Parliament website and are linked to the Bill webpage^[6].