Cost of Living (Tenant Protection) (Scotland) Act 2022 - 2nd proposed extension: statement of reasons

Annex A

Further background to Cost of Living (Tenant Protection) (Scotland) Act 2022

1. On 27 January 2023, Scottish Ministers laid regulations^[34] and a Statement of Reasons^[35] before the Scottish Parliament in order to extend and vary the remaining provisions within Part 1 of the Act for a further 6 months to 30 September 2023.

2. That Statement of Reasons set out that the economic position had not yet changed fundamentally and many households on low and modest incomes, continue to struggle. After taking the wider economic context and stakeholder engagement into account, Scottish Ministers proposed that whilst the Act should be extended for a further 6 month period, it was recognised that the ongoing impacts of the cost crisis may also be experienced by some private landlords, and therefore it would be proportionate to raise the rent cap in the private rented sector to allow within-tenancy rent increases of up to 3%.

3. The voluntary approach to rent setting taken by landlords in the social sector was intended to achieve an average rental increase of less than £5 a week across the sector as a whole. A Scottish Housing Regulator (SHR) report^[36] published 15 March 2023 confirms that this is the case, with an average rent increase across the social sector for 2023-24 of 5.07%, equivalent to £4.38 per week (or just under £19 per month). The average increase is 3.80% (£3.07 per week) for local authorities and 5.34% (£5.05 a week) for housing associations. As rents in the private rented sector are generally significantly higher^[37] than those in the social sector, allowing a maximum rent increase of 3% for rents in the private rented sector equates to a similar average rent increase for tenants in two-bedroom properties (the most common property size in the private rented sector).^[38] The Scottish Government considers that this gives a measure of parity to landlords in the private and social sectors in monetary terms, whilst continuing to protect tenants from unaffordable rent increases whilst the pressures of the cost crisis continue. It should be noted that social sector rents are set for each fiscal year, so these rents increases will apply for a full 12 months, reinforcing the parity of treatment of the social and private rented sectors.

4. In recognition of the increase in the rent cap from 1 April, the safeguard for landlords introduced by the Act – in the form of the ability to apply to a Rent Officer to increase the rent for a let property above the rent cap in connection with defined 'prescribed property costs' – was also increased from 3% to 6%. The previous extension regulations also extended the following provisions in the Act for a further 6 month period to 30 September 2023:

• Eviction from residential properties: Restrictions on enforcement (Schedule 2 – paragraphs 1, 2, 3, 4, 5 and 6); and
• Protection against eviction: Unlawful evictions (notification and determination of damages) (Schedule 2 – paragraph 7).