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

2. Background to proposals

2.1 The Act, which came into force on 28 October 2022, aims to:

• protect tenants by stabilising their housing costs through the introduction of a temporary, variable rent cap;
• where possible, during the cost crisis, reduce impacts on the health and wellbeing of tenants caused by being evicted and/or being made homeless by giving them more time to find alternative accommodation; and
• seek to avoid tenants being evicted from the private sector by a landlord wanting to raise rents between tenancies during the temporary measures and reduce unlawful evictions, through the complementary measures of a moratorium on evictions and raising the level of damages that may be awarded.

2.2 As set out in section 7 of the Act, Part 1 is due to expire at the end of 31 March 2023, with the potential for extension for two periods of 6 months by secondary legislation, subject to the approval of the Scottish Parliament. The first extension would cover the period from 1 April to 30 September 2023 and the second, if subsequently decided, for a further six months until the end of 31 March 2024.

2.3 The Scottish Government has been clear that the provisions contained within the Act must only be in place for as long as they are necessary. In reflection of this, the Cost of Living (Tenant Protection) (Scotland) Act (Early Expiry and Suspension of Provisions) Regulations 2023 (the "expiry and suspension regulations") were laid in Parliament on 19 January 2023 to: expire the rent cap provisions relating to the social sector on 26 February 2023, and, suspend the rent cap provisions relating to the student residential sector on 30 March 2023.

2.4 The social sector rent cap (paragraph 3, Schedule 1 of the Act) expiry follows the development of an agreed approach on rent setting for 2023-24, taken forward on a voluntary basis, with social housing landlords. Social housing landlords are "not for profit" organisations and all rental income is used to support the delivery of housing and associated services for tenants. Under the Scottish Government's Social Housing Charter social landlords are required to set rents and service charges in consultation with their tenants so that a balance is struck between the level of services provided, the cost of the services and how far current and prospective tenants and service users can afford them. The aim of the agreed approach to rent setting has been to keep rent increases well below inflation to ensure that rents remain affordable, whilst still supporting continued investment in the sector.

2.5 The suspension of the rent cap in relation to student residential tenancies (paragraph 4, Schedule 1 of the Act) is due to the evidence of minimal impact that the rent cap is having in this sector. These tenancies are regulated by the terms of the contract between the accommodation provider and the student, and by common law. These contracts typically cover the whole academic year and there is only a very slight possibility of a contract that permits in-tenancy rent increases arising. As such, the rent cap measures are having minimal impact on the student residential sector. It should be noted that suspension of the measures will mean that they cease to have effect but there is a power for the provisions to be revived during the lifetime of Part 1 of the Act should evidence support that being necessary and proportionate. Although assurances were received from the majority of institutional and Purpose Built Student Accommodation ("PBSA") providers that there would be no in-contract rent increases, and evidence to date supports this, these assurances do not cover all providers with certainty, so suspension (as opposed to expiry) is appropriate.

2.6 Information on the provisions to be expired or suspended, and the reasons for their inclusion in the expiry and suspension regulations, is provided within the Policy Note for those regulations.