Cost of Living (Tenant Protection) (Scotland) Act 2022 - proposed extension of section 10: statement of reasons

1. Introduction

1.1 The Cost of Living (Tenant Protection) (Scotland) Act 2022^[1] ("the 2022 Act") is a response to the impact of the cost crisis on those living in the rented sector. Part 1 of the 2022 Act introduced a temporary rent cap (initially set at 0% and then increased to 3% on 1 April 2023^[2]) and a temporary moratorium on the enforcement of evictions, along with simplifying the process for claiming unlawful eviction damages and increasing the level of damages that can be awarded. It also contains powers to temporarily reform rent adjudication in connection with supporting transition away from the emergency rent cap measures in the private rented sector.

1.2 Part 1 of the 2022 Act was initially due to expire on 31 March 2023, however Scottish Ministers used the powers available to them under section 7(3) of the 2022 Act to extend Part 1 on two occasions.^[3] Part 1 of the 2022 Act will now expire on 31 March 2024. Section 10 and schedule 3 of the 2022 Act will also expire on 31 March 2024 unless extended.

1.3 This Statement of Reasons is laid before the Scottish Parliament alongside a set of draft regulations^[4] which seek to extend the expiry of section 10 (and by virtue of that, schedule 3) of the 2022 Act, until 31 March 2025. Extension of section 10 and schedule 3 is being sought to enable the powers to be exercised as intended to smooth the transition away from the rent cap. This Statement sets out the reasons as to why the Scottish Government believes the regulations should be made.

1.4 Schedule 3 of the 2022 Act contains a power to modify the law in relation to rent adjudication on the expiry of the rent cap. By temporarily modifying rent adjudication the aim is to smooth the transition away from the emergency rent cap. If approved, this will aim avoid the unintended consequence of very steep and unmanageable rent increases which could arise if rents that had been suppressed by the rent cap were immediately able to be adjudicated nnewith reference to the open market rent upon expiry of the rent cap.

1.5 As noted, schedule 3 of the 2022 Act would expire on 31 March 2024 (coinciding with the end of the rent cap) unless extended meaning it would not be possible to seek to utilise the powers in Schedule 3 as part of the transition away from the rent cap without this extension. For this important practical and technical reason, therefore, this extension is necessary. If an extension is not secured then there would be no opportunity to manage the transition out of the rent cap via a modification to rent adjudication using the powers in schedule 3 of the 2022 Act.