Cost of Living (Tenant Protection) (Scotland) Act 2022 - proposed extension of section 10: 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^[5] and a Statement of Reasons^[6] before the Scottish Parliament in order to extend and vary the remaining provisions within Part 1 of the 2022 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 2022 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^[7] published 15 March 2023 confirmed that this was 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^[8] 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).^[9] The Scottish Government considers that this gave 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 rent increases will apply for a full 12 months, from 01 April 2023 to 31 March 2024 in most cases, 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 2023, the safeguard for landlords introduced by the 2022 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 2022 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).

5. On 1 June 2023, Scottish Ministers laid regulations^[10] and a Statement of Reasons^[11] before the Scottish Parliament in order to extend Part 1 of the 2022 Act for a further, and final, 6 month period to 31 March 2024.

6. That Statement of Reasons set out that the economic position had not yet changed fundamentally. In reaching the decision to extend Part 1 of the 2022 Act, Scottish Ministers gave careful reflection to balancing the views expressed by many stakeholders and partners against the commitment given when the 2022 Act was introduced and the statutory duty that the provisions will not remain in place unless necessary. Taking account of the overall evidence on the impact of the cost crisis at the time, the rent cap provisions were deemed to be necessary and proportionate, and were extended at the existing rates i.e. 3% rent cap on within-tenancy rent increases or up to 6% for prescribed property costs.

7. The previous extension regulations also extended the following provisions in the 2022 Act for a further 6 month period to 31 March 2024:

• 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)