Rent Adjudication (Temporary Modifications) (Scotland) Regulations 2024 – Business and Regulatory Impact Assessment

Option 1: Do nothing (Business as Usual)

This option would see no new temporary measures put in place to smooth the transition out of the emergency rent cap. On the expiration of the emergency measures at the end of March 2024, the route for tenants to refer rent increases for determination would revert to that prior to the 2022 Act. As set out in the Rationale, since rents for sitting tenants will have been capped for nearly nineteen months by the end of March 2024, in some cases the level of the rent currently paid by a sitting tenant could be significantly below the market rent level, particularly as some rents for sitting tenants may have been below the market rent level even prior to the 2022 Act and will have fallen further behind the market in the period the measures have been in place. As a result, some tenants could face excessively large rent increases if gap between market rent and current rent is allowed to be closed in a single increase. For this reason, this option is not considered to be suitable.

Option 1 – Benefits

The main beneficiaries of Option 1 would be landlords who could raise rents to market rent level. However, where the increase is very high, this could result in rent arrears and potentially eviction, with an impact on the benefit to the landlord from the rent increase, where there is a need to re-let the property. Since Option 2 is analysed relative to Option 1 (business as usual), the benefits of Option 1 are the costs of Option 2, so for more detailed analysis refer to the section Option 2 - Costs.

Option 1 – Costs

The costs under Option 1 would be borne largely by tenants where landlords raise rents significantly, particularly when the gap between existing and market rent is large. Since Option 2 is analysed relative to Option 1 (business as usual), the costs of Option 1 are the benefits of Option 2, so for more detailed analysis refer to the section Option 2 - Benefits.