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

Option 2 (Preferred): Implement Transitional Measures through Regulations

This option is intended to aid the transition away from the current measures by temporarily modifying how rent increases referred to a Rent Officer by a tenant are adjudicated, in order to limit excessively large increases for tenants.

Two options for the formula underpinning the rent adjudication were presented in the consultation with key stakeholders. Both options proposed that the lower threshold at which the taper starts to have an impact should be set at 6%.^[25] That means that the taper will only start to have an impact above the maximum increase currently permitted under the 2022 Act (the 6% relates to the ground of prescribed property costs; the rent cap is lower at 3%). It should also be noted that 6% is above SFC forecasts for average nominal wage growth (3.6%) and nominal disposable household income per capita growth (3.5%) in Scotland in 2024-25.^[26]

Any additional gap between the existing rent and market rent in excess of 6% is split between the landlord and the tenant. This provides additional rental income for the landlord, in recognition of the gap between their current rent and the market rent, while also protecting the tenant.

The consultation set out two options for the upper threshold of 10% and 15%, which would be the level above which the Rent Officer cannot set rent irrespective of the gap between the market and current rent. It was proposed that the 10% cap would be reached when the gap between market and current rent is 20%, implying a gradient for the taper of 0.286,^[27] while the 15% cap would be reached when the gap is 30%, implying a gradient of 0.375.^[28] Taking account of the mixed views that were expressed in the consultation on the options of 10% and 15%, the upper threshold of the taper has been set at 12% to ensure that the threshold achieves a balance between the rights of tenants and landlords. Similarly, the gap between market and current rent at which this upper threshold will be reached has been set at 24%, because this results in a gradient for the taper of one third,^[29] again achieving a balance between the gradients presented in the consultation.

It should be noted that 12% is over three times higher than the SFC forecasts for average nominal wage growth and nominal disposable income per capita growth in 2024-25. It could therefore be extremely challenging for some privately renting households, especially those on lower incomes, to absorb rental increases above this level. However, 12% is also below the average level of increases seen in advertised rents in the 12 months to September 2023, for most bedroom sizes (Table 2), so setting an upper limit lower than this level would increase the average gap in rents paid by new and existing tenants.

The main impact of the proposed tapered approach will be to limit the rental increase relative to the business as usual option. This increase represents both the benefit to the tenant as well as the cost to the landlord, so before turning to the benefits and costs of Option 2, estimates of this foregone rent are set out in the next section.

Estimates of foregone rent under Option 2

Approach to estimating foregone rent

Measures under Option 2 apply to the rent adjudication process only, and do not directly restrict the rent increase that a landlord can propose. It is only if the tenant refers the rent increase to adjudication that the formula set about above will apply when the RSS or FTT decides the case. Therefore, to assess the outcome of Option 2 in terms of foregone rental income, there are a number of scenarios relating to rent-setting behaviour by landlords which need to be considered:

1. Some landlords will not wish to raise the rent for their sitting tenant, irrespective of the rent adjudication process. Evidence (discussed in the next section) suggests that not all landlords raise rents for sitting tenancies each year. In such cases, there is no foregone revenue due to the proposed measures. This possibility is taken into account in the estimates of foregone rental income presented below, through different scenarios relating to the shares of landlords who wish to raise rent.

2. Some landlords will propose a rent increase which is below the maximum level that would be permitted if the increase is referred to the RSS/FTT and would have done so even without the changes to the rent adjudication process. For example, the landlord may be content with the sitting tenant, and is happy to agree a rent increase which is acceptable to the tenant, helping them avoid the costs of a change in tenancy, such as loss of rent while the property is empty and the possibility that the next tenant would not be as satisfactory. In such cases, there is no foregone rental income as a result of the proposed change to the rent adjudication process. We do not have reliable information on how likely this is, and so cannot make a quantitative adjustment for this. To the extent that this does occur, the estimates of foregone rental income presented below would be overestimates.

3. The landlord requests a rent increase above the maximum level that would be permitted if the increase is referred to the RSS/FTT, but the tenant accepts that increase because they regard it as reasonable or are willing to agree to it. The Scottish Government will undertake awareness raising and provide clear information to tenants to support them to access the adjudication process. However, not all tenants will choose to refer a rent increase for adjudication, even when aware of their rights. This could be for a range of reasons, including the tenant’s personal financial situation and satisfaction with the rental property or that the landlord may have chosen not to increase rents in previous years and the rent will, therefore, still be below the market rent for a similar property. We do not have reliable information on how likely this is, and so cannot make a quantitative adjustment for this. To the extent that this does occur, the estimates of foregone rental income presented below would be overestimates.

4. The landlord requests a rent increase above the maximum level that would be permitted if the increase is referred to the RSS/FTT, and the tenant decides to refer the increase to the RSS or FTT, which sets the rent in line with the proposed rent adjudication process. Such instances are included in the costings presented below, both the foregone rental and also the costs to the RSS and FTT of hearing the application or appeal.

5. The landlord would have wished to increase the rent above the maximum level that would be permitted if the increase is referred to the RSS/FTT, but decides to reduce it so that it is line with the proposed rent adjudication process. Such cases are included in the costings presented below. In costing this scenario, it is assumed that, without the change to the adjudication process, the landlord would have requested an increase in line with the market rent of the property. However, it is possible that the landlord would have asked for an increase below market rent (although above the level that would be set under the proposed rent adjudication process), for reasons such as those set out under category (2) above; however, we do not have reliable information on how likely this is, and so cannot make a quantitative adjustment for this. To the extent that this is the case, the estimates of foregone rental income presented below would be overestimates.

The following sections look in more detail about the particular assumptions used to calculate the estimates of foregone rent.

Probability of rent increase for sitting tenant

If a landlord experiences a change in tenancy during the period when the temporary changes to rent adjudication apply, then the proposed regulations will not impact on the rent that can be set for their new tenant. The latest data from the Scottish Household Survey suggests that in 2022 around 32% of adults in the private rented sector had been at their current address for less than a year. As 2022 covers only the first months that the emergency rent cap was in operation, it is possible that the rate of turnover has reduced since then, if sitting tenants have become more reluctant to move due to the protection afforded to them. However, in the absence of more recent, comprehensive evidence, it is assumed that for 32% of properties there will be a change in tenancy during the period when the changes are in force. As a result, there will be no foregone rental income as a result of the proposed measures.

With respect to the remaining 68% of privately rented properties where no change in tenancy is anticipated, a variety of anecdotal and survey evidence suggests that a significant share of sitting tenants do not experience a rent increase each year. Table 4 sets out data from a survey of tenants undertaken for RentBetter in December 2019 and mid-March 2020.^[30]

The data in the second column reports the figures as provided in the research, while the data in the third column has been rescaled to remove those who had been in their property for less than a year as well as those who did not provide information.^[31] This shows that around half of respondents who had been in their property for a year or more had not experienced a rent increase.

Data from a survey of landlords and letting agents, also for RentBetter, on how frequently rents are increased is broadly consistent with the tenant data set out above.^[32] Table 5 shows that around half of landlords/letting agents reported not increasing rents for sitting tenants, either because they never increase rents (17%) or because they only increase rents when the tenant changes (32%).

While the survey data above suggests that around half of sitting tenants would not experience a rent increase at all during their tenancy, the share of tenants who would expect to receive an increase in any particular year would be less than this. The tenant survey data suggests that this share would likely be somewhat below 36%.^[33] This again is broadly comparable to the landlord/letting agent survey data, for which the corresponding figure is somewhat below 31%.^[34]

The RentBetter surveys were undertaken prior to the cost of living crisis. In the BRIAs accompanying the Cost of Living (Tenant Protection) Act and subsequent extensions, the central assumption was that 50% of sitting tenants would experience a rent increase. This central assumption therefore already made an allowance that a greater share of sitting tenants would receive a rent increase each period. This is because:

Even in the absence of legislation, rent increases for sitting tenants may be more frequent when market rents are rising faster.^[35]

This may particularly be the case when cost pressures (such as increases in mortgage rates) are a key contributor to increases in market rents.

Landlords may wish to make up for previous caps on rental increases, and/or raise rents when they can because they are concerned about future rent controls.

However, it is also possible that in some cases landlords may be less likely to increase rents than prior to the cost of living crisis because they are concerned whether a tenant with whom they are satisfied would be able to afford the increase and remain in the property.

To reflect this uncertainty relating to how landlords would respond to the cost of living crisis, high and low estimates of 70% and 30% were also tested around this central assumption. The same approach will be followed in this BRIA.

Trends in market rents

As set out in Table 2, for two-bedroom properties (the most common size) in Scotland, the average increase in market rents was 14% in the year to September 2023.

In the Rationale section, market forecasts for rents were set out, with the majority of forecasters expecting rental growth across the UK to slow in 2024 relative to 2023, and with the CBRE forecasting 7.4% growth in new let rents in Scotland. Therefore, when choosing scenarios for rental growth in Scotland, we assume as a central scenario that rental growth will be lower than in the year to end September 2023. We set the high scenario in line with the current level of rental growth of 14%, the central scenario at 8% and the low scenario at 2%.

Since the foregone rent will also depend on how long a tenant has been resident (as discussed in the next section), we also take into account historic trends in rents over the period of the emergency legislation, in order to calculate the gap between current rent and market rent.

How long the tenant has been resident

The degree to which a landlord’s current rent is below the market rate also depends on how long their tenant has been resident, since when a tenant moves the landlord has an opportunity to reset the rent to the market level. The longer the tenant has been resident, the further below market rent the capped rent is likely to be. In the estimates for foregone rental income set out below, the foregone rent is calculated for different lengths of tenure, and the share of landlords in each category is estimated based on Scottish Household Survey data on length of time at current address.^[36]

Other assumptions

Since the proposed regulations apply to increases for sitting tenants, the amount of foregone rental income will depend on the current level of rents charged by landlords to sitting tenants, and also by how much landlords would like to increase rents for sitting tenants. However, in the absence of data specifically on sitting tenants, we have used data on the level and increase in new let rents to calculate foregone revenue.^[37] This is likely to overstate the foregone rent, because evidence suggests that, even in the absence of legislation, landlords tend to charge lower rents for sitting tenants.^[38]

We also estimate foregone rent based on rent data for a two-bedroom property, since this is the most common size in the private rented sector, and assume that the rent grows in line with the average rent across Scotland for this property size. Foregone rental growth will of course vary across different property size and different geographies in Scotland.

The analysis is broken down into 6-month periods, because the emergency legislation was extended for two additional periods of 6 months.^[39] For the initial period of October 2022 to March 2023, rents were capped at 0%. For the two subsequent periods of extension (April 2023 to September 2023 and October 2023 to March 2024) it is assumed that landlords have increased their rent in line with the general rent cap of 3%. It should however be noted that some landlords have utilised the prescribed property cost ground and have applied for a rent increase of up to 6.%.^[40]

The estimates also take into account that the rent can only be increased once in a twelve-month period. It is therefore assumed that landlords for whom the anniversary date fell in the period October 2022 to March 2023 (and so were not able to raise rents due to the 0% cap that applied during that period), instead increased rents by 3% during the period April 2023 to October 2023.

Estimates of foregone rent

The different assumptions set out above are brought together to estimate the foregone rent. The first set of tables estimate the foregone rent for a landlord who would have wished to raise the rent to the market level, but where the rent is potentially lower either because it is referred to adjudication, or because the landlord reduces the amount of rent they propose in line with the rent formula. The estimates are broken down by the length of time the sitting tenant has been resident. Later in this section the probability that a landlord wishes to raise the rent will also be taken into account in order to calculate estimates of total foregone rent across the market.

Table 6 presents estimated foregone rental growth for the central scenario of 8% future rental growth. The average expected loss for a landlord who wishes to raise rents to the market level is calculated as the loss for each category of tenure length weighted by the share of tenancies which are estimated to fall in each category.

Table 7 undertakes the same analysis for the high scenario of market rental growth of 14%.

Table 8 repeats the analysis for the low rental growth scenario of 2%.

It should be emphasised again that the tables above present the foregone revenue for a two-bed property (which is the most common property size) whose rent is growing in line with the Scottish average for properties of this size. For some combinations of property size and location, foregone rental income will be larger than the estimates presented above, while for others it will be smaller or zero. Moreover, as set out in the tables, there will be no foregone revenue, regardless of location and property size, if there is a change in tenancy.

The estimated foregone rent for an individual landlord is now grossed up to the level of the Scottish private rented sector. In doing so, the probability that a landlord raises the rent for a sitting tenant is taken into account. However, there are other reasons why this approach might overestimate foregone rent, which were discussed above (such as that the landlord may have proposed a rental increase below the market rent even without the change in rent adjudication process),^[41] for which there is insufficient data to make a robust adjustment.

In Table 9, for each rental increase scenario, the average foregone rent (across all tenure-length categories) where the landlord does raise the rent is multiplied by the share of landlords who are estimated to increase rents, and then multiplied by the number of private rented properties in Scotland (approximately 340,000)^[42] to produce an estimate for total foregone rental income.

The estimated total annual foregone rental income across Scotland presented in Table 9 is labelled as indicative because, due to the way the tapered approach operates, total foregone income will not exactly equal forgone income on a typical property multiplied by the size of the sector. However, in the absence of detailed distributional data on existing rents, the estimates should provide some indication of the order of magnitude of total foregone rent.

The estimates of foregone rental income set out in Table 9 can be scaled to the estimated total rental income across the Scottish private rented sector. Taking the central estimate, which assumes that future rental growth will be 8% per annum and that half of landlords with sitting tenants wish to raise rents in any given year, the indicative estimate of £81m foregone rental income is equivalent to around 2.1% of estimated total rental income of £3.867bn in 2024-25.^[43]

Option 2 - Benefits

Benefits to tenants

The main beneficiaries of Option 2 are tenants, who would have additional protection from excessively large rent increases. The potential amount of this protection is set out above in the estimates of foregone rent as a result of the operation of the tapered approach. As discussed in the Rationale section, while there has been some improvement in economic data in recent months, the financial situation facing households in the private rented sector remains challenging. Therefore, it is likely that privately renting households would find it difficult to afford large rent increases that could arise from a move back to market rent in a single step, without having to cut back spending on other necessities, which may result in a build-up in rent arrears, potentially resulting in eviction and homelessness. Alternatively, tenants might have to move, with all the attendant disruptive effects (which could include having to change jobs or their children’s school).

Such financial stresses would also like have a detrimental effect on tenants’ physical and mental health and wellbeing. A majority of private renters (66%) already report that their mental health had been impacted negatively by cost of living pressures.^[44] Even for those tenants whose landlord does not ask for a large rent increase during the period of operation of the proposed measures, the prospect that this could happen is likely have a negative impact on their physical and mental health.

Benefits to local authorities and third sector organisations

Avoiding the adverse outcomes for tenants set out above could help to reduce the pressure on local authority housing support and homelessness services. Third sector organisations could also benefit from reduced pressures on housing, homelessness and financial services. While it is plausible that there will be some savings to local authorities and thirds sector organisations, it is difficult to quantify these robustly.

Benefits to NHS Scotland

With nearly two-thirds of privately renting households reporting that their mental health has been negatively affected by cost of living pressures, reduced anxiety due to the greater financial protection under Option 2 could potentially have a benefit for mental health. This could help reduce pressure on NHS Scotland services. Again, though, it is difficult to quantify such savings robustly.

Option 2 - Costs

Costs to private landlords

Foregone rent

The main costs to landlords of the proposed measures would be foregone rent due to the operation of the proposed changes to rent adjudication. The potential amount of foregone rent has been estimated above. This cost is equivalent in size to the financial benefit to tenants from the proposed changes to the rent adjudication process.

It should be noted that in many cases, landlords may not propose that the rent for a sitting tenant should be raised to the full market level. For example, if the tenant would struggle to manage the rent increase, the landlord may be faced with the costs associated with increased rent arrears, and potentially also due to the eviction process, as well as lost revenue from a void period if the tenant has to move. Moreover, they may be satisfied with the tenant and prefer to agree an increase which means they do not need to find a new tenant who might not be as satisfactory. As was discussed earlier, to the extent that this happens, the landlord might not be affected by the proposed changes, or only to a reduced extent, and therefore the estimated cost to landlords from foregone rent presented above will be overstated.^[45]

Properties with a mortgage

Large increases in interest rates have been one of the features of the cost of living crisis. This section therefore examines the issue of higher mortgage costs for landlords in the context of the proposed temporary rent adjudication approach.

There has been a degree of stabilisation in mortgage rates recently, with Bank of England data showing that the average quoted two-year fixed rate, 75% loan to value (LTV) Buy-to-Let (BTL) mortgage rate has moderated from 6.22% at the end of July 2023 to 5.56% at the end of November.^[46] Meanwhile, the average five-year fixed rate, 75% LTV BTL mortgage rate has moderated from 5.87% at the end of July 2023 to 4.93% at end of December 2023. However, interest rates remain much higher than their levels prior to the cost of living crisis, when the two-year fixed rate, 75% LTV BTL rate averaged around 2%.

It is estimated that around 36% of private rented properties in Scotland have an outstanding BTL mortgage. Of these around a quarter are estimated to be on variable mortgage rates. The remaining three-quarters on fixed rates will only be subject to a potential rate change if they reach the end of their fixed period. It is estimated that around half of BTL mortgages could experience a rate change over a period of 12 months due to having a variable rate or a fixed rate which has reached its end of term. Furthermore, around a third of properties are expected to experience a change of tenancy each year, which will allow the landlord to reset the rent to the market level. Taking all these factors into account, it is estimated that just over a tenth of all Scottish privately rented properties have an outstanding BTL mortgage which could experience a rate change over the period the measures are in place and which will not have a change in tenancy during that year.

If mortgage rates continue to ease as currently expected, landlords with variable rate BTL mortgages may experience a reduction in mortgage costs. However, those who have a fixed rate BLT mortgage which reaches its end of term will likely experience an increase in mortgage costs, because even if fixed rates on new lending have eased in recent months, they are likely higher than when the landlord last fixed. The amount of the increase can vary significantly depending exactly when the mortgage was taken out, the length of term, LTV, etc, but on average it is estimated that the increase in fixed rate mortgage costs could be in the region of £200-£300 per month, which is around 30% to 40% of an average two-bed property rent. This would also be the estimated cumulative increase in monthly mortgage costs for variable rate mortgages since the period of higher interest rates began, and properties with fixed rate mortgages which reached their end of term in the past two years may also have experienced a similar increase while being subject to previous rent restrictions.

However, when assessing the relationship between mortgage costs and rents, the following considerations are relevant:

• Even in normal market conditions, a seller (the landlord in this case) is unlikely to pass anywhere near a 100% of a cost increase onto buyers (the tenant), since the market price is constrained by the buyers' responsiveness to price increases. In the current rental market, tenants are particularly affected by cost of living pressures, which will limit their ability to pay higher rents, and in turn limit how much the market rent can increase by.
• This is particularly the case when very large cost pressures affect only a segment of the market, since the market rent is determined in competition with other landlords who have made different financing decisions.
• Assuming, as the market currently expects, that the current interest-rate tightening cycle has reached its peak, it should be borne in mind that the increase in mortgage costs set out above is the cumulative, not annual, impact of the higher rates, and can be recouped through annual rental increase over a number of years.
• Properties which have experienced an increase in mortgage costs have been able to benefit from a higher cap applying to the prescribed property cost ground under the 2022 Act – up to 3% in the period 6September 2022 to 31 March 2023 (when the rent cap was 0%), and up to 6% in the period 1 April 2023 to 31 March 2024 (when the rent cap was 3%).
• The average increase in private rents reported in the Scottish Government’s statistics of a 14% average annual increase in 2-bed market (largely new-let) rents in the year to September 2023, which is used to cost the foregone rental income for landlords under Option 2, includes the impact of higher mortgage costs on market rents.

While UK Finance data show that the number of buy-to-let mortgages in arrears of 2.5% or more of the outstanding balance in the UK stood at 11,540 at the end of Q3 2023, a 29% increase from the previous quarter and twice the level a year ago (equivalent to 0.57% of all outstanding buy-to-let mortgages across the UK), because the Scottish private rented sector is estimated to constitute only around 7% of the UK private rented sector, these trends reflect wider UK and not specifically Scottish trends. Meanwhile, UK Finance data show there were 450 buy-to-let possessions in the UK during Q3 2023, the same level as the previous quarter, and 13% higher than a year ago. However, across the first 3 quarters of 2023, BTL mortgages taken into possession as a share of all BTL mortgages (0.02%) was below the level across 2019 (0.03%), prior to the covid pandemic.

Impact on landlord incentives for investment

The transitional measures may have an impact on certain incentives to invest. New supply will not initially be affected because the proposed temporary rent adjudication measures do not apply to new lets, although it is possible that concerns about the impact of possible future rental controls on rent increases may be a factor in investment decisions.

In this context, it is worth looking at trends in the overall number of properties on the Scottish Landlord Register. There are some limitations of this data source, such as the fact that registrations last for a period of three years and there could be a time lag in landlords de-registering properties which are no longer available for rent. In the case of any landlords looking to leave the sector or reduce their portfolio, it should also be recognised that the process could take several months from freeing up properties to completing sales. Nevertheless, subject to these limitations, Table 10 shows that the overall number of registered properties across Scotland has been relatively steady across the period January 2022 to December 2023, with the number of properties registered in December 2023 (345,214) being 1.6% higher than in August 2022 (339,632), immediately prior to the announcement of the emergency measures. There are however differences at the local authority level, with more rural local authorities showing a decline in private rented sector properties, whilst others are showing an increase.^[47]

Source: Scottish Landlord Registration System monthly monitoring figures. May-23 figures were based on a snapshot taken on 6 June 2023

With respect to incentives to invest in the quality of an existing private let, the ONS produces estimates of the costs of regular repair and maintenance of a dwelling as part of the CPI. Annual growth in this series, which had reached 7.5% in September 2022, has decreased to 0.2% in December 2023.^[48] Furthermore, repair and maintenance costs from only a portion of the landlord's total costs: data from HMRC for non-incorporated landlords^[49] in the UK show that in 2021-22, repairs and maintenance comprised 23% of total allowable expenses, and 11% of total income declared.^[50]

Familiarisation by landlords with regulations

Landlords will need to familiarise themselves with the regulations. However, it should be noted that the proposed change does not amend the administrative process for rent adjudication. The Scottish Government will provide information on the amended approach to rent adjudication to support tenants, landlords and letting agents understanding of how rent increases will be considered where the tenant makes a referral to a Rent Officer or the FTT.

Costs to Rent Service Scotland

With respect to the cost of an individual rent adjudication application to the RSS, the proposed transitional measures involve the application of a formula which uses the current rent, the rent proposed by the landlord and the market rent as inputs. The first two elements will require to be provided by the applicant, and therefore the main work required from the RSS is to determine the market rent for the property, as per the rent adjudication process prior to the 2022 Act. Therefore, the cost per case is likely to be very similar for these two processes.

Overall costs to RSS could be higher if there are more applications under the transitional measures than there would be if the rent adjudication measures as they applied prior to the 2022 Act were in force. There is significant uncertainty about how many applications for adjudication will be received under the proposed temporary measures. It may be the case that there will be similar levels of applications, but landlord representative bodies raised concerns during consultation that the amendments to the rent adjudication process could prompt more tenants to apply.

The potential additional costs to RSS are therefore estimated as follows. Firstly, the cost per case is set out in Table 11. As discussed above, this is based on the costs of rent adjudications under the pre-2022 Act procedures.

Next, the total cost is estimated under different caseload scenarios. The first scenario assumes that the caseload is the same as would be expected under the pre-2022 Act rent adjudication procedures (the business as usual). RSS received 96 applications in the eight months from 1 January 2022 to 6 September 2022 when the pre-2022 Act procedures were suspended. This is approximately 144 cases at an annual rate. It is assumed that the level of applications under the business as usual would be somewhat higher than this, at around 150 cases, because the share of the market with a private residential tenancy will increase over time.^[52] The total cost to RSS under the baseline is then estimated as the cost per case (as set out in Table 11) multiplied by 150 cases. Medium and high cost scenarios are then estimated by assuming that the caseload is twice and four times as high as the business as usual. The potential additional costs to the RSS are then calculated as the difference between the total costs under each caseload scenario and the total cost in the business as usual.

Costs to the First Tier Tribunal

Under the proposed measures, where the tenancy is a private residential tenancy, there will be the right to appeal a rent adjudication by the RSS to the FTT, as per the pre-2022 Act processes. Furthermore, the proposed rent adjudication process will also apply when tenants on applicable statutory assured and short assured tenancies apply directly to the FTT under section 24(3)(a) of the Housing (Scotland) Act 1988.

With respect to the cost per application, it is assumed (as discussed above in relationship with RSS costs) that the process of adjudication under the temporary measures will require a similar level of resource to rent applications under the pre-2022 Act procedures. Table 13 sets out the indicative cost per case. Note that this estimate is based on the assumption that the number of cases is of a similar order of magnitude to the caseload scenarios set out below, so that the total caseload can be absorbed within existing arrangements without the requirement for additional FTT staffing or office costs.

As for rent adjudication applications to the RSS, the impact of different caseload scenarios on total costs for the FTT is estimated. Again, the low scenario assumes that the caseload will be in line with the business as usual (i.e. the caseload if the pre-2022 Act provisions were to come back into force). In 2021-22, the FTT received a total of 15 rent adjudication applications for assured (6), short assured (1) and private residential (8) tenancies. It is assumed that this would be the caseload in the business as usual.^[54] In line with the approach to RSS costing, the medium and high caseloads are based on twice and four times the baseline caseload. These caseloads are then multiplied by the indicative cost per case set out in Table 13 to derive total case costs. The potential additional costs to the RSS are then calculated as the difference between the costs under each scenario and the cost in the business as usual.