Details emerge of permanent rent control proposal

The controversial minister who steered rent controls through the Scottish Parliament has contacted Propertymark to reveal details of the next stage.

Patrick Harvie - the Green Party activist who is Minister for Zero Carbon Buildings, Active Travel and Tenants' Rights in the Scottish Government - has given details of his administration’s plans to introduce temporary changes to rent adjudication. This is the process that allows tenants to challenge rent rises.

Although this is part of the transition away from the Cost of Living Act which first introduced rent controls in Scotland, the new measures will continue to limit rent increases “to protect tenants” in his words.

The current Cost of Living Act, which was always intended as a temporary measure, remains in force until the end of March this year.

Once the rent cap has expired the Scottish Government says it expects that many rent increases proposed by landlords will proceed as normal.

However, the Cost of Living legislation allows ministers to change the way rent increases referred by a tenant are adjudicated - this is meant to smooth the transition out of the rent cap and protect tenants from steep increases.

Any transitional measure put in place using these powers would last a maximum of one year and would be subject to regular review to ensure it remains appropriate.

Propertymark has been told that when the emergency rent cap is removed, the Scottish Government plans to amend the rent adjudication process so decisions must be based on the lowest of three comparators - open market rent, or the new rent proposed by the landlord, or a a maximum 'reasonable' increase for that tenancy, which will be defined by a new taper calculation created by the Scottish Government.

The trade body has also been told by Harvie how this tapering process will work.

Tapering would be based on a percentage which would apply in cases where the rent increase proposed by the landlord was assessed as ‘unreasonable’. Each specific case would be calculated based on the gap between the existing rent for a tenancy and the open market value of similar tenancies in similar properties. 

As part of the tapering approach, an upper limit would also be set which represents the maximum percentage increase for adjudicated rents.

So effectively thios means the current temporary rent controls are replaced by a permanent mechanism to control rents.  

Propertymark has consistently opposed the rent controls, which have been extensively criticised by some politicians and almost all property professionals.

A statement from Propertymark says: “We understand the frustration felt by members as a result of these measures and the further uncertainty it brings, but we will continue to work on your behalf to campaign against rent control and influence Scottish Government proposals. Feedback on plans for the transitional arrangements is open until 4 pm on Monday 15 January 2024 and Propertymark would welcome members’ views on the Scottish Government’s plans to help us respond.

Send your comments to the Policy and Campaigns Team at policy@propertymark.co.uk.”