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Scottish Housing Bill proposes long-term rent control measures

The Scottish government’s new Housing (Scotland) Bill paves the way for the creation of rent control areas and more stringent rent control measures than will apply under the transitional rules announced earlier this week.

The Bill is set to create a duty on local authorities to carry out periodic assessments of the private rental market in their areas and make recommendations to the Scottish ministers about the designation of rent control areas, where they consider measures to control rent increases are necessary to protect the interests of tenants. To facilitate this, landlords will be obliged to give the authorities details of their tenants’ current rent and most recent rent increase and will face penalties for a failure to comply.

Although the Bill does not specify the level of rent caps, it states that rent rises would be capped both during and in between tenancies. Rent cannot be increased more than once in any 12-month period, and no rent increase during the first year of a tenancy is permitted.

Where a property is not in a rent control area, rent may not be increased more than once in any 12-month period and no increase is permitted in the first year of a tenancy.

The Bill provides that the first recommendation report by each local authority is to be submitted by no later than 30 November 2026 and a further assessment should be made every five years. Under the proposal, local authorities would also be required to carry out additional interim assessments if there has been a significant change in the level of rents or rate of increase in rents in the area since the most recent report.

The Bill also proposes provisions allowing certain properties to be exempt from rent control area restrictions but details around what would constitute an “exempt property” will be finalised in follow-on regulations.

In addition to rent controls, the Bill would introduce a requirement on the first-tier tribunal and the sheriff court to consider a delay to the enforcement of an eviction based on the circumstances of the case which appears to be aimed at providing greater protection for tenants during the eviction process, to ensure that “the rights of tenants are appropriately balanced against the rights of landlords to recover the let property”.

Other important changes that would be introduced under the proposed legislation could see tenants given statutory rights to keep pets at a rental property, as well as the right to make alterations to a let property.

Property expert Martin Devine of Pinsent Masons said the Bill and the subsequent regulations on rent controls could add more uncertainty to Scotland’s housing sector.

“Existing rent control measures are stifling investment in new homes which is exacerbating the challenges we have in Scotland with housing supply,” he said. “Based on this draft of the Housing Bill it seems that it is likely to be 2027 at the earliest before there would be clarity on where the Bill’s rent control measures would apply. Such an extended period of uncertainty is not going to assist in tackling the chronic housing shortage we have in Scotland nor facilitate investment in better quality housing, which is badly needed.”

For tenants, while at a superficial level a control on rent may seem beneficial, there is evidence from other parts of Europe which have demonstrated that these measures are likely to continue to deter much-needed investment into the private residential market, which leads to an even greater undersupply of good quality housing stock. “This will result in rents being driven even higher thus defeating the aims of the measures,” he said.

The Bill will now be assigned to a parliamentary committee who will examine the legislation and gather views from interested stakeholders. Responses to the call for views and oral evidence sessions will help inform preparation of the Committee’s report where they will make a recommendation on whether MSPs should support the Bill’s General Principles at the Stage 1 vote.

“This represents an opportunity for businesses to raise concerns with the legislation or propose changes for MSPs to consider at a later stage in the parliamentary process,” said Scott Wright of Pinsent Masons.

While the Bill is going through the parliamentary process, the Scottish government has introduced a transitional rent control framework as a temporary measure to keep rental increases in the private rented sector at bay before long-term rent controls can be introduced under the new legislation.

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