The Cost of Living (Tenant Protection) (Scotland) Act was passed by the Scottish Parliament in October 2022. As a piece of emergency legislation, it was fast-tracked to try and support tenants during the cost-of-living crisis.

Initially, its main provisions were for rents on all tenancies across the social housing, student housing and private residential sectors to be frozen until 31 March 2023, as well as a temporary ban on evictions except in specified circumstances.

As temporary legislation, the provisions of the act were set to expire on 31 March 2023 but could be extended for two further six-month periods – until 30 September 2023 or 31 March 2024 – following a review process and with the consent of the Scottish Parliament.

The legislation caused controversy, with representatives of the property sector highlighting the potential for unintended consequences of the rent cap – such as a reduction in the supply of private rented accommodation as a result of landlords leaving the market.

Indeed, a group of landlords and representative bodies have submitted a petition to the Court of Session in Edinburgh seeking a judicial review of the legislation, arguing it is “disproportionate and unfair”.

In January, Patrick Harvie MSP, minister for zero carbon buildings, active travel and tenants' rights, provided a parliamentary update regarding which aspects of the legislation the government currently intends to keep in place, and what changes will be made, after 31 March 2023. This has since been followed up with guidance and a briefing from the Scottish Parliament Information Centre (SPICe). In short:

• The moratorium on evictions in both social and private rented sectors is expected to remain in place.
• Legislation will be brought forward to expire social rented sector cap provisions from March 2023 following voluntary agreements with social housing providers.
• Rent increases in the private sector will be capped at 3% from 1 April 2023, with landlords being able to apply to raise rent by 6% to cover certain costs.
• The government plans to suspend the rent cap in the student rental sector considering most student accommodation providers set rents at the beginning of the academic year (usually September) and the legislation does not apply to new tenancies.

The discussions we have had with clients and stakeholders over the last six months tell us that this has been a concerning time for all those involved in the delivery of open market and social housing, including housebuilders, developers, funders and housing associations. The income from rental properties became uncertain almost overnight and many have had deals abandoned or frozen as a result.

The data also suggests it has been a worrying time for tenants looking for a rented property, as the lack of supply and corresponding increase in initial rents has made it harder and more expensive than ever to find a new home.

Last week the Scottish Parliament’s Local Government, Housing and Planning Committee backed the extension of the eviction ban and the rent controls to the end of September, and this will now be voted on by all MSPs before it is formally approved.

While many in the industry will be disappointed to see the controls remain in place at all, the fact that the Scottish Government has moved anyway from an almost total rent freeze is a step in the right direction. However, further steps are required for the Scottish Government to show they are listening and recognise the unintended consequences of the legislation.

With new build-to-rent opportunities coming to the market and attracting interest, the sector is moving forward once again, but it remains important that those already operating in Scotland’s property sector, and those considering investing in what is a fundamentally strong and stable market, engage with policymakers ahead of the various review points to make their views known and highlight key issues.

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