There has been a lot in the press regarding the above Bill and we just wanted to provide a brief explanation:
What does the legislation propose?
The legislation states that no rent increases will be routinely permitted until 31 March 2023. Landlords can however apply to a rent officer in the area in which the property is located, in order to recover up to 50% of the increase of any evidenced, prescribed property costs that the landlord has incurred during the relevant period.
Prescribed property costs are:
- interest payable in respect of a mortgage or standard security relating to the let property
- a premium payable in respect of insurance (other than general building and contents insurance) relating to the let property
- service charges relating to the let property that are paid for by the landlord but the payment of which the tenant is responsible for
Where a landlord is not happy with the rent officer’s order, they can appeal to the First Tier Tribunal. Rent increase notices issued before 6 September 2022 are enforceable as normal.
Moratorium on evictions
A moratorium on evictions will prevent enforcement of eviction notices and will not prevent the serving of notices. Additionally, the First Tier Tribunal will continue to operate as normal.
There will be exemptions including for anti-social and criminal behaviour, abandonment, repossession by lenders, substantial rent arrears and circumstances where a landlord needs to sell or live in the property.
Guidance states: “The Scottish Government recognises that there are a number of circumstances where enforcement of an eviction order should be able to proceed to protect communities and to strike an appropriate balance between protection of tenants and the rights of landlords. This includes where a tenant is to be evicted for antisocial and criminal behaviour due to the continued negative impact on the community delaying enforcement of an order would have; where a tenant is no longer living in the let property given the negative impact this would have on housing supply; circumstances where landlords themselves are in financial hardship and need to sell or live in the let property; and in cases where there are substantial rent arrears given the negative impact of accruing further significant debt on both the tenant and the landlord.”
So what does all this mean? Well, in terms of the rent freeze it means that should, a landlord incur additional costs then in certain circumstances they can apply to Rent Service Scotland to increase the rent to cover up to 50% of a limited number of specific costs , including increased mortgage payments and increases in landlords insurance or service charges. Of course when a tenant leaves the property and it is re-marketed the property can be brought back to the market at the market rent and will allow for any uplifts that the landlord feels is appropriate.
With regards to the evictions ban it’s really business as normal. Most tenants leave during the notice period when they find alternative accommodation so the ban will have little or no impact in the vast majority of cases. Landlords can still serve notice as normal if they wish to end the tenancy. If the tenant doesn’t leave the normal process for serving an eviction order can still be used it will just mean that currently the earliest date that the tenant can be evicted will be 31st March 2023. However it is important to clarify that tenants can be evicted for anti-social behaviour, abandonment, substantial rent arrears or if the landlord intends to move back into the property to alleviate financial hardship.
There has been a huge amount of negative press surrounding this piece of legislation and we feel that there is little negative impact in the majority of cases. It is also reassuring that the Scottish Government has taken steps to protect landlords due to extreme situations arising whilst the property is tenanted.