Renters reform is big news both in Scotland as a result of the Cost of Living (Tenant Protection) (Scotland) Act 2022 (”the Scottish Act”) and now in England due to the Renters (Reform) Bill (“the English Bill”).

Scotland

The Scottish Act introduced two key measures: a rent increase cap and a pause on some evictions. The Scottish Act originally applied until 31 March 2023 with options to extend. In September 2023 the Scottish Parliament has voted for a final extension under the legislation to 31 March 2024. The provisions which apply now and will be extended are:

• Rent cap for existing tenancies of 3%: tenants must be notified by their landlords before the rent is increased. Increases are limited to once in every 12 months. The rent cap does not apply to the starting rent under new tenancies.
• Higher rent increases: these are available in certain limited circumstances if landlords apply to Rent Service Scotland (whose decision can be appealed by either party to the First-tier Tribunal). This could allow up to a 6% increase to cover certain evidenced costs from the previous six months.
• Social housing: originally subject to a cap but a voluntary agreement between the Scottish Government and social landlords means different rates of increase (below inflation) will apply.
• Student accommodation: halls of residence and purpose-built student accommodation (PBSA) are not currently subject to the rent cap (this was suspended under the first extension and will continue).
• Evictions: there is a ban in certain circumstances (some evictions can still go ahead).
• Unlawful evictions: can result in the landlords being liable for the payment of increased damages up to a maximum of 36 months’ rent.

England

By comparison, the English Bill is not yet finalised and is subject to change as it makes its way through Parliament. There are a variety of proposed measures:

• Transition to new form of statutory tenancy: the current forms are to be abolished. This will impact on the social housing sector.
• End of "no-fault" evictions: landlords will only be able to evict in reasonable circumstances and tenants will need to give 2 months’ notice. PBSA will be exempt from these changes (providers must be registered for government approved codes).
• Changes to possession grounds: there are a variety of changes, some to make it easier to regain possession when tenants engage in anti-social behaviour. Exempted educational establishments like universities will be able to continue to let to non-students during holidays and be able to evict them to re-let to incoming student tenants.
• Revised rent procedures: new statutory procedures for proposing rent increases and challenging or appealing rent amounts or above market increases. Unlike the Scottish Act there is no proposed cap on rent increases.
• Right to keep pets: a right allowing tenants to ask landlords if they can keep their pet in the property. Government guidance is expected on this provision.
• New landlord duties and provision of information: landlords will have to provide more information ahead of the tenancy starting.
• Landlord redress scheme: a new complaint procedure scheme with financial penalties for breach.
• Private rented sector database: a new database or portal with parties’ details.

The English Bill currently has no exception for student accommodation other than those let by education institutions. As it stands the English Bill gives the government the power to make further regulations to include or exclude niche types of accommodation such as PBSAs.

Comment

In the longer term, the Scottish Government intends to introduce a housing bill (included in the legislative programme for 2023-24 published earlier this month) which will contain longer-term statutory rent controls and provisions intended to strengthen tenant rights.

The prospect of permanent rent controls will not be welcomed by many in the industry. The core problem putting upward pressure on rents is lack of supply, which can only be addressed by increased investment to deliver much-needed new homes. That investment will require any rent controls to be set at sensible levels and much greater certainty than the market has experienced over the last few years.

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