Will engagement with the Scottish Government result in the rent freeze thawing?

The Scottish Government’s Cost of Living (Tenant Protection) (Scotland) Bill was passed on 6 October 2022 and brought about what is essentially a rent freeze on existing residential leases (effective from 6 September 2022) and a moratorium on evictions (except in certain circumstances) across the private, social and student housing sectors.

The emergency legislation was fast-tracked through the Scottish Parliament as a temporary measure to try to support tenants during the cost-of-living crisis. Its provisions are set to expire on 31 March 2023, however, the legislation does include the option to extend the measures for two further six-month periods – until 30 September 2023 or 31 March 2024.

The Act contains statutory reporting requirements, which mandate that every three months the Scottish Government must review and report to the Scottish Parliament on the need for the provisions in the Act to either be continued or to expire, where appropriate, based on the evidence available at the time.

The deadline for the first three-monthly report, covering the period 28 October to 31 December 2022, to be laid before the Scottish Parliament is 14 January 2023 and there is a ministerial statement on the Act scheduled for 12 January. So, we should know then whether the provisions are being extended or amended.

While the private rental sector remains robust in Scotland, responses from across the industry have expressed concerns about the impact on the rental sector, referring to deals that have been aborted or delayed, and pointing out the likely inflationary impact on rents under new leases that a lack of supply could cause.

So far, the only thing we know for certain is that the Scottish Government has confirmed the rent freeze will be removed for social housing from April, following an agreement between ministers and the Scottish Federation of Housing Associations on below-inflation rent increases for the 2023/2024 financial year.

The fundamentals for investing in the build-to-rent sector in Scotland remain strong and there are several exciting opportunities on the market at the moment.

We have witnessed a willingness by developers, funders, investors and other housing providers affected by the legislation to engage constructively with the Scottish Government to try to agree a sensible way forward. It is in everyone’s interest to remove any barriers to investment and increase the supply of rental homes, and the change with social housing is evidence of effective stakeholder engagement.

It is important that this engagement continues on both sides of the debate.

If our market-leading real estate and parliamentary and public law teams can be of assistance, please do not hesitate to get in touch.

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