Property investors welcome move to replace cost of living freeze with new limit

Residential rent rises for private landlords in Scotland will be limited to 3% a year from April.

The Scottish government has confirmed that the current freeze on rents, in place since September, will end on 31 March.

Instead, under amendments to the Cost of Living (Tenant Protection) Act, it will be replaced by a new annual rent rise limit of 3%. This will remain in place for at least six months, with an option to extend for a further six months until 31 March 2024.

scottish parliament

However, landlords will still be able to apply to government body Rent Service Scotland to increase rent to partially cover specific rising costs, including increased mortgage interest payments on the property and rises in insurance. The maximum rise allowed in these circumstances would be 6%.

The social sector rent freeze is being removed entirely, albeit it is to be replaced with agreements from landlords to keep any rent increase for 2023-24 well below inflation.

Under this agreement, the Convention of Scottish Local Authorities (COSLA) has committed to restricting rents to no more than £5 a week, while members of the Scottish Federation of Housing Associations and Glasgow West of Scotland Forum of Housing Associations have reported planned average increases of 6.1%.

An evictions ban will remain in place as will increased damages of unlawful evictions of up to 36 months of rent.

The Scottish Property Federation (SPF) said it ‘cautiously’ welcomed the move to replace a freeze with a 3% cap.

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David Melhuish, director of SPF, said: “‘This will give some confidence to key investors looking to build new homes for rent in Scotland, but it will not wholly undo the negative impacts of the emergency legislation implemented in October 2022.

“In some cases, capital that was earmarked for building new rental homes in Scotland has already been diverted to projects in other parts of the UK.

‘We must address the crisis of availability for those seeking to rent homes in Scotland, and this will require significant investment from the private sector.” 

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