Scotland to scrap rent controls next month

Rent controls imposed in Scotland in 2022 to alleviate cost-of-living pressures will be lifted next month.

The decision follows industry warnings that the caps stifled investment and inflated rental costs.

Scottish Housing Minister Paul McLennan told the Herald newspaper: “The temporary changes to rent adjudication were in place to support the transition away from the short-term rent cap that was in place under the Cost-of-Living Act.

“They were in place to manage the risk of very steep increases in rents for tenants if there was a return to market rent in a single step and will come to an end on March 31, 2025.”

He anticipates the move will spur new investment ‘into rental housing of all tenures’.

Housing developers had claimed that billions in housing projects were shelved due to the cap.

However, Living Rent’s national campaigns spokesperson, Ruth Gilbert, called the decision ‘deeply irresponsible’.

Rent control legislation

David J Alexander, the chief executive of DJ Alexander Scotland, said: “The announcement that the current rent control legislation is to be ended on March 31st is welcome news.

He highlighted that Mr McLennan also acknowledged a ‘need for longer term action on rents’ and the Housing (Scotland) Bill will introduce longer-term rent control ‘where this is needed’.

Mr Alexander continued: “Everybody involved in the private rented sector (PRS) has been frustrated at the uncertainty of the Scottish Governments’ policy on rent controls.

“But this announcement, coupled with a proposed consultation including consideration of how new housing built specifically for private rent – including in mid-market rent and other purpose-built private rented accommodation – should be treated is to be welcomed.”

Investment in the sector

Mr Alexander continued: “This should encourage a return of investment in the sector and the potential for a rapid increase in the number of new homes being built for the private rented sector.

“This is a positive development for landlords, investors and tenants who will all benefit from an increase in the volume of properties being brought into the market.”

He says that open market rent setting can return with no rent cap restriction – at least until the new Housing (Scotland) Bill comes into effect in 2027.

He said: “This will be a comfort for landlords and investors of a greater degree of certainty for the next few years.

“This is a clear sign that the Scottish Government is listening to the private rented sector and going some way to encourage growth to ensure landlords and investors can be more certain of the viability of their investment and tenants can be comforted at the prospect of a substantial increase in the supply of homes to rent.”

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