Propertymark urges clarity as Scottish government ends emergency rent cap

A leading industry body has criticised the Scottish government for not providing more information on the transition to end the emergency rent cap.

Propertymark says more clarification is needed about Rent Service Scotland’s ability to assess market rents.

The Scottish government announced last week that the emergency rent cap will end on the 1^st of April 2024.

New proposals are too complex

Propertymark warns that the new proposals are too complex and self-managing landlords could find it hard to comply with the new rules.

The industry body suggests ministers should encourage landlords unsure about how to navigate the changes to use the Scottish Letting Agent Register to find a reputable agent who can support them.

The new changes will allow rent hikes of 6% or lower provided the total rent is not more than market value.

The Scottish government said any tenant who wishes to dispute a rent increase notice can apply for rent adjudication. In such cases, Rent Service Scotland or the First-tier Tribunal will set rent based on the lowest of the following three figures:

• the open market rate
• the rent requested by the landlord
• and a comparator based on the difference between the market rate and current rent

Fixed standard approach would fail

However, Propertymark has expressed concerns about Rent Service Scotland’s ability to assess market rents, in particular, what data they will use to define market rents.

The industry body also says reassurance is needed that enough rent officers will be available to support users of the new process and ensure that it is efficient.

Propertymark warns a fixed standard approach would fail to reflect local market conditions and is in favour of only applying a taper to rent increases where the difference between the current rent and open market rent exceeds a certain level.

The industry body says it’s important to consider that some landlords or their agents may be justified in making large rent increases if they had not raised rents for some time before the emergency measures were put in place.

A spokesperson from Propertymark said: “Costs are rising exponentially for landlords, including mortgage rates, increasing compliance requirements, and building and labour costs, which means the difference between current and market rent levels could be significant.

“Where this can be evidenced, landlords should be able to set the new rent level accordingly.”

Chronic undersupply of homes in Scotland

The spokesperson adds the chronic undersupply of homes in Scotland needs to be addressed.

“The long-term aim for the Scottish government must be to re-balance supply and demand levels for private rented property. If demand remains high, more rental property is needed which in turn will reduce the cost of rents. The Scottish Government should look at ways to incentivise new landlords and support existing investors.

“A review of all recent tax changes implemented by the Scottish government and UK government that impact private landlords is urgently needed. Furthermore, the recent increases in Additional Dwelling Supplement rates which are stopping investment in the sector, should be immediately reduced, or removed.

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