Schedule 1—Rent cap
Rent cap for private residential tenancies
22.Paragraph 1(1) of schedule 1 provides that the 2016 Act applies, subject to sub-paragraph (2), with the modifications set out in paragraph 1 of the schedule.
23.Sub-paragraph (2) provides that the modifications in paragraph 1 have no effect in relation to any rent-increase notice given under section 22(1) of the 2016 Act by a landlord under a private residential tenancy to a tenant before 6 September 2022. Existing rights of tenants to challenge any rent increase will be maintained for rent-increase notices given before 6 September 2022. This means that, where a rent-increase notice was issued prior to 6 September 2022, the 0% cap will not apply and the proposed rent will be applied 3 months after the tenant received the rent-increase notice (or such longer period as may be agreed between the landlord and the tenant) unless the tenant has made an application to a rent officer (part of Rent Service Scotland) under section 24 of the 2016 Act to challenge the rent-increase notice.
24.Sub-paragraph (4) modifies the effect of section 19 of the 2016 Act. Section 19(1) of the 2016 Act provides that the rent payable under a private residential tenancy may not be increased more than once in a 12 month period. Sub-paragraph (4)(a) modifies section 19(2) in consequence of sub-paragraph (9) and (13). Separately, sub-paragraph (4)(b)—
firstly, inserts a new subsection (3) into section 19 of the 2016 Act in consequence of the new Chapter 2A of Part 4 of the 2016 Act (to be inserted by paragraph 1(17) of schedule 1 of the Act) to allow a landlord to apply to a rent officer seeking a rent increase above the level of the permitted rate in certain circumstances,
secondly, inserts a new subsection (4) of section 19 conferring a regulation-making power (subject to the affirmative procedure) on the Scottish Ministers to amend that section to permit a second rent increase in a 12 month period in certain circumstances (as may be specified in the regulations).
25.Sub-paragraph (5) inserts a new section 21A into the 2016 Act (with temporary effect) providing that from 6 September 2022 a landlord under a private residential tenancy may not increase rent by more than the permitted rate (which is initially set at 0%). The permitted rate may be changed by the Scottish Ministers by regulations (subject to the affirmative procedure). Any rent-increase notice given on or after 6 September 2022 when the permitted rate is 0% has no effect.
26.In consequence of the new section 21A of the 2016 Act imposing a rent cap, sub-paragraph (6) modifies section 22 of the 2016 Act providing that any rent increase agreed between a landlord and tenant has no effect to the extent that the increase is more than the permitted rate.
27.Sub-paragraphs (8) and (9) modify sections 24 and 25 of the 2016 Act with the effect that, except where the permitted rate is 0% (meaning that no rent-increase notice can be given), a tenant who has received a rent-increase notice from a landlord may refer the proposed rent increase to a rent officer for a decision on whether the proposed rent increase does or does not exceed the permitted rate of increase. If it does not, the rent officer will approve the proposed rent increase by order. If the proposed rent would be an increase of more than the permitted rate, the rent officer will order that the rent may be increased by the permitted rate (see new sections 25(1A) to (1C) of the 2016 Act inserted by paragraph 1(9) of schedule 1).
28.In the circumstances where the modifications of section 25 of the 2016 Act made by the Act mean that the application to a rent officer under section 25 is to be limited to the rent officer deciding whether the proposed rent increase is at or below the level of the permitted rate (and is more limited than the process of rent determination by a rent officer otherwise set out in section 25 of the 2016 Act which is to be determined at the level of open market rent), the following provisions of the 2016 Act are not necessary and are temporarily to be treated as having been repealed—
section 26 (rent officer’s duty to issue provisional order) – see sub-paragraph (10),
section 32 (determination of open market rent) – see sub-paragraph (15),
section 24 (duty of rent officers and the First-tier Tribunal to make information about open market rents determined) – see sub-paragraph (18).
29.Sub-paragraphs (12) and (13) modify the effect of sections 28 and 29 of the 2016 Act to provide that the landlord or the tenant may appeal against an order by a rent officer under section 25(1A) or (1B) (deciding that the proposed rent increase is at or below the permitted rate and ordering that the rent payable is the rent proposed in the rent-increase notice, or otherwise ordering that the rent payable is the current rent payable as increased by the permitted rate) to the First-tier Tribunal. On determining the rent payable on appeal, the First-tier Tribunal must decide that the rent payable is the current rent as increased by the permitted rate.
30.Sub-paragraph (14) consequentially modifies section 31 of the 2016 Act dealing with what is effectively an underpayment of rent which arises where the effective date on which the rent officer’s or the First-tier Tribunal’s decision regarding rent increase takes effect is later than the date that the rent increase had originally been due to take effect in accordance with the rent-increase notice.
31.Sub-paragraph (16) makes consequential provision to section 33 of the 2016 Act (which applies where a referral made to a rent officer under section 24, or an appeal to the First-tier Tribunal under section 28, is withdrawn). In those circumstances, the rent officer or the First-tier Tribunal must decide that the rent payable is the lower of the rent proposed in the rent-increase notice or the current rent increased by the permitted rate.
32.Sub-paragraph (17) inserts a new Chapter 2A of Part 4 of the 2016 Act containing exceptions where a landlord may apply for a rent increase above the permitted rate. New section 33A of the 2016 Act enables a landlord to make an application to a rent officer to apply a proposed rent increase above the permitted rate in order to recover up to 50% of the increase in any prescribed property costs (defined by new section 33A(4) of the 2016 Act) incurred by the landlord at any time during the period of 6 months before making the application. The definition of “prescribed property costs” may be modified by regulations made by the Scottish Ministers under section 33A(5) which require the approval of the Scottish Parliament.
33.Prescribed property costs are any of the following costs—
interest payable in respect of a mortgage or standard security relating to the let property,
a premium payable in respect of insurance (other than building and contents insurance) relating to the let property and the offering of the property for let,
service charges relating to the let property that are paid for by the landlord but the payment of which the tenant is responsible for under the tenancy.
34.Where a landlord applies to a rent officer under new section 33A(1) of the 2016 Act for a rent increase above the permitted rate, new section 33A(3) of the 2016 Act requires the landlord to give written notice of the application to the tenant which must—
state the rent that would be payable if the proposed rent increase took effect,
state that the proposed rent would be an increase of more than the permitted rate,
state that the rent payable under the tenancy is not increased until the rent officer or (if appealed) the First-tier Tribunal makes an order determining the rent,
describe what prescribed property costs of the landlord have increased in the previous 6 months prompting the proposed rent increase,
where the proposed rent increase includes an amount in relation to the landlord’s increased service costs (which is a reference to increased service charges which fall within the definition of “prescribed property costs”) that are paid for by the landlord but recoverable from the tenant, a statement detailing the nature and amount of the increase in the service charges.
35.Under new section 33B of the 2016 Act, any rent increase ordered by the rent officer must be no more than 50% of the increase in the landlord’s prescribed property costs incurred at any time during the 6 month period before making the application (as specified in the application to the rent officer) subject to an overall limit of this increase being no more than 3% of the level of the existing rent. This 3% limit may be changed by regulations by the Scottish Ministers if approved by the Scottish Parliament – see new section 33F(2) but may not be lower than the level of the permitted rate.
36.Sub-paragraph (11) modifies section 27 of the 2016 Act in consequence of the application to a rent officer under section 33A(1) and an order by the rent officer under section 33B(2) or (3). Within 14 days of making the order, the rent officer may correct an error in the original order determining the rent by making a new order.
37.Chapter 2A also provides for appeals and reviews. An order of a rent officer under section 33B(2) or (3) may be appealed to the First-tier Tribunal under section 33C within 14 days of the order being made. As with the decision of the rent officer, any rent increase ordered by the First-tier Tribunal on appeal must be no more than 50% of the increase in the landlord’s prescribed property costs incurred in during the 6 month period before making the application (as specified in the original application to the rent officer) subject to a limit of this increase being no more than 3% of the level of the existing rent. The 3% limit may be modified by regulations made by the Scottish Ministers subject to the approval of the Scottish Parliament – see section 33F(2).
38.Again, the decision of the First-tier Tribunal may only be reviewed by the First-tier Tribunal under limited circumstances set out in section 33E. This is comparable to section 30 of the 2016 Act which applies in relation to an appeal to the First-tier Tribunal following a referral by a tenant to a rent officer under section 24.
39.New section 33F(1) confers power on the Scottish Ministers by regulations (subject to the affirmative procedure) to modify the 50% limit on the increase in prescribed property costs in respect of which a landlord may apply to a rent officer (under section 33A(1)) to seek recovery by way of rent increase.
40.Section 33G makes equivalent provision to section 31 of the 2016 Act, dealing with what is effectively an underpayment of rent which arises where the effective date on which the rent officer’s or the First-tier Tribunal’s decision (under section 33B(2) or (3) or 33C(3)) regarding the rent increase takes effect is more than 3 months after the day on which the tenant was notified of the landlord’s proposed increase under section 33A(3). This is based on the assumption in the provisions in new Chapter 2A of Part 4 of the 2016 Act inserted by the Act that if an application by a landlord to increase rent to a level above the permitted rate is approved by a rent officer or the First-tier Tribunal under this Chapter, it is to take effect 3 months after the tenant has been notified under section 33A(3) of the application.
41.Sub-paragraph (19) temporarily disapplies Chapter 3 (rent pressure zones) of Part 4 of the 2016 Act meaning that a local authority will be unable to make an application to the Scottish Ministers requesting that all or part of the local authority’s area be designated as a rent pressure zone during the period of application of the rent cap while Part 1 of this Act is in force.
Rent cap for assured tenancies and short assured tenancies
42.Paragraph 2 makes similar provision in relation to assured tenancies and short assured tenancies modifying the 1988 Act as the provision made in paragraph 1 in relation to private residential tenancies modifying the 2016 Act.
43.From 6 September 2022, a landlord under an assured tenancy or a short assured tenancy may not increase the rent payable under the tenancy by more than the permitted rate, which is initially set at 0% (see section 23A of the 1988 Act inserted by sub-paragraph (3)). The Scottish Ministers may, by regulations, change the permitted rate.
44.But the modifications made by paragraph 2 of schedule 1 of the Act have no effect in relation to a rent increase notice properly served under section 24(1) of the 1988 Act before 6 September 2022 (see sub-paragraph (2)(a)). Similarly, the modifications made to the 1988 Act do not affect a referral or an application to the First-tier Tribunal (under section 25(1) or 34(1) of the 1988) that has been made before the paragraph comes into force (see sub-paragraph(2)(b)).
45.Furthermore, the rent cap does not apply to tenancies to which the statutory rent increase process did not apply under section 24(5) of the 1988 Act (see subsection (6) of new section 23A). The rent increases relating to those tenancies are not governed by the arrangements under Part 2 of the 1988 Act and are instead governed by contractual terms. These excluded tenancies are either—
statutory assured tenancies where the landlord varied the terms of the contract in the year following the conversion of the assured tenancy to a statutory assured tenancy under section 17 of the 1988 Act,
contractual tenancies which include a term making provision for an increase in rent (including provision whereby the rent for a particular period will or may be greater than that for an earlier period).
46.The Act makes provision for a new route of referral to rent officers under the 1988 Act as modified, mirroring the modifications of the 2016 Act. The 1988 Act, without the modifications made by the Act, provides that statutory rent increase notices can be appealed by a tenant directly to the First-tier Tribunal, and rents in general in respect of short assured tenancies can be referred to the First-tier Tribunal for a redetermination of appropriate rent for that tenancy. Sections 24A to 24K of the 1988 Act (inserted by paragraph 2(5) of schedule 1 of the Act) replace this process, mirroring the changes made to the 2016 Act relating to applications to rent officers and appeals to the First-tier Tribunal.
47.A tenant who has received a notice to increase rent from a landlord (where the permitted rate is more than 0%) may refer the proposed rent increase to a rent officer for a decision that the proposed rent increase does not exceed the permitted rate of increase (see section 24(3)(a) of the 1988 Act as modified by sub-paragraph (4)(d) and (g)). If it does not, the rent officer will approve the proposed rent increase by order. If the proposed rent would be an increase of more than the permitted rate, the rent officer will order that the rent may be increased by the permitted rate (see sub-paragraph (5) inserting new section 24A of the 1988 Act).
48.The landlord or the tenant can appeal against an order by the rent officer to the First-tier Tribunal within 14 days of the order being made (see new section 24B of the 1988 Act). On determining the rent on appeal, the First-tier Tribunal must decide that the rent payable is the current rent as increased by the permitted rate (see new section 24C of the 1988 Act).
49.New section 24D of the 1988 Act makes similar provision to section 33 of the 2016 Act (mentioned above).
50.Sub-paragraph (5) also makes provision for circumstances where a landlord may apply to increase the rent above the permitted rate (see new section 24E of the 1988 Act). It is similar to the provision made for private residential tenancies in paragraph 1 of the schedule in which a landlord may apply to a rent officer for an increase in rent to recover no more than 50% of prescribed property costs (as specified in the application to the rent officer) incurred by the landlord at any time during the period of 6 months before making the application, subject to an upper cap of the increase being no more than 3% of the current amount of rent.
51.Prescribed property costs are any of the following costs—
interest payable in respect of a mortgage or standard security relating to the house that is let,
a premium payable in respect of insurance (other than building and contents insurance) relating to the house that is let and the offering of the house for let,
service charges relating to the house that is let that are paid for by the landlord but the payment of which the tenant is responsible for under the tenancy.
52.Where a landlord applies to a rent officer under new section 24E(1) of the 1988 Act for a rent increase above the permitted rate, new section 24E(3) of the 1988 Act requires the landlord to give written notice of the application to the tenant which must—
state the rent that would be payable if the proposed rent increase took effect,
state that the proposed rent would be an increase of more than the permitted rate,
state that the rent payable under the tenancy is not increased until the rent officer or (if appealed) the First-tier Tribunal makes an order determining the rent,
describe what prescribed property costs of the landlord have increased in the previous 6 months prompting the proposed rent increase,
where the proposed rent increase includes an amount in relation to the landlord’s increased service costs (which is a reference to increased service charges which fall within the definition of “prescribed property costs”) that are paid for by the landlord but recoverable from the tenant, a statement detailing the nature and amount of the increase in the service charges.
53.The powers of a rent officer under new section 24F of the 1988 Act and the First-tier Tribunal under section 24G of the 1988 Act are the same as described in relation to sections 33B and 33C respectively of the 2016 Act mentioned above.
54.New section 24I of the 1988 Act makes equivalent provision to section 30 of the 2016 Act mentioned above.
55.New section 24J confers equivalent regulation-making powers on the Scottish Ministers as conferred under new section 33F of the 2016 Act to modify—
the 50% cap on recovery of any increase in the landlord’s prescribed property costs in connection with any approved rent increase above the permitted rate of increase,
the overall cap on any rent increase of 3% of existing rent.
56.New section 24K of the 1988 Act makes equivalent provision to existing section 31 of the 2016 Act (as modified) and new section 33G of the 2016 Act mentioned above.
57.As a result of modified processes of applying to a rent officer and the First-tier Tribunal, sub-paragraphs (6) and (7) disapply the routes of appeal under section 25 and 34 of the 1988 Act. As mentioned above, saving provision is made under paragraph 2(2)(b) of schedule 1 of the Act to ensure that, on the day on which paragraph 2 of schedule 1 comes into force, no existing referral to a rent officer, or application to the First-tier Tribunal, is affected by the modifications made in this schedule.
Rent cap for Scottish secure tenancies and short Scottish secure tenancies
58.Paragraph 3 makes provision in relation to Scottish secure tenancies and short Scottish secure tenancies. On or after 6 September 2022, a landlord under a Scottish secure tenancy or short Scottish secure tenancy may not increase the rent payable under the tenancy by more than the permitted rate, which is initially set at 0%. Any rent increase notice given on or after 6 September 2022 has no effect. In addition, any rent increase notice that is given at a time when the permitted rate is 0% is of no effect (see sub-paragraph (3)).
59.The provision does not affect a landlord’s ability to increase any charge other than rent that is payable under a Scottish secure tenancy or a short Scottish secure tenancy.
60.The Scottish Ministers may, by regulations, change the permitted rate. A landlord may not give a rent increase notice if it increases the rent payable under the tenancy by more than the permitted rate.
61.Paragraph 3(3) (see new section 25(7) of the 2001 Act) confirms that the provisions do not preclude social landlords from consulting their tenants.
62.Note that, while the provisions refer to Scottish secure tenancies, they additionally apply to short Scottish secure tenancies by virtue of section 34(6) of 2001 Act.
Rent cap for student residential tenancies
63.Paragraph 4 makes provision in relation to student residential tenancies. From the day paragraph 4 comes into force, a landlord may not increase the rent payable under the tenancy by more than the permitted rate. The permitted rate is initially set at 0% meaning that no rent increase may take effect while the permitted rate is set at that level.
64.The rent cap in relation to student residential tenancies has effect from the date on which paragraph 4 of schedule 1 of the Act comes into force rather than from 6 September 2022. This is because student residential tenancies are governed by contractual arrangements which, generally, would have been entered into before 6 September 2022 for the 2022-2023 academic year meaning that it is not considered to be necessary or appropriate to apply this provision retrospectively, that is, before the Act comes into force.
65.Subsection (7) defines “
