Loophole in ScotGov rent cap blamed as bill rises hit record levels

That's double the Scottish Government-imposed 3% rent cap for private tenants introduced in April which has now been extended to March next year. But landlords do not have to comply with the rent controls when setting rents for new tenancies.

And new rental data from Homelet has shown that the average rental value of new tenancies in Scotland has risen by 14.4% in the year to August - the highest leap of any region in the UK. Average rent is at £985 - £124 more than a year ago.

The rent rise is even greater than the 13% rise in Greater London while in Northern Ireland annual bills went up just 5.8% and in Wales it is 8.2%.

READ MORE: ScotGov rent freeze fails to stop debt soaring to record £190m

Housing campaigners are now calling for a rethink of the rent control regime to close the loophole and include all new tenants as well.

The Scottish Government insisted the "vast majority" of in-tenancy rises covered by the rent rise cap will have been within the maximum level that they have set since April, 2023.

Details of the rent hikes have come despite the then First Minister Nicola Sturgeon announcing a rent freeze in September, last year to beat the cost of living crisis.

It was replaced by a 3% rent cap for private tenancies in April which was to remain in place till September 30, 2023.

MSPs have voted to extend the rent cap for a further six months meaning private landlords with properties within Scotland will continue to face restrictions to rent rises until March 2024.

But the rent cap freeze and cap has not applied to new tenancies and the extension has not plugged the loophole.

Official figures produced by the Office for National Statistics show that private rents across the board which includes existing and new tenancies have risen by 6% in Scotland in the 12 months to August 2023, despite the freeze and the 3% cap.

Official statisticians say it is the highest annual percentage change since records began in 2012.

In the year before the pandemic, rent rises were averaging just 0.8%.

The Scottish Tenants Organsation said the rent controls regime was "badly flawed" and needed to be changed.

"If this rent cap is to work it has to cover new and existing rent to protect everyone in the cost of living crisis," the STO said.

"This loophole should have been covered by the new extension but it has not. There should be no exceptions.

"The loophole shows it is a poorly thought out rent cap and reflects more of the concerns of landlords rather than tenants."

Housing campaign group Living Rent also said there needed to be a shake up of rent controls saying: "It has not gone far enough in protecting those who need to move.

"With landlords taking every opportunity they can to hike up rents between tenancies, anyone who moves is being forced to pay more and struggle to afford to live or leave the community they love.

"This government needs to ensure tenants can meaningfully challenge rent increases in the meantime.

There are estimated to be 2.6m homes in Scotland with nearly a quarter being social rented properties.

It comes after it emerged that the rent rise restrictions have failed to stop a debt mountain rise by £43.1m since before the pandemic to stand at a record £189.97m.

The average arrears per Scots household renting in Scotland's low cost homes has shot up by nearly 30% from £249 in 2019/20 to £322 in 2022/23.

An official overview shows that rent debt in social housing rose by over £20m in the past year alone - despite a bill freeze brought in by the Scottish Government to support people through the cost-of-living crisis. The rise in the previous year was over half that at just £9m.

Ministers have been accused of betraying the poorest in Scotland in the cost of living crisis by not extending the bills cap to those renting from social sector landlords such as councils and housing associations who tend to provide lower cost accommodation taken by the poorest and most vulnerable in the country.

The Scottish Government pledged on September 4 to introduce measures to enhance tenants’ rights and protections as well as long-term rent controls.

In March it emerged that rents in Scotland in the social rented sector had risen by up to 8% while those in the private sector were capped at 3%.

Rent rises approved by over 100 housing associations in Scotland hit an average of 5.34% and ranged between 0% and 8%. The typical rent rise in homes controlled by local authorities was at 3.8%.

The Scottish Government in confirming the extension of the rent cap also said that enforcement of evictions will also be paused for a further six months for most tenants.

Tenants’ rights minister Patrick Harvie said: "Our emergency legislation has led the way at a time when rents have been rising across the UK in a similar pattern. Our measures have stabilised rents to help tenants to stay in their homes and so I am pleased parliament has approved regulations to extend the emergency Act for up to a final six months.

“Since 1 April 2023, private landlords with a tenancy subject to the cap have been able to increase a tenant’s rent in-tenancy by up to 3% or can apply to Rent Service Scotland for approval of an increase of up to 6% in specific circumstances. Anywhere else in the UK, private tenants have faced a double whammy of uncapped rent rises both during and between tenancies.

“Our Programme for Government confirms our intention to introduce a Housing Bill to deliver a New Deal for Tenants, including the introduction of long-term rent controls for the private rented sector.”

In announcing the extension of the rent rise cap and evictions enforcement pause, he said the move will help provide stability for those tenants.

The minister said longer-term rent controls will be introduced in the future.

“We will continue to keep them under review to make sure they are justified and proportionate based on the pressures both tenants and landlords are experiencing,” he said.

“Scotland leads the way in the UK in both immediate and long-term action to develop a well-regulated rented sector which works for both tenants and landlords."