Stay In The Know: Rent Freeze

There are never ending changes to the policies that affect the way properties are managed in the United Kingdom and, as a landlord, keeping your wits about you is crucial to ensuring you appropriately adjust when they come into force. Being blindsided by new laws, can be detrimental if unprepared so ensuring you keep your eyes peeled for updates is a must. The current rent freeze put in place in Scotland is just one of the latest changes that requires your attention, as it could have future affects for both you and your property.

What is the Scottish Rent Freeze?

Scotland’s government enforced a temporary freeze to rental increases in September 2022, which was intended to provide support to tenants struggling amidst the cost-of-living crisis, which has brought much hardship to residents of the UK.

Are there exemptions?

Prescribed costs are having to be evaluated to determine eligibility for a rent increase. If landlords apply for a rental increase they will be limited to the proposed percentages until September of this year. The costs they have to evidence include:

• Payable interest for the mortgage of the property
• Contractual service charges with the tenant as part of their rent
• Insurance premiums relating to the property

Who does this affect?

This rental limit means that those in:

• Assured tenancies
• Short-assured tenancies &
• Private residential tenancies

Will not be at risk of receiving a rental increase until September of this year in Scotland. However, if you are a part of common law tenancies, regulated tenancies, contracted rent increases, or beginning a new tenancy, this will not apply.

When does this end?

It was initially due to be in place until 31^st March 2023 but, as interest rates and inflation continue to rise with no projection of a plateau, this emergency law has now been prolonged for six more months.

However, this freeze, is now being enforced as a rental cap instead from April 2023. With the initial freeze only covering existing tenancies, that meant any properties put on the market after, could still have their rental amount increased, and with rents increasing by 33% in a year according to The Guardian, First Minister Nicola Sturgeon enforced a 3-6% cap on the amount that landlords could increase the rent throughout this period.

What does this mean for landlords?

Landlords have been prohibited from carrying out certain measures as part of the Cost of Living (Protection of Tenants) (Scotland) Bill. As well as there being a halt on rental increases, there are now increases to the payable damages when an unlawful eviction is conducted which will undoubtedly make landlords more cautious when handing out Section 21s or Section 8s. Alongside this, there have been temporary prohibitions on evictions, similar to the manner in which evictions were handled during the heat of the pandemic.

What about the rest of Great Britain?

For now, this law doesn’t appear to be on its way to other parts of the UK but that doesn’t mean you shouldn’t be prepared as anything is possible, particularly when in such close proximity to those affected by the change. With the introduction of the Energy Bill Support Scheme, which has provided £400 of financial support to people in England, it is clear that the government will continue to navigate the long-term effects of the prevalent economic crisis for the country as a whole. Updates on this situation are inevitable, so keep maintaining awareness on the ever changing legislation to ensure you, your tenants and your property are ready if, and when you are affected.

Maya