Cost of Living (Tenant Protection) (Scotland) Bill 2022: overview

An overview of the Cost of Living (Tenant Protection) (Scotland) Bill 2022.


About the Bill

People who rent their homes are more likely to live in poverty, be financially vulnerable and live on low incomes compared to those who own their home either outright or with a mortgage. Households in the rented sector (especially those on lower incomes) generally pay more of their income into housing costs than owner occupiers. The cost crisis is placing exceptional financial pressure on households, exacerbating existing inequalities, with the risk that more people could face hardship, especially this winter.

If no action was taken to support tenants, rents could increase, leaving many struggling to cope. At the same time, the risk of eviction can have serious implications for tenants’ health and wellbeing and potential employment prospects, which in turn could further exacerbate their situation.

Aims of the Bill

The Cost of Living (Tenant Protection) (Scotland) Bill 2022 has been introduced as part of the Scottish Government’s overall response to the emergency situation caused by the impact of the cost crisis. The temporary measures are intended to:

  • protect tenants by stabilising their housing costs;
  • where possible, reduce impacts on the health and wellbeing of tenants caused by being evicted and/or being made homeless by giving them more time to find alternative accommodation; and
  • seek to avoid tenants being evicted from the rented sector by a landlord wanting to raise rents between tenancies, and reduce unlawful evictions, via a moratorium on evictions and by raising the level of damages that may be awarded.

Key measures

If passed, the Bill will introduce a temporary freeze on in-tenancy rent increases and a temporary moratorium on evictions which is expected to continue until at least 31 March 2023. In addition it will provide increased damages for unlawful evictions until at least 31 March 2023. It also introduces additional powers to temporarily reform rent adjudication in order to support the transition out of the emergency measures.  This overall package of measures is designed to offer increased protection for tenants, whilst balancing safeguards for landlords. More information on these measures is set out below.

Beyond 1 April 2023

There will be the option to extend the measures for two further periods of six months with Parliamentary approval, this means that the measures are time bound and could not be extended without proper Parliamentary scrutiny. In addition, the Bill contains provisions that require the measures to be reviewed, and reported on, every 3 months, and for the Scottish Government to expire or suspend any provision that is no longer necessary or proportionate.

Together these measures provide certainty on the overall duration that the restrictions in the Bill can be in force, and ensure that they will be kept under review to make sure that they continue to fulfil their purpose and that they reflect the evolving context of the cost crisis.

Rent cap

How it works

The emergency measures will set a maximum permitted rate of rent increase  (‘the cap’) in rent in the majority of tenancies private and social rented sectors, and for college and university halls of residence and Purpose Build Student Accommodation (PBSA). The cap will be set at zero and is expected to remain at that level for the period to 31st March 2023. It will be possible for the Scottish Government to vary the cap whilst the emergency measures are in force if necessary, to respond to changes in wider economic circumstances. 

The cap will apply to any rent increase proposed on or after 6th September 2022. It will not be possible to give notice of a rent increase whilst the cap is at zero.

For the period the measures are in force, landlords will not be able to increase rents for existing tenancies, other than in line with the cap, but the measures do not restrict rent changes between tenancies.

There are several categories of tenancies to which the emergency measures will not apply, including regulated tenancies and certain other tenancy types where rent increases are governed by contract terms.

When private sector landlords will be able to increase rents

Recognising the impact the cost crisis may also be having on certain landlords, the legislation includes safeguards for private sector landlords, allowing them to apply to a Rent Officer (part of Rent Service Scotland) to increase rent to partially cover an increase in the preceding six months of prescribed costs.

These prescribed costs include: mortgage interest payments on the property they are letting, landlords’ insurance or service charges paid for by the landlord but which the tenant is responsible for in accordance with the terms of the tenancy.

Where evidenced, a Rent Officer may order that a landlord would be able to increase rent by the lower of: 50% of the increase in these prescribed costs in the preceding six months, or, 3% of the existing rent level. If the Rent Officer’s decision is disputed there would be a route of appeal for landlords and tenants to the First Tier Tribunal.

Impact on residents in the social rented sector

The majority of rents in the social sector are raised from 1 April each year, therefore, it is not anticipated that the cap would have an immediate impact on the levels of rent charged by local authorities or Registered Social Landlords. However, it will provide certainty to social sector tenants that their rent cannot increase while the cap is at zero.

The Scottish Government will work closely with the sector to determine the best way forward from 1 April 2023 and further detail will be confirmed in due course.

Effect on Private Residential Tenancy tenants who received a rent increase notice before 6 September 2022

Where a rent increase notice was issued prior to 6 September 2022 in a private residential tenancy, the 0% cap will not apply and the proposed rent will be applied after 12 weeks unless the tenant has made an application to Rent Service Scotland to challenge it (under section 24 of the Private Housing (Tenancies) (Scotland) Act  2016 ).

Moratorium on evictions

How it works

The moratorium will prevent enforcement action for individual evictions for a maximum of six months in the private and social rented sector, college and university halls of residence and PBSA except in a number of limited circumstances. This maximum of six months’ delay will apply to individual cases, unless the emergency legislation itself ceases to be in place before the end of the 6 months.

It is anticipated that a temporary moratorium on evictions will help to reduce the negative impacts on the health and wellbeing of tenants caused by being evicted and/or being made homeless during the cost crisis. It will provide more time for people to seek support and to find alternative accommodation that meets their needs at an affordable rent.

When the moratorium won’t apply

A number of safeguards have been put in place to allow evictions in limited circumstances. This includes cases of anti-social behaviour and criminality, to protect other tenants and the local community, cases of abandonment, to avoid empty properties and additional exemptions to support landlords who find themselves in financial hardship.

This also includes cases where there is substantial rent arrears, to prevent tenants building up unmanageable debt they will continue to owe and to support the landlord’s ability to continue to offer the property for rent.

Where an eviction order or decree was granted before the legislation comes into force or where the landlord raised eviction proceedings before the legislation comes into force and served an eviction notice before the announcement on 6th September 2022, the case will not be caught by the moratorium and will still be able to be enforced in line with current legal requirements.

As set out above, where a landlord is prevented from enforcing an order for eviction while the moratorium is in effect, the enforcement of that order can only be delayed for a maximum period of 6 months.

Definition of substantial rent

We don’t want to leave tenants owing unsustainable levels of rent to their landlords, which would then risk affecting their ability to secure housing in the future, so our Bill contains a safeguard allowing evictions to proceed where the total owed at the point the order or decree is issued is at least six months’ worth of rent (defined as £2,250 for the social rented sector as this equates to 6 months’ worth of average rent).

Increased damages for unlawful eviction

Changes to the damages awarded for unlawful eviction

These measures change the way civil damages can be awarded for unlawful eviction and are intended to make it easier and more meaningful for tenants to challenge an unlawful eviction and receive appropriate damages. The changes will also help to discourage landlords from carrying out such evictions. If passed as introduced, damages for unlawful evictions will be increased to a maximum of 36 months’ worth of rent. The Tribunal or Court will have discretion to award a lower amount if appropriate in the circumstances of the case.

The Court and Tribunal will also have a duty to inform relevant authorities such as the Police and local authority (the Scottish Housing Regulator in social landlord cases) where an order has been made so that they can take appropriate action. Landlords who conduct evictions lawfully will not be affected by these measures.

Powers to temporarily reform rent adjudication

These measures will allow Scottish Ministers to temporarily reform the rent adjudication process to support the transition out of the emergency measures at such time when this is the appropriate course of action. For example, this power could be used to amend the process to ensure that rent increases remain reasonable when the rent cap is lifted.

Any regulations made under this power will be subject to consultation and will be made through the affirmative parliamentary procedure, ensuring that appropriate scrutiny is given to the necessity for any temporary changes proposed.

Other support available

The Scottish Government has allocated almost £3 billion to a range of supports this year that will contribute to mitigating the impact of the increased cost of living on households.  This includes investment to strengthen support for households who are struggling to meet essential costs, including:

  • £20 million for the Fuel Insecurity Fund in 2022-23, to help households at risk of self-disconnection or self-rationing energy use;
  • £88.2 million for Discretionary Housing Payments this year, including £68.1 million to mitigate the bedroom tax helping over 91,000 households in Scotland to sustain their tenancy;
  • £10m for the Tenant Grant Fund, for which changes in eligibility where announced in September 2022 so that the fund can also support people who are struggling with the rising cost of living.

Where to find support

The Scottish Government has recently launched a new website to help those struggling with the cost of living crisis:

The website includes information on help available for households to meet rising energy, housing and other costs. It also provides details on accessing Scottish and UK social security payments, including online benefit calculators, as well as wider health and wellbeing information.

 

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