Rent Adjudication (Temporary Modifications) (Scotland) Regulations 2024 – Business and Regulatory Impact Assessment

Scottish Firms Impact Test

The Scottish Government issued a targeted consultation to principal stakeholders in the rental sector in December 2023. The purpose was to gather views on the proposed approach to temporarily modify the rent adjudication process, as part of the transition away from the emergency rent cap. The consultation represented the views and perspectives from Scottish firms of all sizes, including landlords, tenants, investors, local authorities and Registered Social Landlords.^[55] In addition, the proposals have been discussed with the private rented sector stakeholder group. These actions demonstrate the Scottish Government’s ongoing efforts to understand the impact of the proposed measures and provide clear and comprehensive information to all stakeholders.

Due to the location-specific nature of the private rented sector, the majority of landlords are Scottish firms or individuals. The impacts on landlords set out above therefore set out the expected impact on Scottish firms.

Impact on Small Businesses

The proposed transitional measures apply on a per-property basis, and are therefore automatically scaled to the size of the landlord’s business, which means they therefore do not directly need to differentiate between landlords with differently sized portfolios.

It could be the case that landlords with larger portfolios are able to pool the impacts across their properties, e.g. properties located in different areas may be subject to different trends in market rents and thus affected by the tapered approach in different ways. The larger the portfolio, the more likely it is that at least one of the landlord’s properties will experience a change in turnover, allowing rents on that property to be reset to the market level.^[56] However, much of this impact is a by-product of the risk diversification opportunities provided by operating at a larger scale, rather than the direct result of the regulation.

In terms of the costs of familiarisation with the legislation, as set out above these are expected to be relatively small, especially as the Scottish Government will provide clear information. Furthermore, smaller-scale landlords can make use of letting agents, who are able to pool the fixed cost of familiarising themselves with this and other regulatory and legal requirements across their letting business.