Since the Scottish Government lifted the cap on rent increases for private rented properties in Edinburgh, landlords have been able to bring rents back in line with market prices. But the new tapering system that replaced the cap has left many scratching their heads to work out what they can charge.
The Rent Cap And Other Restrictions
The Cost of Living (Tenant Protection) (Scotland) Act was put in place in 2022 to support tenants during the cost-of-living crisis. The Act limited rent increases to 3%, or 6% in exceptional cases, and put a pause on evictions.
The restrictions were in place from April 2022 to March 2024, when the Scottish Government announced a new tapering system for rent increases and allowed landlords to once again pursue tenant evictions.
New Transitional Rent Increase Measures
However, the new transitional measures have caused much confusion. Only one increase is permitted in a 12-month period and tenants must be given three months’ notice, but the calculation process is complex:
- If the gap between the current rent and the market rent is 6% or less, the landlord can increase the rent by the proposed amount as long as this is not more than the market value
- If the gap between the current rent and the market rent is more than 6%, the landlord can increase the rent by 6% plus an additional 0.33% for each percentage above that 6% threshold gap as per the formula set out in the Rent Adjudication (Temporary Modifications) (Scotland) Regulations 2024
- The total rent increase cannot exceed 12%
- Rent Service Scotland and the First Tier Tribunal cannot set a higher rent than requested by the landlord
Online Rent Calculator
The tapering system has caused much confusion for landlords so the Scottish Government has provided an online calculator to help them make sense of the new rules, and also to help tenants understand what they are being charged.
Tenants can challenge rent increases by appealing to Rent Service Scotland, who will do the calculation to ensure it is within the rules and not more than 12% of the current rent. If referred to a Rent Officer, they will make the final decision on the proposed increase.
Exemptions Around Assured And Short-Term Tenancies
However, these rules apply only to private assured tenancies. A decision by the Upper Tribunal confirmed in July that the Cost of Living (Tenant Protection) (Scotland) Act 2022 did not apply to assured and short-term tenancies that contain rent increase clauses.
This confirmed an earlier decision by the First Tier Tribunal that was appealed by tenants, and the ruling sets a precedent that will be binding on all future cases.
The Upper Tribunal also confirmed that short and assured tenancies with rent increase clauses are also exempt from the new tapering mechanism appeal process that can be used for other types of tenancies.
Get Expert Advice On Your Rent Rates
Clan Gordon has been looking after Edinburgh landlords and tenants for almost 20 years, sharing expertise and experience to ensure they are fully informed about the latest regulations and legislation.
If you need help navigating the new tapering system or want advice about any other issues impacting the lettings market, schedule a call with a member of our expert property management team.