Cost of Living and Rent Eviction March 24
Rent adjudication
From 1 April 2024 onwards, subject to parliamentary approval, the process for rent adjudication will temporarily be modified for one year. This temporary change will provide protection for tenants whose rents may rise steeply if they were to return back to market rents in one step, once the emergency rent cap comes to an end.
It will also enable landlords to react to an increase in costs and reinvest in our private rented sector.
From 1 April, if a tenant is concerned about the level of a proposed rent increase, they can raise it with their landlord or agent and apply to a rent officer at Rent Service Scotland, or to the First-tier Tribunal if applicable, for a rent adjudication.
An illustrative rent increase calculator is available to help landlords and tenants understand what the rent may be set at if a rent adjudication application is made, based on the proposed changes from 1 April.
In such cases, Rent Service Scotland or the First-tier Tribunal will set rent based on the lowest of the following three figures:
1. the open market rate
2. the rent requested by the landlord
and a comparator based on the difference between the market rate and current rent (taper formula)
1. The taper formula can be summarised as:
- if the gap between market rent and the current rent is less than 6%, then the rent increase can go ahead without modification
if the gap between market rent and the current rent is above 6%, the taper would apply, with an additional 0.333% increase allowed for each percentage point between the current rent and market rent, up to a gap of 24%
If the gap between the market rent and current is 24% or larger, the increase cannot exceed 12% and this will apply in all cases.
this is also subject to the requirement that Rent Service Scotland and the First-tier Tribunal cannot set a higher rent than that requested by the landlord.
Apply about a rent increase
Apply to Rent Service Scotland about your rent increase - if you have a Private Residential Tenancy.
Apply to the Housing and Property Chamber (First tier tribunal) - if you have another type of tenancy.
Examples of the taper approach to rent increases
Below are a selection of illustrative worked examples of the approach that would apply under the Rent Adjudication (Temporary Modifications) (Scotland) Regulations 2024.
They present different scenarios that show how the taper approach would apply where the difference between current rent and open market rent is between 6% and 24%.
Each example considers what would happen were a tenant to refer a rent increase for adjudication.
Example 1 - new rent 5% higher
A landlord sets a new rent which is 5% higher than the current rent.
The landlord believes the difference between current rent and the open market rent is 5%.
Rent increases up to and including 6% are permitted, as long as the new rent does not exceed the open market value.
If the tenant took the case to rent adjudication and the open market rent value was confirmed at this 5% level or above, then the rent increase of 5% would be approved.
If the rent adjudication concludes the open market rent is lower than the rent proposed by the landlord, rent would be set at the open market level.
Example 2 - new rent 8% higher
A landlord sets a new rent which is 8% higher than the current rent.
The landlord believes this 8% increase would bring the rent up to the open market value.
Rent increases are subject to the taper approach if the proposed rent increase is above 6% of overall rent.
If the gap between the current rent and open market rent is 8%, then the rent increase would be capped at an increase of 6.7% higher than existing rent.
Example 3 - new rent 15% higher
A landlord sets a new rent which would be 15% higher than the current rent.
The landlord believes the open market value is 25% above the current rent. Rents cannot rise by more than 12%.
If the gap between current rent and open market rent is more than 24%, rent increases are capped at 12% higher than existing rent.
If the tenant took the case to rent adjudication and it was confirmed that the open market value was 24% or higher than the current rent, then the rent increase would be set at an increase of 12% higher than existing rent.
Example 4 - new rent 15% higher
A landlord sets a new rent which is 15% higher than the current rent.
The landlord believes the open market value is 15% higher than the current rent. Rents cannot rise by more than 12%.
If the gap between the current rent and the open market rent is 15%, then the rent taper formula is applied and the rent increase is capped at 9% higher than existing rent.
If the tenant took the case to rent adjudication and it was confirmed that the open market rent was 15% higher than the current rent, then the allowable rent increase would be set at 9% higher than existing rent.
Home Sales and Lettings Comment: We're implementing a rent review in March using the Tapered Approach outlined in proposed legislation. Notices will be issued to tenants on April 1st, with changes effective July 1st, 2024, for existing tenancies. We aim to ensure fairness and stability while considering market conditions and tenant needs. Should you have questions, feel free to contact us.
Source – Scottish Government