The Cost of Living (Tenant) Protection (Scotland) Act 2022 gives Scottish Ministers temporary power to cap rents for private and social tenants. The Act also introduces a temporary pause on the enforcement of eviction orders in certain cases.

In a statement to the Scottish Parliament in January, Patrick Harvie, minister for zero carbon buildings, active travel and tenants’ rights, expressed his intention to continue both the temporary pause on the enforcement of eviction orders in certain cases and the rent cap for tenants in the private rented sector beyond the initial expiry date of 31 March 2023.

Ahead of the Committee session, Propertymark gathered evidence from members. A letting agent in Lanarkshire highlighted the rise in mortgage costs for landlords, outlining that one landlord has had an increase in their premiums from £151 to £560. In addition, an agent from Inverness said that one landlord is between tenancies and her fixed mortgage is due to end in 15 months’ time but has increased the rent now in expectation of future costs and changes to legislation.

Evidence from Propertymark members in Scotland indicates that the prospect of rent control is promoting rent increases at tenancy changeover and that landlords are fearful of the policy direction and are signalling an intention to sell.

When asked in November 2022, 83% of responding agents said that landlords would be inclined to increase rents between tenancies, because of the Cost-of-Living Act, to cover impending and rising costs. When asked in February 2023, this had risen to 94%. 68% of agents also said that they had already seen an increase in notices to sell due to the temporary measures, in February 2023 this figure rose to 78%.

Timothy Douglas, head of policy and campaigns at Propertymark, said: “The Cost-of-Living Act is continuing to have an effect on landlord confidence with the majority of agents still seeing them exiting the market. The crux of the housing problem is that demand is far outstripping supply, yet this legislation is having the opposite effect of pushing landlords out of the sector.

“Rent increases have never been a significant factor in the private rented sector, yet this legislation and the threat of further rent controls is forcing landlords to put up rents between tenancies to cover any future cost implications.

“Costs have increased for tenants, but also for landlords. Those on variable mortgages have seen their payments increase much higher than 3 per cent, not to mention the other costs involved in property management.”