The Cost of Living (Tenant Protection) Scotland Act introduced emergency legislation which gave ministers the power to cap rents for social tenants for the first time when it was passed in October. Rents in the private rented sector and for student accommodation were also impacted by the legislation.

The cap, which applies to in-tenancy rent increases, was initially set at 0% from 6 September 2022 until at least 31 March 2023, with ministers also given the power to vary the rent cap while it is in force and extend the measures over two further six-month periods.

A report to Parliament provided an update on its approach for rent setting for 2023/24 in the PRS and eviction protection across the rented sector in light of the legislation.

Since MSPs would need to vote on extending the rent cap, tenants’ rights minister Patrick Harvie revealed he will recommend that MSPs approve an extension to the freeze on private rent rises. It is unclear whether the PRS rent cap remains at 0%.

In line with a statement made by Mr Harvie in December, the intention is to remove the rent cap from the social rented sector from the end of March.

Council tenants will see their rents rise by an average of less than £5 per week, while housing associations confirmed talks are ongoing to increase rents by an average of 6.1%. No social landlord is consulting on a rate above inflation, Mr Harvie told MSPs.

A moratorium banning evictions will also be recommended for extension, except in a number of specified circumstances. 

Mr Harvie pointed to the “unprecedented challenges being faced by people across Scotland due to the ongoing cost of living crisis”.

He added: “This unprecedented economic position has not yet changed fundamentally and I know that many households on low and modest incomes continue to struggle.

“I would anticipate that it will remain necessary and proportionate to extend the rent cap provisions beyond March 31 in the private rented sector while recognising that the act gives power to vary what the cap actually is.”

CIH Scotland said it is “disappointed” with the decisions which it believes will have “significant unintended consequences” for renters.

Callum Chomczuk, national director at CIH Scotland, said: “We are disappointed about the decision of the Scottish Government to both maintain the rent control provision for the PRS and continue the extraordinary eviction protection measures across the whole rented sector.

“We remain concerned that the continuation of the rent cap in the PRS will have significant unintended consequences which will undermine tenants’ housing outcomes. This policy is likely to encourage landlords to increase rents between tenancies when they may not otherwise have done so. Additionally, it will drive some landlords out of the market, reducing the supply of privately rented accommodation available.

“The Scottish Government has strived to strike a balance between protecting tenant and recognising the need for investment in the social sector, we would encourage ministers to set clear parameters that give certainty to the PRS about under what circumstance a rent cap can be lifted.

“Equally social and private landlords deserve clarity under what circumstances normal eviction proceedings will return. In most cases landlords only evict tenants as a last resort and in extreme circumstance. Landlords and the courts are best placed to determine the validity and appropriateness of any eviction proceedings, rather than be subject to extraordinary protection measures.”

The Scottish Property Federation has accused ministers of ignoring “the serious damage that this legislation is doing to the long-term supply” of homes and “will continue to deter much needed investment to provide modern, energy-efficient rented accommodation in Scotland”.

Scottish Property Federation director, David Melhuish, said: “The Scottish Government’s statement today on the extension of the emergency powers on rental increases for sitting private sector tenants will continue to deter much needed investment to provide modern, energy-efficient rented accommodation in Scotland. It is difficult to see how this can continue to be viewed as emergency legislation when the cap on some of those who are least able to pay in the social sector has, in effect, been removed.

“Further, we are disappointed that the Scottish Government continues to ignore the serious damage that this legislation is doing to the long-term supply of residential properties in Scotland. The uncertainty that the policy is creating has clearly increased the risk associated by investors with Scottish Build-to-Rent projects. The decision is not supported by the government’s own Scottish Housing Market Review that estimates an annualised 4.4% increase for existing tenancies, far lower in fact than the average increase Ministers have agreed is acceptable for the affordable housing sector of 6.1%.

“It is little wonder there is pressure on existing private tenancies with 29% fewer properties available to let and reports of hundreds of applications for individual properties placed on the market.

“Scotland needs evidence-based policy and ambition from its leaders to increase housing of all tenures. Only then can we hope to make a mark on the country’s housing crisis.”

Ahead of Mr Harvie’s statement, Propertymark sent a briefing to MSPs outlining evidence it had received from members, and said it was heartening to hear some politicians highlight the impact that letting agents have seen as a direct consequence of the Act and landlords wishing to sell.

However, with the minister admitting that he is already developing long-term proposals for rent control that will be designed to continue after the Cost of Living Act has expired, Propertymark said it has met with industry partners and is preparing formal proceedings as part of a judicial review.

Timothy Douglas, head of policy and campaigns, said: “Once again, the Scottish Government has failed to acknowledge what is happening in the private rented sector and the damage that legislation capping rents is causing. Unlike for providers of social rented accommodation there has been no task and finish group for the private rented sector to formally raise our concerns.

“Alarmingly, the minister also failed to acknowledge the impact of planned future legislation for the private rented sector that also includes energy efficiency targets that many landlords will struggle to afford. We have recently written to the Deputy First Minister expressing our dismay at the budget decision to raise taxes when purchasing buy to let property as there is clearly a lack of basic understanding on the economics of supply and demand. It seems non-sensical that on the one hand the Scottish Government is increasing costs for investing in the private rented sector and on the other hand accusing landlords of increasing rents.”

Sarah-Jane Laing, chief executive of Scottish Land & Estates, added: “Our members provide homes throughout Scotland and will be very disappointed to hear the minister’s statement today. Like social housing providers, our members use rental income to maintain and improve properties and this appears to be totally disregarded by Mr Harvie. We believe that these rent freeze measures are disproportionate.

“We also refute the minister’s claims that there has been engagement with the sector ahead of today’s announcement.”