Scottish Government has proposed an amendment to the Housing (Scotland) Bill, advocating for rent increases to be capped in areas where rent controls apply, subject to the approval of Parliament.
In response to stakeholder feedback, rent increases would be limited to the Consumer Price Index (CPI) plus 1%, up to a maximum increase of 6%.
If approved, the rent cap will apply to rent increases both during the term of a tenancy and in between tenancies, and will only apply in areas where rent control is applied.
Where it applies, the rent cap will stabilise rents – supporting tenants and helping to tackle poverty, while providing protection for the property rights of landlords and supporting investment.
A consultation in Spring 2025 will seek views on how powers that allow exemption from rent controls or rent increases above the cap could be used by Scottish Ministers.
Scottish Housing Minister Paul McLennan said: “The Housing (Scotland) Bill includes a package of reforms which will help ensure people have a safe, secure, and affordable place to live.
“Eradicating child poverty remains this government’s priority and having a home can make a direct contribution to achieving this.
“This is why ensuring families can have secure and affordable homes that meet their needs is part of our approach to tackling the housing emergency.
“There is a consistent view that Scotland needs a thriving private rented sector – one that offers good quality, affordable housing options and values the benefit that investment in rented property delivers.
“This announcement provides certainty for tenants and continues to encourage investment.”
He continued: “Setting out the form of the rent cap in this way – with CPI as the basis – allows for a reflection of the costs to landlords of offering a property for rent whilst offering protection for tenants in terms of limiting more significant rent increases.
“We are bringing forward a system of rent control that works for Scotland – a system that supports stabilisation of rents for tenants, whilst ensuring there can be a balanced approach that provides appropriate protection for the property rights of landlords and supports investment in the development of rented homes.”
Timothy Douglas, head of policy and campaigns at Propertymark, said: “Whilst the Minister is beginning to recognise that landlords and investors are vital to solving the housing crisis in Scotland, and inflation-linked rent increases will support investor appetite, further changes are still needed to strengthen the legislation and give more confidence to letting agents and their landlords.
“The Bill, in its current form does nothing to address the demand for private rented property and the proposals for rent control areas, in terms of date collection, designation and reporting timescales are inconsistent.
“Furthermore, rent control measures between tenancies removes any incentive for landlords to invest or upgrade properties and the Scottish Government must reduce the tax burden on landlords to bring down the cost of renting for tenants.”
