Wed 24 Jan 2024
The Scottish Government has confirmed the rent increase procedure which will apply when the rent cap legislation ends on 31 March 2024.
For rent increase notices issued from 1 April 2024 onwards, the landlord can propose an increase of any amount.
If the tenant wishes to challenge the increase they can refer it to the rent officer who must apply a tapering formula to the increase.
If the increase proposed by the landlord is higher than that allowed through the tapering formula then the rent officer will set the rent at the lower level.
The tapering formula will only apply if the tenant challenges the increase. If they don’t then the amount proposed by the landlord will take effect from the end of the notice period.
Any rent increase notices issued on or before 31 March 2024 are still capped at 3%.
The tapering formula can be summarised as follows:
- If the gap between the market rent and the current rent is 6% or less, then the landlord can increase the rent by the proposed amount, as long as this is not more than the market level.
- If the gap between the market rent and the current rent is more than 6%, the landlord can increase the rent by 6% plus an additional 0.33% for each percent that the gap between the current rent and market rent exceeds 6%. However, the total rent increase cannot exceed 12% of the current rent.
- Both cases are also subject to the requirement that the rent officer cannot set a higher rent than that requested by the landlord.
Some worked examples of how this will operate can be found here. We understand that the government is going to publish an online calculator that will inform landlords and tenants what rent would be set by the rent officer if they enter figures for the current rent and their assessment of the market rent for the property.
To work out market rent, look at what rents comparable properties are being marketed at, or seek advice on rental value from a local letting agent.
As with the rent cap legislation, the above procedure does not apply to assured and short assured tenancies which contain a rent increase clause in the tenancy agreement. The rent for these types of tenancies can be increased in line with whatever increase is permitted in the rent increase clause.
The above procedures only apply to mid-tenancy increases. There is no restriction on how much landlords can increase rents between tenancies.