The rent cap
On 6 September 2022, the Scottish government introduced a rent cap (or ‘rent freeze’) via the Cost of Living (Tenant Protection) (Scotland) Act 2022. This initially meant that tenants in Scotland with certain types of tenancies could not have their rent raised for a certain period. For example, before 31 March 2023, private rented sector tenancy tenants could not have their rent raised. The provisions have now been extended and amended, so that as of 1 April 2023 private residential tenancy rents can generally only be increased by 3% and by following the proper procedures. Landlords may request permission from Rent Service Scotland to increase rent by up to 6% to cover certain specific costs. These provisions are to last until at least 31 March 2024.
Keep this qualification in mind when reading the information below, which applies to the usual rent increase rules (ie when a rent cap is not in place).
Can a landlord increase the rent?
Landlords are entitled to increase the rent they charge, as long as they follow the correct procedures and the proposed rent increase is not excessive or unfair. The Tenancy agreement should include clauses for how and when the rent will be reviewed. The general rules for rent increases are:
the landlord must get the tenant's permission if they want to increase the rent by more than what was previously agreed
the landlord should also only increase rent in line with similar properties in the area. They cannot push for an unrealistic or unfair increase in rent
When and how can a landlord increase the rent?
Private residential tenancies
If the tenant is on a private residential tenancy (any tenancy created on or after 1 December 2017) the landlord can only increase the rent once every 12 months. The landlord also needs to give the tenant 3 months' notice of the rent increase, using the correct notice.
When giving this notice, the landlord must use a rent increase notice. Where the landlord fails to use this notice, the notice will not be effective.
Where a tenant believes that the proposed rent increase is unreasonable, they can apply to Rent Service Scotland for a rent adjudication. A rent officer will then set the rent level based on a range of information regarding the property. The rent officer has the ability to increase the rent, if they believe it should be higher, or decrease the rent, if they think it’s too high.
If the tenant is an assured tenant, the landlord cannot increase the rent until the fixed-term ends. If the landlord wants to increase the rent during the fixed-term, the tenant must agree to an increase or there must be a clause in the tenancy agreement which allows them to do this. After the fixed term has expired, the landlord can increase the rent by:
giving the tenant written notice of the proposed increase using Form AT2 (this can only be given to the tenant once per year)
giving the tenant written notice to change the terms of the tenancy (including the rent change) using Form AT1(L) (this can only be given to the tenant after the landlord has served them with a notice to quit)
The landlord must give the tenant as lease one rental period of notice before the rent increase becomes effective. For example, if the tenant pays rent monthly, the landlord must give the tenant at least one month’s notice before the rent can increase.
Short assured tenants
If the tenant is a short assured tenant, the landlord cannot increase the rent until the fixed term ends. The landlord can increase the rent when the tenancy agreement is renewed at the end of the fixed term.
If the tenant is a regulated tenant, the landlord can increase the rent by complying with the procedure for registering a fair rent.
Challenging a rent increase
A tenant may be able to challenge an increase in rent if they believe it to be too high (or not fair in the case of regulated tenants) in the Housing and Property Chamber if they are:
an assured tenant
a short assured tenant
a regulated tenant
Where a tenant has a residential tenancy, they can only apply to a rent officer where they believe the rent increase to be unreasonable. The rent officer will then decide whether the rent increase is fair and how much the tenant should pay.
Negotiating an increase
It may not be beneficial for the landlord to impose an increase in rent. The tenant may no longer want to rent the property, in which case, the landlord will have to spend time and expenses trying to re-let the property. It may also be an inconvenience for the landlord to try and find suitable replacement tenants, especially if there was a good relationship with the previous tenants.
The tenant will want to either have the rent stay the same or have a minimal increase in the rent. Therefore it could be advantageous to negotiate the rent increase. These negotiations could include the level of rent increase both parties are happy with or to roll out the rent increase in incremental stages over a period of time (for example, an increase of £25 in the first 6 months and then an increase of £50 for 6 months after that).