Tenants rights’ minister Patrick Harvie said, subject to the approval of Parliament, the new rules will be in place from 1 April 2023.
Private landlords will be able to apply to raise rents by up to six per cent in “defined and limited circumstances”.
The Scottish government capped rent hikes at 0 per cent for six months in October last year to “protect tenants” during the cost of living crisis.
The majority of the other temporary measures to protect tenants will now be extended for another six months, including preventing enforced evictions and imposing a maximum fine equal to 36 months rent in the event of unlawful eviction.
The rent cap for student accommodation will be suspended, the social sector rent freeze scrapped and replaced by agreements from landlords to keep any rent increase for 2023-24 well below inflation.
Harvie said: “With many households still struggling with bills, it is clear that these protections are still needed to give tenants greater confidence about their housing costs and the security of a stable home.”
Measures criticised by PRS
The measures have been widely criticised by landlords and those in the private rented sector (PRS) with fears that many will simply sell up, reducing supply and pushing rents up across the board.
Nathan Emerson, chief executive of Propertymark, said as a direct result of the Scottish government’s initial decision to cap rents at zero, some 68 per cent of Scottish letting agents have reported an increase in notices to sell from landlords.
Confirmation that the cap will be extended has prompted a coalition of landlords and letting bodies to seek a Judicial Review of the legislation.
The Scottish Association of Landlords, Scottish Land and Estates and Propertymark said the law is “disproportionate and unfair”.
John Blackwood, chief executive of the Scottish Association of Landlords, said: “So far, the result of the Scottish government eviction ban and rent freeze has been just as concerning as we predicted.
“Landlords selling up loss-making property is further reducing housing supply, despite ever-increasing demand. The result is the cost of finding a new home is actually increasing for renters.
“While the Scottish government sees fit to raise council and housing association tenants’ rents, so social landlords can do repairs and improvements, they fail to realise that private landlords are faced with similar financial pressures. Landlords have had enough.”
Harvie has acknowledged that costs have been rising for private landlords too but said the three per cent cap would be sufficient given the safeguard allowing for rises of up to six per cent in specific circumstances to cover specified rising costs they “might be seeing” as landlords.
Buy-to-let mortgage rates have been steadily rising over the past year, with average buy-to-let fixed rates across both two-year and five-year terms above six per cent, Moneyfacts data shows.
Around 340,000 households, one in seven homes in Scotland, are provided by the private rented sector.
‘Unfairly penalising landlords’
Sarah-Jane Laing, chief executive of Scottish Land & Estates, warned government it should be enabling a “well-functioning system that balances the rights of both tenants and landlords”.
“Regrettably, in recent times the Scottish government has sought to unfairly penalise private landlords including our members who provide a vital supply of homes in our rural areas, many at below market rents.”
Emerson added: “Private landlords provide homes on a huge scale for people, and they must be able to cover the costs of outgoings on the property.
“Repairs and maintenance costs are not solely applicable for social landlords and it’s essential for landlords to be able to keep properties to a high standard in the interests of their tenants.”
