Rent cap for assured tenancies and short assured tenancies
42.Paragraph 2 makes similar provision in relation to assured tenancies and short assured tenancies modifying the 1988 Act as the provision made in paragraph 1 in relation to private residential tenancies modifying the 2016 Act.
43.From 6 September 2022, a landlord under an assured tenancy or a short assured tenancy may not increase the rent payable under the tenancy by more than the permitted rate, which is initially set at 0% (see section 23A of the 1988 Act inserted by sub-paragraph (3)). The Scottish Ministers may, by regulations, change the permitted rate.
44.But the modifications made by paragraph 2 of schedule 1 of the Act have no effect in relation to a rent increase notice properly served under section 24(1) of the 1988 Act before 6 September 2022 (see sub-paragraph (2)(a)). Similarly, the modifications made to the 1988 Act do not affect a referral or an application to the First-tier Tribunal (under section 25(1) or 34(1) of the 1988) that has been made before the paragraph comes into force (see sub-paragraph(2)(b)).
45.Furthermore, the rent cap does not apply to tenancies to which the statutory rent increase process did not apply under section 24(5) of the 1988 Act (see subsection (6) of new section 23A). The rent increases relating to those tenancies are not governed by the arrangements under Part 2 of the 1988 Act and are instead governed by contractual terms. These excluded tenancies are either—
statutory assured tenancies where the landlord varied the terms of the contract in the year following the conversion of the assured tenancy to a statutory assured tenancy under section 17 of the 1988 Act,
contractual tenancies which include a term making provision for an increase in rent (including provision whereby the rent for a particular period will or may be greater than that for an earlier period).
46.The Act makes provision for a new route of referral to rent officers under the 1988 Act as modified, mirroring the modifications of the 2016 Act. The 1988 Act, without the modifications made by the Act, provides that statutory rent increase notices can be appealed by a tenant directly to the First-tier Tribunal, and rents in general in respect of short assured tenancies can be referred to the First-tier Tribunal for a redetermination of appropriate rent for that tenancy. Sections 24A to 24K of the 1988 Act (inserted by paragraph 2(5) of schedule 1 of the Act) replace this process, mirroring the changes made to the 2016 Act relating to applications to rent officers and appeals to the First-tier Tribunal.
47.A tenant who has received a notice to increase rent from a landlord (where the permitted rate is more than 0%) may refer the proposed rent increase to a rent officer for a decision that the proposed rent increase does not exceed the permitted rate of increase (see section 24(3)(a) of the 1988 Act as modified by sub-paragraph (4)(d) and (g)). If it does not, the rent officer will approve the proposed rent increase by order. If the proposed rent would be an increase of more than the permitted rate, the rent officer will order that the rent may be increased by the permitted rate (see sub-paragraph (5) inserting new section 24A of the 1988 Act).
48.The landlord or the tenant can appeal against an order by the rent officer to the First-tier Tribunal within 14 days of the order being made (see new section 24B of the 1988 Act). On determining the rent on appeal, the First-tier Tribunal must decide that the rent payable is the current rent as increased by the permitted rate (see new section 24C of the 1988 Act).
49.New section 24D of the 1988 Act makes similar provision to section 33 of the 2016 Act (mentioned above).
50.Sub-paragraph (5) also makes provision for circumstances where a landlord may apply to increase the rent above the permitted rate (see new section 24E of the 1988 Act). It is similar to the provision made for private residential tenancies in paragraph 1 of the schedule in which a landlord may apply to a rent officer for an increase in rent to recover no more than 50% of prescribed property costs (as specified in the application to the rent officer) incurred by the landlord at any time during the period of 6 months before making the application, subject to an upper cap of the increase being no more than 3% of the current amount of rent.
51.Prescribed property costs are any of the following costs—
interest payable in respect of a mortgage or standard security relating to the house that is let,
a premium payable in respect of insurance (other than building and contents insurance) relating to the house that is let and the offering of the house for let,
service charges relating to the house that is let that are paid for by the landlord but the payment of which the tenant is responsible for under the tenancy.
52.Where a landlord applies to a rent officer under new section 24E(1) of the 1988 Act for a rent increase above the permitted rate, new section 24E(3) of the 1988 Act requires the landlord to give written notice of the application to the tenant which must—
state the rent that would be payable if the proposed rent increase took effect,
state that the proposed rent would be an increase of more than the permitted rate,
state that the rent payable under the tenancy is not increased until the rent officer or (if appealed) the First-tier Tribunal makes an order determining the rent,
describe what prescribed property costs of the landlord have increased in the previous 6 months prompting the proposed rent increase,
where the proposed rent increase includes an amount in relation to the landlord’s increased service costs (which is a reference to increased service charges which fall within the definition of “prescribed property costs”) that are paid for by the landlord but recoverable from the tenant, a statement detailing the nature and amount of the increase in the service charges.
53.The powers of a rent officer under new section 24F of the 1988 Act and the First-tier Tribunal under section 24G of the 1988 Act are the same as described in relation to sections 33B and 33C respectively of the 2016 Act mentioned above.
54.New section 24I of the 1988 Act makes equivalent provision to section 30 of the 2016 Act mentioned above.
55.New section 24J confers equivalent regulation-making powers on the Scottish Ministers as conferred under new section 33F of the 2016 Act to modify—
the 50% cap on recovery of any increase in the landlord’s prescribed property costs in connection with any approved rent increase above the permitted rate of increase,
the overall cap on any rent increase of 3% of existing rent.
56.New section 24K of the 1988 Act makes equivalent provision to existing section 31 of the 2016 Act (as modified) and new section 33G of the 2016 Act mentioned above.
57.As a result of modified processes of applying to a rent officer and the First-tier Tribunal, sub-paragraphs (6) and (7) disapply the routes of appeal under section 25 and 34 of the 1988 Act. As mentioned above, saving provision is made under paragraph 2(2)(b) of schedule 1 of the Act to ensure that, on the day on which paragraph 2 of schedule 1 comes into force, no existing referral to a rent officer, or application to the First-tier Tribunal, is affected by the modifications made in this schedule.
