AGENT BLOG: After Scotland’s rent cap lifted, guess what happened next?

Nicky Lloyd of ESPC Lettings in Edinburgh reflects on the rental market in Scotland six months after a rent cap and ban on evictions were scrapped.

rent cap espc lettings

October marks the first six months of the changed rental landscape in Scotland, following on from almost two years of the restrictions put in place on tenancies by the Cost of Living (Tenant Protection) Scotland Act 2022.

On 1 April, the controversial 3% rent cap and eviction moratorium were both lifted, allowing landlords across Scotland to resume evictions (following the strict, correct procedures), and enabling them to propose rent increases of up to 12%, with rights for tenants to appeal any such proposals.

It’s a good time to reflect on the ways that these changes have affected the market, especially in Edinburgh, where the rental sector is under incredible pressure from tenants with demand outweighing supply consistently.

Biggest change

The biggest change that we have seen is the lifting of the rent cap, which allowed landlords to raise rents without the restrictions that had been in place for almost two years previously.

We can appreciate that any rent increase can be a source of anxiety for tenants, but thankfully, most landlords were considerate of their tenants’ financial situations. We have seen increases averaging around 5%, which is a step in the right direction from the point of view of the landlord, while still being an affordable increase for most tenants.

Evictions ban

The ban on evictions was also lifted in April, after being brought in during the pandemic as an emergency measure.

For landlords who had been struggling with tenants for several years by that point, the lifting of the ban was a welcome relief. We currently have several cases going through the First Tier Tribunal, and there must be a massive backlog with many landlords in similar situations, as we’re yet to see any verdict on the next steps six months later.

Overall, the requirement for evictions is rare, as most tenants are responsible and treat their property with care and respect. But we know that for those landlords affected by tenants choosing not to play by the rules, it has been a stressful few years, and it will be a relief for them to be able to move on from such precarious circumstances.

We have seen many landlords choosing to exit the rental market and selling their properties.”

Over the past few years, since the pandemic and the subsequent legislation came into place, we have seen many landlords choosing to exit the rental market and selling their properties – indeed, around 20% of our own portfolio has been affected in this way.

This has been largely due to the landlords’ own financial situations, with many looking to release capital. With the declaration of a housing emergency in Scotland, there is a desperate need for more rental properties to be made available, especially in cities like Edinburgh where demand is exceptionally high.

The rental market may not appear be too attractive a prospect to many new landlords currently, but the reality is far from it. High tenant demand continues to exist, and property purchase prices have remained fairly consistent, meaning that there are opportunities for excellent yields to be achieved, for those who want to take the plunge.

Reinvigorated

Overall, I would say that the new legislation has worked well for both landlords and tenants – it’s slightly reinvigorated the market, but there wasn’t as much movement as we initially thought the changes may generate.

Tenants are still choosing to stay for longer in their current rental properties, where the rent increases are a better financial prospect than the market rental rate of newly advertised properties.

New landlords coming into the market and increasing the supply of available rental properties would surely be the biggest step forward for the market, but it appears we will need to wait and see what the upcoming Scottish election year will bring to see if any major changes can attract more investment into the private rental sector.

Nicky Lloyd is Head of Lettings at Edinburgh-based ESPC Lettings


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