Housing Scotland Bill Rent Cap Proposed - Increases Capped At Cpi+1% Up To A Maximum Of 6%

1st November 2024

An amendment to the Housing Bill will set out how rent increases will be capped in areas where rent controls apply, subject to the approval of Parliament.

In response to stakeholder feedback, rent increases would be limited to the Consumer Price Index (a measure of inflation) plus 1%, up to a maximum increase of 6%. If approved, the rent cap will apply to rent increases both during the term of a tenancy and in between tenancies, and will only apply in areas where rent control is applied.

Where it applies, the rent cap will stabilise rents - supporting tenants and helping to tackle poverty, whilst providing appropriate protection for the property rights of landlords and supporting investment.

A consultation in Spring 2025 will seek views on how powers that allow exemption from rent controls or rent increases above the cap could be used by Scottish Ministers.

Housing Minister Paul McLennan said, "The Housing (Scotland) Bill includes a package of reforms which will help ensure people have a safe, secure, and affordable place to live.

"Eradicating child poverty remains this government's priority and having a home can make a direct contribution to achieving this. This is why ensuring families can have secure and affordable homes that meet their needs is part of our approach to tackling the housing emergency.

"There is a consistent view that Scotland needs a thriving private rented sector - one that offers good quality, affordable housing options and values the benefit that investment in rented property delivers. This announcement provides certainty for tenants and continues to encourage investment.

“Setting out the form of the rent cap in this way - with CPI as the basis – allows for a reflection of the costs to landlords of offering a property for rent whilst offering protection for tenants in terms of limiting more significant rent increases.

“We are bringing forward a system of rent control that works for Scotland – a system that supports stabilisation of rents for tenants, whilst ensuring there can be a balanced approach that provides appropriate protection for the property rights of landlords and supports investment in the development of rented homes."

An amendment to the Housing Bill will set out how rent increases will be capped in areas where rent controls apply, subject to the approval of Parliament.

In response to stakeholder feedback, rent increases would be limited to the Consumer Price Index (a measure of inflation) plus 1%, up to a maximum increase of 6%. If approved, the rent cap will apply to rent increases both during the term of a tenancy and in between tenancies, and will only apply in areas where rent control is applied.

Where it applies, the rent cap will stabilise rents – supporting tenants and helping to tackle poverty, whilst providing appropriate protection for the property rights of landlords and supporting investment.

A consultation in Spring 2025 will seek views on how powers that allow exemption from rent controls or rent increases above the cap could be used by Scottish Ministers.

Housing Minister Paul McLennan said:

“The Housing (Scotland) Bill includes a package of reforms which will help ensure people have a safe, secure, and affordable place to live.

“Eradicating child poverty remains this government's priority and having a home can make a direct contribution to achieving this. This is why ensuring families can have secure and affordable homes that meet their needs is part of our approach to tackling the housing emergency.

“There is a consistent view that Scotland needs a thriving private rented sector - one that offers good quality, affordable housing options and values the benefit that investment in rented property delivers. This announcement provides certainty for tenants and continues to encourage investment.

“Setting out the form of the rent cap in this way – with CPI as the basis – allows for a reflection of the costs to landlords of offering a property for rent whilst offering protection for tenants in terms of limiting more significant rent increases.

“We are bringing forward a system of rent control that works for Scotland – a system that supports stabilisation of rents for tenants, whilst ensuring there can be a balanced approach that provides appropriate protection for the property rights of landlords and supports investment in the development of rented homes."