RENT protection for private sector tenants in Scotland is changing from April 1.

At present, the 2022 Cost of Living (Tenant Protection) (Scotland) Act caps annual rent increases at 3%, or up to 6%, for existing tenants.

New transitional regulations will come into force, if passed by the Scottish Parliament, that will operate for the next one to two years.

The rent adjudication system for open market rents had been suspended by the 2022 Act, but will resume with significant modifications to prevent excessive rent hikes from next month.

The need for additional tenant protection was obvious. The 2022 Act did not apply to any new tenancies created and data from advertised rents and landlord returns revealed average annual rent increases of 22% to 27% across Greater Glasgow between 2022 and last year.

Average two-bedroom rents in Greater Glasgow have been higher than the Scotland average since 2014, with the gap continuing to increase. The average rent last year was £1050 per month, compared to the Scotland average of £841.

In the three years between 2020 and 2023, private rents rose by 38.9% in Glasgow, which was higher than London, Manchester or Edinburgh.

Without a transitional scheme after the 2022 Act expires this month, there would have been a real risk of serious financial hardship for many tenants in private lets.

Under the new scheme, Rent Service Scotland (RSS) and the First-tier Tribunal will determine a rent increase based on the lower of three figures: the open market rent; the rent increase requested by the landlord; and a new taper that supports the transition away from the rent cap with an overall cap of 12%.

RSS and the tribunal cannot impose a rent that is higher than a landlord seeks and must impose the lowest possible increase in relation to the new rules.

For example, let’s say a landlord proposes a £100 per month rise, but the tenant is already paying slightly above the open market rent, the new rent could be a slight decrease in existing rent.

That is quite unlikely, as we know the market has been pushing rents up dramatically over the last couple of years in particular.

A more likely scenario is a tenant paying £1000 per month and a landlord seeks a 20% rise to £1200. Let’s say £1100 is the open market rent.

Any rise above 6% of current rent as against market rent is permitted on a one third basis, up to a maximum cap of 12% overall.

The RSS or the tribunal would determine a new rent at £1073, representing a 7.3% hike.

It’s important to remember a private landlord has to give a tenant three months’ written notice of any proposed rent increase and can only do this in any 12-month period, generally starting from the end of that notice.

Tenants receiving rent increase notices from next month can of course try and negotiate with their landlord but in all likelihood if an above inflation increase is suggested it may be essential for the tenant to apply to RSS for an adjudication.

This will prevent any rent hike in excess of 12% and if compelling evidence of lower market rents in a locality can be submitted as evidence, it should be possible to minimise any proposed rent increase.