Now the Dust Has Settled, How Will the Housing Bill 2025 Affect the PRS?

We think we can say, without fear of contradiction, that there has been a bit of talk about the Housing (Scotland) Bill 2025. Of all the measures in the Bill, the introduction of Rent Control Areas (RCA) has captured most headlines.

However, what else is in there which might affect the private rented sector (PRS) in Scotland? Are the RCAs as significant a measure as appears at first glance?

Now that the Bill has passed its final reading in the Scottish Parliament and awaits Royal Assent, we thought it was an appropriate time to reflect on what’s in it, and what it actually might mean for the PRS in Scotland.

So, as the experienced property professionals we are, we have waded through the legislation so that you don’t have to! So, how will the Housing Bill 2025 affect the PRS?

Housing (Scotland) Bill 2025

If you’d like to read the Bill itself, you can do so right here. Like all legislation it makes War and Peace look like a light novella, but that’s just the nature of the beast.

The second point we think that is worth making is that while the Bill lays out the government’s intentions, there are provisions in there which may alter as a result of court cases or first-tier tribunals interpretations.

We’re not suggesting that there will be major changes in practice, but trust us when we say that if you were to ask a civil servant involved in the drafting exactly what a particular clause or provision means, they’ll tell you that it’s up to the courts.

This is entirely normal.

Rent Control Areas

The introduction of the power to regulate rents was the headline provisions of the Bill; it received much interest, comment and lobbying during the Bill’s progress.

It has survived the Bill’s passage and therefore the Scottish Government, through the Housing Minister, will have the power to regulate rents. Whether anyone is ever going to use it is a very different question.

To better explain that, we need to look at what has been decided.

1: Periodic assessment of rent conditions

Local authorities will be required to make an periodic assessment of the level of relevant rents in their area, the rate of increase of relevant local rents, and the impact of those rents and increases.

This report has to be submitted to the Scottish Government, with the first report to be submitted to cover the period up to 31st March 2027; subsequent reports to be delivered every five years thereafter.

2: Report to Scottish Ministers

The report must contain the information outlined above, and a recommendation as to whether or not the local authority believes a RCA is appropriate.

3: Interim reports

If the local authority believes that there has been sufficient change in rents and rates of increase between the reporting periods to cause problems for tenants, it can submit an interim report to Scottish Ministers.

4: Review of reports by Scottish Ministers

Wholly self-explanatory – ministers will review the reports and discuss any RCA recommendations.

There are further provisions which allow ministers to request additional information and to suggest alterations to the reporting procedure. There is also a duty to consult with relevant organisations and bodies, both landlords and tenants.

5: Report by Scottish Ministers

The ministers must submit a report indicating their intention to raise a Scottish Statutory Instrument to introduce a RCA. Ministers are once again required to consult before finally imposing the RCA.

If that looks time-consuming you’d be right. In the Bill, there then follows lengthy explanation of the information that can be requested by the Minister and what happens if that information is knowingly false. It’s gripping stuff…

So, will RCAs happen?

Not in any hurry, no. With the first reporting period not ending until March 2027, it is highly unlikely that anything will happen before then, although it is theoretically possible if a local authority submitted an interim report and recommendation.

There is no doubt that local authorities will have plenty of additional work to do, which they’re no doubt delighted about, before the first reports can be submitted.

It’s wholly unclear at present if they are even geared up to deliver the sort of information required for the periodic reports, and at a time when local authorities are under more pressure than ever, this cannot be a boon to them.

Another point to consider is that we have seen the Scottish PRS finally retrench after the global pandemic and the pressures which emerged immediately afterwards.

Rent inflation has fallen back, and while that decrease has been small, the rental market throughout the UK has softened. If this trend continues, there are likely to be fewer pressures on local authorities to seek RCAs.

Moreover rent increase within a RCA will be limited to CPI (Consumer Price Inflation) plus 1%, up to a maximum of 6%. So while these provisions appear to be sweeping they are actually quite specific and targeted.

In other words, the exceptional conditions which led the Scottish Government to impose rent controls after the pandemic no longer apply, and it is reasonable to question whether or not we might see similar circumstances again.

It’s not all about (rent) control

The Bill is not exclusively about rent control, far from it, although this is the headline which has attracted the attention of those concerned with the PRS in Scotland.

Included in the Bill are sections which address; which properties will be subject to modified RCA restrictions, the duty on landlords to include information about rent in adverts, the keeping of pets and changes to a let property.

Further the Bill includes sections on dealing with evictions, the ending of joint tenancies, the frequency of rent increases in private residential properties not within a RCA, homelessness prevention, mobile homes and property factors.

Honestly, if we were to try and address all of these issues, we would be in danger of simply re-writing the Bill, but we’ll highlight a few in greater detail.

Modified RCA restrictions

This provision allows Ministers to permit rent increases via Statutory Instrument on a specific property within a RCA providing that they agree with the landlord’s reasons for the request and following consultation with the tenant.

This appears to be the mechanism whereby mid-market rent (MMR) properties and properties which have been subject to higher levels of investment can be exempted from the strictures of the RCA.

The consultation below also makes mention of buy-to-rent developments and it appears that Ministers might also consider these suitable for special treatment in order to encourage such developments.

The Scottish Government consulted on such exemptions and undertook to bring forward legislation to recognise their importance.

Dealing with mould in a timely manner

Section 38AA amends the Housing (Scotland) Act 1987 and gives ministers the power to determine; “the circumstances in which a house is to be considered to be substantially free from rising or penetrating damp”.

This is in response to cases such as that of Awaab Ishak, a two-year-old who died from a respiratory condition caused by a local authority’s failure to deal with mould sufficiently quickly.

This provision is aimed primarily at the social rented sector.

Duty on landlords regarding rent when advertising

Landlords will have to be quite clear when advertising a property within a RCA with regard to the rent, specifically:

Where the advertised property was let previously:

• the rent payable under the previous tenancy,
• whether there was a relevant rent increase during the period of 12 months before the date on which the advertisement of the advertised property is published
• if there was such an increase, the date on which the most recent increase took effect,
• the rent that the prospective landlord proposes to be payable under the tenancy 
• confirmation that the property is in a rent control area 

Where the advertised property was not let previously:

• the rent that the prospective landlord proposes to be payable under the tenancy,
• confirmation that the property is in a rent control area.

Keeping pets

A tenant may now request the right to keep a pet in a let property and their landlord may not unreasonably refuse. The landlord can consent and impose conditions and tenants should ensure that such consent is given in writing.

There will be a right of appeal to the First Tier tribunal in the event of a refusal if the tenant doesn’t agree with the landlord’s decision, either a refusal or consent but with conditions which are unacceptable to the tenant.

Ending joint tenancies

The Housing Bill makes it possible for a single tenant to give notice of their intent to end a joint tenancy. For those wanting to read more, see Section 38 of the Housing Bill 2025.

It’s an extensive section and includes provisions regarding pre-notice of the intention to serve notice and allows for the transfer of interest from the person giving notice to another.

Use of unclaimed deposits

There is provision in the Bill to allow unclaimed deposits from properly administered schemes to be used by ministers or administrators acting on their behalf for the benefit of private tenants.

Such uses may include the provision of services to provide advice, information or support with regards to the rights of new or existing tenants, and to aid in preventing homelessness in private tenants.

Advice from the property pros

With the greatest will in the world, this is no more than a skip through the provisions of the Housing Bill 2025. Most legislation is endlessly littered with references both to itself and to other relevant Acts.

Consequently to get the fullest understanding, you’d have to sit down, having set aside a day and spend your time clicking back and forth to extract a comprehensive view of the Bill and its implications.

As far as the Housing (Scotland) Bill and the PRS is concerned, the main takeaway is that the Scottish Government has given itself the right to legislate to impose RCAs, should circumstances suggest that these are necessary.

As we’ve already suggested, it’s unlikely that we will see RCAs being imposed any time soon as in our opinion there will have to be a very specific set of circumstances to justify them.

Of the other provisions which will affect the PRS, the requirements regarding disclosing rent information might be significant, but that provision applies to private residential tenancies within a RCA. We’ll need a RCA before it becomes relevant.

As is often the case, the Bill contains much that won’t be of direct concern to those within the PRS in Scotland at present, so while there has been much talk and many column inches, we don’t foresee any substantial impact at present.

There are changes in how the First Tier tribunal deals with evictions, however the vast majority of tenancies do not end there, so those changes will affect a minority of landlords.

In summary…

The Housing Bill 2025 makes several changes to the law in Scotland, some of which we won’t fully understand until those powers are exercised and possibly challenged in the courts.

Away from the headlines surrounding RCAs, there are a number of administrative changes and the Bill makes changes to existing provisions in Scottish housing law.

At present, we’re not convinced that this legislation will have a substantial effect on Scottish landlords, as the biggest change, rent control areas, are designed to meet a problem when and if it arises.

We would therefore pay more attention to provisions further down the Bill regarding evictions, suitability of factors, use of unclaimed deposits, changes regarding joint tenancies etc.

Time will tell exactly how provisions such as these will affect the PRS in Scotland.

A final comment: we are not lawyers and nothing we’ve written constitutes legal advice. If you think you might be affected by the Bill, speak to your own solicitor.

As far as any other aspect of the buy-to-let market in Scotland is concerned, we’d love to have a chat with you, so if you’re considering embarking on a property investment adventure, get in touch and let’s talk.

Thank you for making it to the end of this piece on the Housing Bill 2025, legislation is never an easy read!

Written by Ross MacDonald, Director of Sales & Cofounder of Portolio

Get in touch on 07388 361 564 or email to [email protected]