Landlords in Scotland have been warned to weigh up raising rents with risking void periods.

Temporary rent restrictions on existing tenancies will be lifted from 1st April, meaning that landlords can increase mid-tenancy rents to market levels for the first time in two years.

The cap has contributed to a tough market for landlords who’ve faced many legislative and financial challenges, explains John Loudon, auctioneer at Auction House Scotland, including higher mortgage rates and the recent increase of the Additional Dwelling Supplement to 8%.

“This has resulted in reduced numbers of investors entering the market or expanding their rental portfolio,” he added. “We’ve also seen an increase in the number of landlords exiting the market.”

However, the removal of the cap will give landlords and property investors some much-needed breathing space and allow them to review their rental strategy and make stronger plans for future investments.

Void periods

“Landlords will also still have to consider whether a substantial increase would bring about a void period,” he added. “However, while the rental market remains strong, this lifting of the cap is broadly regarded as a positive for the private rental sector.”

To increase rents, landlords must still provide three months’ notice to tenants.

They must also be prepared for formal tenant challenges, although this will only favour them if the rise is deemed to exceed the market rate.

If it doesn’t, Rent Service Scotland or the First Tier Tribunal will set the rent at the open market value, which could be higher than the increase proposed by the landlord.

The caps are likely to be replaced by more permanent measures in 2027.

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