Changes in Private Rented Sector in Scotland

Landlord or tenant, you might have heard in the news or online about recent changes in legislation covering tenancies offered in Scotland. It can be difficult to decode that legal jargon. We’ve broken it down to make clear what you need to know and how these changes will affect you. Please be aware this change in tenancies coupled with the new Letting Agent Code of Practice will be the biggest change in our industry since 1988.

What is this new act?

The Private Housing (Tenancies) Scotland Act. It is replacing the current short assured tenancy agreements with a “Private Residential Tenancy” (PRT).

Why is it happening?

According to the Scottish Government it’s due to all parties – tenants, landlords, letting agents and investors – calling for more security.

When will these changes happen?

They are starting to come into effect and will be fully implemented by the end of this year, the expected final paper are due to be available in September 2017.

What are the key changes?

• A model tenancy agreement will be written by the Scottish Government. The new agreement will be more streamline with only one document, the lease needing to be signed. It will negate the need for documents such as an AT5 and Prior notice of grounds
• A standard tenancy will now no longer have an end date or a minimum fixed period.
• If a landlord wishes to raise rent this can only be done once annually and they must give the tenant three months’ notice.
• The tenant can appeal a rent increase via a rent officer who will set an open market rent. This can then be further debated at a First-Tier Tribunal.
• Local authorities can apply to the Scottish Government to designate an area as a “rent pressure zone” which means rents can be increased no higher than a percentage set by the Government.
• Landlords must give 28 days notice if a tenant has occupied the property for 6 months or less or 84 days if the tenant has occupied the property for more than 6months . Notice can only be given on the grounds stipulated.
• Tenants must give 4 weeks’ notice before leaving a property, no matter how long they have occupied it. Notice can be served at any point from the start date.
• A landlord’s right to recover possession of a property from a tenant because the tenancy agreement has reached its end date has been removed.
• A landlord’s grounds for evicting a tenant are now limited to the following:
• Landlord intends to sell the property at market value within 3 months of tenant leaving (mandatory)
• Property is to be sold by mortgage lender (mandatory)
• Landlord intends to refurbish which will entail significantly disruptive works (mandatory)
• Landlord intends to live in the property (mandatory)
• Family member intends to live in property (discretionary)
• Landlord intends to use property for non-residential purpose (mandatory)
• Property required for religious purpose (mandatory)
• Tenant is no longer an employee of landlord (mandatory if application made within 12 months of tenant ceasing to be employee)
• Tenant is no longer in need of supported accommodation (discretionary)
• Tenant is not occupying the property (mandatory)
• Tenant has breached tenancy agreement (but not rent clauses) (discretionary)
• Tenant has owed some rent for 3 consecutive months (mandatory if on day of tribunal hearing tenant owes at least one months’ rent and arrears are not due to delay/failure in benefit payment)
• Tenant convicted of using property for immoral/illegal purpose or convicted of offence committed at/near property (mandatory)
• Tenant has acted in anti-social manner (discretionary)
• Tenant associates with someone who has a criminal conviction or who has engaged in anti-social behaviour (discretionary)
• Landlord has been refused registration or had registration revoked (discretionary)
• Landlord’s HMO licence has been revoked (discretionary)
• Overcrowding statutory notice has been served on the landlord (discretionary)

A Rebalancing

The changes have been called by the Scottish Government to “rebalance” the relationship between landlords and tenants to be a fairer one, and ensure that tenants feel “more secure in their homes”.

Reaction however has been mixed with tenant associations welcoming the changes while landlord bodies more fearful that such controls, in addition to the LBTT (land and buildings tax) on buy-to-lets mean that landlords may be forced to make cuts elsewhere resulting in lower quality properties, or could even deter investors from the market altogether.