27
Oct
2017

The on-going evolution of the Private Rented Sector in Scotland

My last blog, in May, discussed Registration for agents who should all be working towards the criteria required for application. I have spoken to many agents who’ve completed all the training and are just waiting for the Register to open in January. This will be fully implemented by the end of September next year.

By comparison, licencing for all landlords has been mandatory for over 10 years.

 

The Private Housing (Tenancies) (Scotland) Act 2016 is now imminent and will bring the current system of tenancy agreements (Assured and Short Assured Tenancy) and associated forms to an end on 30th November 2017 and the new Private Residential Tenancy (PRT) from 1st Dec 17 will be introduced for all new residential tenancies. The existing Short Assured Tenancies and Assured Tenancies will be able to continue under tacit relocation or on a rolling lease until one party brings them to an end or both parties agree to convert the tenancy.

This continues the Scottish Government aims to offer more security to tenants, and to safeguard lenders, landlords and investors.

The Government promised, in April, that they would publish a ‘model’ tenancy agreement, which was is now on the website and can be found at here.

Having read hundreds of tenancy agreements over a number of years, it is good to see, that while many of the standard clauses remain the same, they are clear and simple to understand, and considerable thought has gone into the order of contents. The Agreement is split into mandatory clauses which are the core rights and obligations of all parties, and discretionary clauses which a landlord can choose to include, as and when appropriate.

Landlords and agents need to be aware it’s not compulsory to use this Model PRT Agreement BUT the tenancy agreement terms must comply with the law and there is a legal requirement to give a Tenant a copy of the Private Residential Tenancy Statutory Terms Supporting Notes which can be found here.

I have dealt with many disputes over a number of years and it is reassuring to see that the Model offers guidance links to the necessary safety provisions and signposts the Supporting Notes in relation to the Repairing Standards. I would hope that the detail now available from the start of the tenancy should prevent any formal disputes and help with any negotiation if it’s needed at the end of the lease.

 

 

The Main Changes

The Act introduces many changes but the headliner is the removal of the no-fault ground for eviction making the practice of repossession harder.

On the plus side, the Notice to Quit and a Notice of Proceedings are replaced by the single ‘Notice to Leave’.

Notice can only be served on the basis of one of the 18 grounds listed in SCHEDULE 3 of the Act and are also listed in the Model Agreement (link above); most of which are mandatory.

 

What does this all mean?

Tenancies will now continue indefinitely unless the landlord is able to invoke specific criteria to end them.

Rents can only be reviewed annually, with at least three months advance notice given of any intended increase. There is also more information on how to ensure any increase is fair and checking on whether it is in a Rent Pressure Zone in the Supporting Notes (here).

If a Notice to Leave is ignored, the landlord can apply to the First Tier Tribunal, which will issue an eviction order provided the statutory grounds for doing are established.

While it is appreciated that this may impact on the landlord’s ability to keep up payments on his mortgage, especially if interest rates rise, the changes are being well received and seen as a positive step forward to improving the sector.

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