From December 1st 2017, the Scottish Government will introduce the 'private residential tenancy'. Its purpose is to improve security for tenants and provide safeguards for landlords, lenders and investors.
The new tenancy will be open-ended and will last until a tenant wishes to leave the let property or a landlord uses one (or more) of 18 grounds for eviction.
23rd October is when SG will publish the Model Tenancy (MT) which gives less than 6 weeks between 23/10/17 and 1/12/17 for the industry to adjust to the new processes. Alan and Stuart are working to make the transisson as smooth as possible.
Below is a link to Scot Gov Landlord guide
SAL Factsheet: A simple guide to the new tenancy regime
The new private residential tenancy (PRT) regime will come into force on 1st December 2017, replacing the current system of assured and short assured tenancies. Most landlords and agents will not have had to get to grips with a new regime before and the prospect may seem daunting. This factsheet sets out the basics of how the new regime will operate on a practical, day to day level.
Starting the tenancy
The Scottish Government is producing a model lease for landlords and agents to use. It will contain two types of clauses – mandatory ones and optional ones. The optional ones can be removed and the landlord can add in their own clauses provided they don’t contradict the mandatory ones.
Only one date is needed on the lease – the start date. The legislation does not allow the parties to agree a duration for the lease or an end date. The tenancy can be terminated at any point after the start date by the landlord or tenant.
As at present, the landlord will be free to decide on the initial rent, even if the property is in a Rent Pressure Zone (RPZ) (see below for more on RPZs).
In addition to the lease, it is expected that landlords will need to provide tenants with guidance notes similar to the current Tenant Information Pack unless they are using the Government’s model lease. However, this will be the only pre-tenancy document required. The AT5 form and prior notice of grounds will no longer be needed.
The first rent increase can be carried out at any time after the start of the lease but thereafter it cannot be increased more frequently than once a year. The tenant has to be given three months’ notice of a rent increase using a prescribed form. The landlord is free to decide on the amount in line with open market rates. If the tenant feels that the increase is too high, they can ask a rent officer from the Housing & Property Chamber (HPC) to set the rent. The rent officer will set the rent at the open market level.
If the property is in a RPZ, Scottish Ministers will place a cap on rent increases, but this must be at least 1% above the Consumer Prices Index (CPI). RPZs can be designated by Scottish Ministers only in extreme circumstances where there is evidence that rents are increasing by too much and in doing so are causing undue hardship to tenants and putting pressure on the local authority to provide housing or subsidise the cost of housing.
Ending the tenancy
If the tenant wants to leave, they must give the landlord 28 days’ notice in writing. They can issue this at any point after the start date.
The landlord can only end the tenancy if one of 18 grounds for possession apply. These are summarised below: -
1. Landlord intends to sell the property at market value within 3 months of tenant leaving (mandatory)
2. Property is to be sold by mortgage lender (mandatory)
3. Landlord intends to refurbish which will entail significantly disruptive works (mandatory)
4. Landlord intends to live in the property (mandatory)
5. Family member intends to live in property (discretionary)
6. Landlord intends to use property for non-residential purpose (mandatory)
7. Property required for religious purpose (mandatory)
8. Tenant is no longer an employee of landlord (mandatory if application made within 12 months of tenant ceasing to be employee)
9. Tenant is no longer in need of supported accommodation (discretionary)
10. Tenant is not occupying the property (mandatory)
11. Tenant has breached tenancy agreement (but not rent clauses) (discretionary)
12. 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)
13. Tenant convicted of using property for immoral/illegal purpose or convicted of offence committed at/near property (mandatory)
14. Tenant has acted in anti-social manner (discretionary)
15. Tenant associates with someone who has a criminal conviction or who has engaged in anti-social behaviour (discretionary)
16. Landlord has been refused registration or had registration revoked (discretionary)
17. Landlord’s HMO licence has been revoked (discretionary)
18. Overcrowding statutory notice has been served on the landlord (discretionary)
The notice period for most grounds is 28 days’ if the tenant has been entitled to occupy the property for 6 months or less, and 84 days’ if the tenant has been entitled to occupy the property for more than 6 months.
Grounds 10-15 require 28 days’ notice, regardless of the duration of time the tenant has been entitled to occupy the property.
To end the tenancy the landlord must issue the tenant with a prescribed notice called a notice to leave, detailing which of the above grounds apply.
If the tenant doesn’t leave the property when asked to on the notice to leave, then the landlord needs to apply to the HPC to have the tenant evicted. Applications to the HPC will be free of charge and landlords and tenants are expected to represent themselves at the chamber rather than using a solicitor. The HPC hearing will be run and determined by a panel comprising a solicitor who specialises in tenancy legislation and at least one property/housing expert. If the ground is mandatory (as indicated in the list of grounds above) then the tribunal has to issue an eviction order if the ground is proven. If the ground is discretionary then the tribunal will only issue an eviction order if it considers that it is reasonable to do so.
The new regime does not affect existing tenancies such as assured and short assured tenancies provided the fixed term is still running or they are renewing by tacit relocation. These will continue to operate under the old regime.
Legal opinion had been divided on whether a short assured tenancy which is renewing on a contractual basis (typically on a month to month basis) would become a PRT at the first contractual renewal after the new legislation is implemented. SAL raised concerns about this situation with the Scottish Government and in response the government decided to issue legislation to ensure that tenancies of this type will not become PRTs. They will continue as short assured tenancies in perpetuity until terminated by the landlord or tenant.