20 Feb 2017

Landlords told to prepare for biggest shake-up in 30 years

Landlords told to prepare for biggest shake-up in 30 years

The private rented sector is to witness its biggest shake up in almost 30 years that will affect all people letting properties in Scotland.

The Private Housing (Tenancies) (Scotland) Act 2016 has introduced the Scottish Private Residential Tenancy, the new form of private tenancy for Scotland.

The Scottish Government’s aim is to deliver improved security of tenure for tenants and also the power for local authorities to designate rent pressure zones within their jurisdiction.  

The Scottish Government also claims it will streamline the procedures for starting and ending a tenancy and provide a model agreement.

It is believed the new tenancy regime will go live on 1st December 2017.

'No fault' ground to be removed

Under the new regime, tenancies will have no minimum period and will continue indefinitely unless the tenant wants to leave or the landlord terminates using a prescribed ground for eviction.  The ‘no fault’ ground of termination under Short Assured Tenancies (SAT) has been removed from landlords.

The Scottish Private Residential Tenancy (SPRT) will become the standard tenancy agreement between residential landlords and tenants when the act comes into force in early 2018. SAT’s currently in place will remain until they are extended by either a fixed term or by month to month when they will default to a SPRT.  This obviously must be considered when agreeing SAT extensions now.

A base model tenancy agreement will be produced under secondary legislation by the Scottish Government. The model agreement will contain compulsory clauses which must appear in any new tenancy agreements when the legislation is in force.  Landlords will be able to add reasonable additional clauses if they so wish.

The Act will allow landlords to review the rent once a year however the tenant will have the right to refer the matter to the new first tier tribunal if they can provide evidence any proposed increase is above market value.

Notice Periods

The notice periods terminate the new tenancy will be as follows:

  • Tenants – 28 days at any time
  • Landlords – If under six months, 28 days (dependent on grounds used) . If over six months, 84 days.

Grounds for Terminating the Tenancy

The landlord must use at least one of the prescribed grounds to be allowed to terminate the lease. 

Part 1: Let property required for another purpose (all of these grounds are mandatory, with the exception of ground 5 which is discretionary)
  • The landlord intends to sell the property for market value within three months of the tenant ceasing to occupy it.
  • Property to be sold by the mortgage lender.
  • The landlord intends to refurbish and this will entail significantly disruptive works to, or in relation to, the property.
  • The landlord intends to live in the property as his or her only or principal home.
  • A member of the landlord’s family intends to live in the property as his or her only or principal home.
  • The landlord intends to use the property for a purpose other than providing a person with a home.
  • The property is held for a person engaged in the work of a religious denomination as a residence from which the duties of such a person are to be performed; the property has previously been used for that purpose; and the property is required for that purpose.
Part 2: Tenant’s status (ground 8 has a mandatory and discretionary strand and ground 9 is discretionary)
  • The tenancy was granted to an employee and the tenant is no longer an employee. (This ground is mandatory if the application for eviction was made within 12 months of the tenant ceasing to be - or failing to become - an employee and discretionary if the application is made after the 12 month period has elapsed.)
  • The tenancy was entered into on account of the tenant having an assessed need for community care and the tenant has since been assessed as no longer having such needs.
Part 3: Tenant’s conduct (some of these grounds are mandatory, others are discretionary and ground 12 has a mandatory and discretionary strand)
  • The tenant is not occupying let property as his or her only or principal home. (Mandatory)
  • The tenant has breached the tenancy agreement – this excludes the payment of rent. (Discretionary)
  • The tenant is in rent arrears. (This ground is mandatory if, for three or more months, the tenant has been continuously in arrears of rent and on the day the Tribunal considers the case, the arrears were at least one month’s rent. The Tribunal must also be satisfied that the arrears were not due to a delay or failure in the payment of a relevant benefit. This ground is discretionary if the tenant has been in arrears of rent for three or more months, and on the first day the Tribunal considers the case, the arrears are less than one month’s rent and the Tribunal is satisfied that it is reasonable on this basis to issue an eviction order. In deciding whether it is reasonable to evict, the Tribunal will consider whether the tenant being in arrears is due to a delay or failure in the payment of a relevant benefit.)
  • After the tenancy has begun, the tenant is convicted of using, or allowing the use of, the let property for an immoral or illegal purpose, or is convicted of an imprisonable offence committed in or in the locality of the let property. The application must usually be made within 12 months of the tenant’s conviction. (Mandatory)
  • The tenant has acted in an anti-social manner to another person and the Tribunal is satisfied that it is reasonable to issue an eviction order given the nature of the behaviour and who it was in relation to or where it occurred. The application must usually be made within 12 months of the antisocial behaviour occurring. (Discretionary)
  • The tenant is associating in the let property with a person who has a relevant conviction or who has engaged in relevant anti-social behaviour. A relevant conviction is a conviction which, if it was the tenant’s, would entitle the Tribunal to issue an eviction order. Relevant anti-social behaviour means behaviour which, if engaged in by the tenant, would entitle the Tribunal to issue an eviction order. The application must usually be made within 12 months of the conviction or antisocial behaviour. (Discretionary).
Part 4: Legal impediment to let continuing (all of these grounds are discretionary)
  • Landlord registration has been refused or revoked by a local authority.
  • House in Multiple Occupation (HMO) license revoked by the local authority.
  • Overcrowding statutory notice in respect of the property has been served on the landlord.

If the tenant doesn’t move out as requested the landlord will ask the new First Tier Tribunal for Scotland, The Housing and Property Chamber to serve an eviction order.

The act also gives local authorities the power apply to designate areas as rent pressure zones to limit the increase in existing rents. This will not affect initial rents but could act to limit any annual increases thereafter.

The introduction of this new tenancy, in addition to the tax changes, will affect all landlords letting property in Scotland therefore it’s essential they have an agent who can offer them the support of some of the most experienced lettings, legal and financial professionals in the country.

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If you are looking to buy, sell or lease property, Aberdein Considine can offer you the support of some of the most experienced property professionals in the country.

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