27
Oct
2017

Continuing 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. The general impression from agents is that this is a natural progression of regulation of the letting sector and that it can only raise standards. The consumer should be confident that their agent is fit and proper and competent at their job. Generally the quality of agents in Scotland is very high, but there was no clear evidence of this. 

By comparison, licencing for all landlords has been mandatory for over 10 years, since April 2006.

 

The Private Housing (Tenancies) (Scotland) Act 2016 is now imminent and will bring the current system of tenancy agreements (Assured and Short Assured Tenancy) to an end on 30th November 2017 and replace them with the new Private Rented Tenancy (PRT) from 1st Dec 17.

The Government promised, in April, that they would publish a ‘model’ tenancy agreement, which, from last week can be seen 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 there is a legal requirement to give a Tenant a copy of the Easy Read Notes for the Scottish Government Model Private Residential Tenancy Agreement’ if using the Model Agreement – these can be found here.

Where a landlord chooses to use a different Tenancy Agreement, they must make sure it includes all the statutory terms and provide the tenant with the Private Residential Tenancy Statutory Terms Supporting Notes which for landlords providing their own Tenancy Agreement, which again can be found here.

I have dealt with many disputes over a number of years and it is reassuring to see that the Model incorporates guidance links to the necessary safety provisions and signposts are included to 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 potentially harder as you can no longer just ‘require your property back’. You will now need a reason to serve notice and if it is one of the discretionary grounds, this can be challenged.

On the plus side, the Notice to Quit and a Notice of Proceedings are replaced by the single ‘Notice to Leave’. This simplifies the process and should reduce number of technically incorrectly served notices.

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

It should also be noted that tenancies must be for a minimum of six months, unless both parties agree otherwise.

 

What does this all mean?

This continues the Scottish Government’s aims to offer more security to tenants as 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 at least one of the statutory grounds for doing has been 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 generally well received and seen as a positive step forward to improving the sector.

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