Scottish Landlords and Tenants to Adopt New Private Residential Tenancy Regime
The Private Housing (Tenancies) (Scotland) Act 2016 (“the Act”) was given Royal Assent on 22 April 2016 and is due to come into force on 1 December 2017.
In introducing the Act the Scottish government’s aim is to improve security of tenure for tenants and put appropriate safeguards in place for landlords, lenders and investors.
The introduction of this Act will see a complete overhaul for private residential tenancies in Scotland with the demise of the current assured and short assured tenancies and the introduction of a brand new form of tenancy agreement known as the Private Residential Tenancy (PRT). Short assured and assured tenancies will continue to be used until the Act comes into force and these should be ended using the current procedures in place.
Key changes in the Act will include:
Subscribed Terms - The terms of the PRT will be set out as part of regulations relating to the Act and will contain compulsory clauses to form part of all PRTs. There will be no minimum period of let, no pre-tenancy notices will be needed and the “notice to quit” will be replaced by a “notice to leave” served by the landlord.
No end date - The PRT will continue indefinitely and will only come to an end if the tenant wishes to leave (by giving the required notice) or if the landlord ends the tenancy (by giving the required notice) based on a prescribed ground for repossession.
Rent review – the landlord cannot increase the rent more than once every year and must give the tenant 3 months’ notice of the rent increase. The landlord can increase the rent by issuing a “rent increase notice” in the form prescribed by Part 4, Chapter 2 of the Act. If the revised rent is above market rate, the tenant will be allowed to challenge the rental increase by referring matters to a rent officer. If the parties fail to agree with the rent officer’s decision either the landlord or the tenant can appeal the decision to the First-tier tribunal (“the FTT”) – a tribunal introduced to Scotland in December 2016.
Rent Controls – Subject to the government consulting with landlords and tenants, Local Authorities will be able make an application to the Scottish Ministers to nominate certain areas to be designated as “rent pressure zones”. This will allow for a cap to be placed on any rent increases within these zones.
New Termination Notice Periods
Tenant to Landlord - The period agreed in writing between the parties or 28 days written notice. The notice must be given “freely and without coercion of any kind”.
Landlord to Tenant - The landlord may end the tenancy at any point by service of a “notice to leave” subject to one of the grounds for termination being met.
If the property has been occupied for less than 6 months or if the grounds for eviction under Part 3 of Schedule 3 of the Act apply (i.e if the tenant breaches the lease or the eviction is due to the tenant’s behaviour) then 28 days’ notice is required.
If the property has been occupied for over 6 months (and the eviction is due to a ground other than that noted in Part 3 of Schedule 3 of the Act) then 84 days’ notice is required.
The full grounds for eviction are noted below.
What if the tenant fails to vacate?
The landlord can apply to the FTT for an eviction order. If the FTT is satisfied that one of the grounds for eviction applies then the FTT can issue an eviction order against the tenant. The landlord must notify the local authority that they are applying for an eviction notice through the FTT. If the tenant fails to vacate after being served with an eviction notice then court proceedings would need to be raised.
What if an eviction order is wrongly served on the tenant?
The FTT can (by application by the tenant) issue a ‘wrongful termination order’ against the landlord. If granted, the order would require the landlord to pay the equivalent of six months’ rent to the tenant. As the local authorities need to be notified of such order, the order would be flagged up in any subsequent landlord registration process.
What are the prescribed grounds for landlords to repossess?
A landlord can only terminate a lease if one or more of the 18 grounds are met, including:
- The landlord intends to sell or carry out refurbishment works;
- The landlord intends to live in the property;
- The Tenant breaches the tenancy agreement;
- Rent arrears - the arrears (from the day on which the FTT considers the application) must be an amount:
a) equal to or greater than one month’s rent; and
b) the tenant has been in arrears (by any amount) for a continuous period of 3 or more consecutive
c) the tenant’s arrears are not as a consequence of a delay or failure in the payment of a relevant
The full grounds under Schedule 3 of the Act can be viewed here
All grounds under Part 3 Schedule 3 of the Act require the landlord to give 28 days’ notice and the remaining grounds under Schedule 3 of the Act require 84 days’ notice. Some grounds are mandatory (i.e the FTT must, based on the criteria, facts and circumstances, find that the ground applies and grant an eviction order) and others are discretionary (whereby the FTT may or may not find that the ground applies).
Transfer of ownership – under the new Act if the heritable property is transferred the landlord’s interest will automatically pass to the new owner.
Death of a tenant - if certain conditions are met, partners, resident carers and family members (aged 16 and over) may become the tenant under the PRT on the death of the tenant.
Tenancies excluded from the Act:
A number of tenancies have been excluded from the Act, including:
• agricultural tenancies of more than two acres
• social housing tenancies
• holiday lets
• (with certain criteria being met) purpose built student accommodation
• tenancies with a low rent of less than £6 per week
We await the Model Tenancy Agreement which is currently being created under secondary legislation.
This article is for general guidance only. We are not, under any circumstances, providing advice or accepting any liability for any party who may seek to rely on the terms of this article.