Private Housing (Tenancies) (Scotland) BillMake Text Bigger
This IMPORTANT article is not only applicable to landlords in Scotland, it could also be a glimpse into future regulation to follow in England and Wales.
The Bill was released around three weeks ago and is still being poured over by lawyers and advisers. Before it becomes an Act in Scotland there will be some changes but the basic fundamentals will stay the same.
Given the complexity and gravity of the changes Property118 strongly recommends that all landlords who own property in Scotland should become a member of the Scottish Association of Landlords. My own personal opinion is that becoming a member of SAL is without a doubt the most cost effective way for landlords with property in Scotland to keep abreast of the changes in legislation and to receive quality information. Details of how to become a member of SAL can be found at the bottom of this article.
I must thank Scottish Association of Landlords for organising and inviting me to their National Landlords Day earlier this week.
Thank you also to Andrew Cowan of TC Young Solicitors for his excellent presentation which summarised the key details of the Bill.
So what is so important?
The fundamental change proposed in the Bill is that tenants will have security of tenure under a new compulsory form of model tenancy agreement to be known as a PRT which is an abbreviation for Private Residential Tenancy.
Here’s a list of the key points:-
- Landlords will no longer be able to evict without grounds.
- Illegal to charge fees to tenants (this is already the case in Scotland)
- Landlords pays a penalty of up to three months rent if a correctly formatted tenancy is not issued within 28 days
- Minimum 3 months notice to increase rent (can only be applied once a year)
- Tenant can appeal rent with a rent officer and then to a tribunal
- Scottish Ministers can introduce Rent Pressure Zones “RPZ’s” which will enable them to cap rent at CPI + 1% plus a discretionary number. It is not known whether that discretionary number can be a negative.
- Tenants can end a tenancy by giving 28 days notice within the first six months and 56 days notice thereafter
The grounds for eviction will be:-
- lender intends to sell property
- breach of tenancy agreement
- tenant has been in rent arrears for 3 or more consecutive months
- tenant has a relevant conviction
- tenant has engaged in antisocial behaviour
- landlord intends to sell property or to refurbish property
- landlord or family intends to live in property
- landlord intends to use property for non residential purpose
- tenant not occupying property
- tenant has materially failed to comply with a statutory term of tenancy (Mandatory)
- tenant has failed to comply with a non statutory term of tenancy (Discretionary)
- 3 or more consecutive months rent arrears and at any point during that period at least one month’s rent is due (Mandatory)
- 3 or more consecutive months rent arrears (Discretionary)
My personal thoughts are that the changes will discourage investment into the Scottish Private Rented Sector. It will be interesting to see how lenders react, but the Bill does seem to have considered them at least. One thing is for sure, Scottish landlords will need to get far better at due diligence before agreeing to let their properties. Can you imagine having to prove to a Judge that a tenant is terrorising neighbours. Would the neighbours give evidence? I suspect the cost of rent guarantee and legal fees insurance will increase in Scotland to compensate for the increased risks too.
The one positive is that there appears to be a willingness from the powers that be in Scotland to improve the speed of the system to deal with evictions. Is this just political claptrap or will we see some actual proposals? It’s a pity the detail on that point is nowhere near as comprehensive as the detail in the Bill isn’t is?
What are your thoughts?
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