Use of periodic tenancies in Scotland?

by Readers Question

11:41 AM, 19th February 2016
About 3 years ago

Use of periodic tenancies in Scotland?

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Use of periodic tenancies in Scotland?

I recently purchased some flats in Scotland which are subject to Short Assured Tenancies. I let a house in England and after an initial Assured Shorthold Tenancy I am usually relaxed about allowing this to become a periodic tenancy. Scotland

However I am not clear whether the same considerations apply in Scotland, or whether it is even possible/legal to continue to let a property there after the initial agreement has expired.

Does anyone have experience/ knowledge of this?

Jon



Comments

Mike W

13:01 PM, 19th February 2016
About 3 years ago

Hi Jon,

I think you need to update yourself on the plans of the Scottish Government to completely change the law. Those changes will make your question irrelevant. You won't have the choice. It not law yet but ....

Indeed you next question might be how will I ever get my flats back!

Emsal Ahmet

13:02 PM, 19th February 2016
About 3 years ago

Hello Jon,
I have rented out flats in Scotland for the last ten years. My experience has been that the terms of the AST agreement are the same as in England. Once the tenancy runs its term it then becomes a rolling tenancy,
i hope that helps

Puzzler

8:44 AM, 20th February 2016
About 3 years ago

I rented in Scotland when I first worked there and the agent would have applied a renewal fee for a new term had I stayed. Same as in England it can be either way (I think). However tenants have greater protection in Scotland and this is going to increase, and they now cannot be charged any fees. As a landlord you will have to be registered.

Also where do you live? and whereabouts are the properties? You should speak to a solicitor (and may be an agent) in the area, especially if this is your entry to Scotland. You should already be aware that estate agents are solicitors in Scotland. The income tax laws have just changed as well. Currently there is no difference but there could be in future.

Andy Loveday

12:00 PM, 20th February 2016
About 3 years ago

Hi Jon,

I’m going to try and keep this simple. I’ll outline the current process and then add my view on the potential changes on the horizon in Scotland.

In Scotland, at this point in time, the minimum period of let on the tenancy agreement must be 6 months although it can be longer than this.

You must give the tenant a notice AT5 (required by law) before the tenancy agreement is signed stating that the tenancy being offered is a SAT.

Prior Notification of Grounds for Possession, is another legal notice that should be issued prior to the tenancy agreement being signed.
This is required if you then seek possession under grounds 1-5 from the Housing (Scotland) Act 1988. The most common ground is that the property was previously your home and you may wish to live in it again in the future.

In addition, you are required by law to tell your tenant about The Repairing Standard and their rights at the start of the tenancy. The Repairing Standard was introduced by the Housing (Scotland) Act 2006. This is now communicated to the tenant via a tenant information pack (TIP).

The tenancy will not automatically end when it reaches the end date (this is known as the “ish date”) on the agreement. It will renew automatically unless you take steps to formally end the tenancy by giving notice in the correct form and within the correct timescales.

Depending on the lease agreement you use, if you fail to do this it will renew for the same period as the original lease and under the same conditions as laid out in the original agreement i.e. the landlord and tenant will continue to have the same rights and obligations.

However, (Emsal Ahmet) most SAT agreements contain a clause that stipulates that if the agreement is not brought to an end by either party on the end date then the agreement will continue on a monthly basis.

That’s the current process.

I’ll now attempt to pick up and outline my view (with a little help from Heather Munro) on the other elements highlighted in the previous comments.

The Scottish rate of Income Tax (Puzzler) will apply from 6 April 2016.
There is no overall change to the Income Tax rate you pay – whether you pay the basic, higher or additional rates. However, some of the Income Tax collected (10%) under the Scottish rate will fund the Scottish government, and the rest will fund the UK government.

Please note, you’ll only pay the Scottish rate of Income Tax if you live in Scotland.

The Private Housing (Tenancies) (Scotland) Bill (Mike W) was introduced to the Scottish Parliament on 7 October 2015. The Bill is the product of a Government review of the private rented sector in Scotland.

The main recommendation of the Review Group was to replace short assured tenancies (SATs) and assured tenancies (ATs) with a single type of tenancy, the ‘private residential tenancy’ (PRT).

The PRT will give tenants security of tenure whilst they pay the rent and behave. Rent increases will be subject to statutory oversight and landlords will have to prove they have a statutory ‘eviction ground’ to recover their property.

There will be new procedural rules and time limits for Landlord and Tenant alike should they want to end the lease. Landlords must issue notice founded on an ‘eviction ground’ set out in Schedule 3. The grounds fall under two main categories: where the let property is required for another purpose, such as the landlord wishes to sell or refurbish the property; and grounds relating to the tenant’s conduct, such as breach of the lease, or 3 months arrears of rent at the date of the notice. There is some overlap with the existing grounds for repossession (under the Housing (Scotland) Act 1988) and the Bill also introduces new grounds.

As the draft Bill currently stands, when the law comes into force it will affect all future tenancies, but existing SATs will be allowed to run their course. The Bill is likely to become law this year.

The view expressed (Puzzler) about the added protection for tenants in Scotland is in, my view, accurate. As a start, there are no tenant fees.

It is against the law, in Scotland, for a landlord - or a letting agent acting on their behalf - to charge or receive any premium or require the making of any loan as a condition of granting, renewing or continuing a tenancy. The landlord or their letting agent may charge only rent and a refundable deposit of two months' rent at the most.

The meaning of 'premium' includes any fine or other sum and what the law calls any other 'pecuniary consideration' (e.g. money that has to be paid in the present or in the future). It includes a service or administration fee or charge.

The Private Housing (Tenancies) (Scotland) Bill, as proposed, will, in my view, provide a further level of protection for the tenant.

As indicated (Puzzler) all private landlords that let property in Scotland must register with their local authority to ensure that they are a "fit and proper person" to let property. It is an offence to let any house without being registered. The maximum fine for operating as an unregistered landlord is £50,000.

The Landlord Registration scheme has a number of aims.

First, it enforces minimum standards in private renting and provides local authorities the ability to remove the worst landlords from the sector amongst other enforcement measures.

Second, it enables tenants and neighbours to identify and contact landlords of private rented property.

Third, it provides information on the private rented sector in Scotland allowing local authorities to engage more effectively with landlords and tenants.

In Scotland, solicitors can also act as estate agents (Puzzler) as well as carrying out Conveyancing. Not all solicitors act as estate agents and not all estate agents are solicitors. Where solicitors do act as estate agents they are often (but not always) part of a Solicitors Property Centre (SPC).

There you are…. Done…. It’s that simple!!

If you are looking for an agent (lettings) in Scotland, let me know where your properties are located and I will look to see if there is someone that I could recommend.

I hope that helps.

Puzzler

9:04 AM, 21st February 2016
About 3 years ago

Reply to the comment left by "Andy Loveday" at "20/02/2016 - 12:00":

Wow, thanks for that, I did not have all the details so that is really useful. You are right obviously that not all solicitors are estate agents but I am not so sure that not all estate agents are solicitors. They certainly seem to be in Aberdeen. I don't mean every member of staff of course but they all advertise themselves as such. Hence the ability to cement the deal much earlier in the process than in England. The offer to the estate agent and its acceptance (missives) is in law as binding as exchange of contracts in England.

You are also right that Scottish income tax is only if you live in Scotland, however it is not entirely clear at this stage where you would have to declare property income. I work in Scotland and live here for work but my main home is England and that is where most of my property is, but not all. At the moment the rate is the same but I can see that changing in future - Nicola didn't dare raise it just now as there is an election coming up.

Matt Wardman

12:32 PM, 21st February 2016
About 3 years ago

Reply to the comment left by "Puzzler " at "20/02/2016 - 08:44":

As as I understand it Ts in Scotland *can* effectively be charged fees, but you have to guess what they will be and charge a higher rent instead.

The Scottish Government banned fees from being identified explicitly and prevented open competition in the market.

But a cost is a cost is a cost and needs to be covered somewhere. It won't go away just because the Scottish Government have a brainstorm and demand no one talk about it.

Yes, imo it was one of the most boneheaded political decisions I have seen for years.

Andy's post is excellent.

Jon Sear

20:58 PM, 21st February 2016
About 3 years ago

Thank you for all your responses, I got the answer I needed, and I'm sure anyone considering renting property in Scotland for the first time will find Andy's comprehensive summary extremely helpful.


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