The Private Housing (Tenancies) (Scotland) Act was recently passed by the Scottish Parliament and will have a profound impact on the private lettings market in Scotland. Whether London MPs or Welsh AMs follow suit remains to be seen – but if so, you read it here first!
The Act is expected to come into force in late 2017 however, the key aims of the Act include a simpler tenancy system, predictability regarding rent increases, and an enhanced security for tenants.
Simpler Tenancy System
The Act abolishes the short assured and assured tenancies. In its place will be the single type of private tenancy, the Private Rented Tenancy (PRT). There are exceptions to the PRT such as Student accommodation and Holiday lets.
Landlords are only permitted to increase the rent once per year upon providing 3 months’ notice. Tenants may challenge such rent increases by referring the matter to a Rent Officer who can determine a ‘fair’ rent. The newly created Private Rented Sector Housing Tribunal will hear any appeal of the Rent Officer’s decision.
The Act also gives local authorities powers to create ‘rent pressure zones’. This enables authorities to apply rent caps in areas they determine have been subject to excessive rent increases.
Security for Tenants
The Act abolishes the short assured tenancy and consequently the ‘no-fault’ ground for possession will also disappear. The ‘no-fault’ ground permits Landlords to vacate a property on the the expiry of a lease upon the expiry of two months’ notice. In short, Scotland will no longer have the equivalent of a section 21 notice in England.
Under the new Act, Landlords seeking possession will need to give at least one ground to bring the tenancy to an end. The grounds include that the Landlord is looking to use the property for non-residential purposes, to sell/refurbish/move into the property, or rent arrears for three or more consecutive months. The Landlord’s notice will be either 28 days or 84 days depending on the circumstances and the Tenant will have the right to refer the matter to the newly created Tribunal. If the Tribunal finds for the Tenant, a wrongful termination order could require the Landlord to pay the Tenant a sum of not more than six months’ rent.
The response to the Act has been mixed amongst those in the Property Sector. The security of tenure and restrictions on rent increases will no doubt be welcomed by many Tenants across the board. However, Landlords and Landlord associations have warned that these restrictions may result in Landlords disposing of their investment properties or looking outside of Scotland for such properties. Time, will no doubt tell.