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Update on Scotland

When Westminster considers new measure for the English private rental market they take note of the new measures and changes in Scotland. So here is a post on the Private Housing (Tenancies) (Scotland) Act 2016 which came into force in December last year and has made huge changes to the rental market in Scotland.

Length of tenancy and notice

The Act applies to all tenancies which commence on or after 1 December 2017. Tenancies will now be open ended and last up until the tenant vacates or if the landlord uses one of 18 grounds for eviction.

Where a tenant wishes to end a tenancy, they must give a minimum of 28 days-notice, this notice period can be varied by agreement between the parties. Where a landlord wishes to end a tenancy, they can only do so on 1 of 18 grounds only. In other words, Scotland now has no equivalent to a section 21 notice and all evictions must be justified on one of the statutory bases. The grounds include that the tenant has breached the lease, the tenant is no longer in occupation, the landlord wishes to move in, or the landlord wishes to sell the property. Some of the grounds are mandatory and some not and notice periods for the various grounds range from 28 days to 84 days. Where a tenant refuses to vacate the matter can be referred to the First Tier Tribunal (see below).

Rent

Landlords will be required to give tenants’ 3 months’ notice when they wish to increase the rent using a prescribed form. Rents can only be increased every 12 months and can also be limited by the imposition of a ‘rent pressure zone’ which creates a rent increase cap in an area where the local council believe rents are too high.

Where there is a dispute over a rent increase the matter can be referred to a rent officer who will make a decision on a tenant’s application within 40 days. The rent officer has the power to not only decrease a prospective rental figure but to increase it too. Where there is a dispute with the rent officer’s decision he can be asked to reconsider it, or the matter can be referred to the First Tier Tribunal (see below).

Other monies

Deposits will be restricted to 2 months and any other charges such as administrative, premiums, additional deposits and additional charges are illegal under the Act, although most of these have been unlawful for some time.

Tribunal

Disputes between the parties can then be referred to the First Tier Tribunal for Scotland (Housing and Property Chamber). The Tribunal will have powers to make decisions such as the return of 3 months’ rent if the landlord has failed to give the tenant a written tenancy agreement or the notes which explain the tenancy terms and tenant’s rights, similar to the ‘how to rent guide.’ In Scotland landlords are required to be registered with the Scotland Landlord register and where they fail to do so the Tribunal may refer them to the local authority. Failure to register can see landlords served with a Rent Penalty Notice which prevents them charging rent or be fined up to £50,000.

Comment

This Act is designed to improve security, stability, and predictability for tenants and, some have argued, for landlords/investors as well. It is of course only in the interests of landlords to have their properties occupied by good tenants. However, where a dispute arises between the parties the process to evict a tenant could take longer than any landlord would hope. Further, these ‘open ended’ tenancies could have an impact on agents and their ability to charge commission and that impact will be considered in another post when we have more information.

Inevitably this change in Scotland has led to pressure in England to end the use of s21 notices as well and so it will be important to keep an eye on how the situation evolves north of the border.

 

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