NEW REGULATIONS FOR THE PRIVATE RENTED SECTOR
The Private Housing (Tenancies) (Scotland) Act 2016 took effect on the 1st December 2017, this will introduce a new form of private residential tenancy known as the PRT, Alister Biggar takes a look at the significant changes for landlords in particular.
The purpose of the new legislation is said to improve security for tenants as well as to provide safeguards for landlords, lenders and investors too. The new tenancy arrangement will be open-ended and will last until a tenant wishes to leave the let property or when a landlord uses one or more of 18 grounds for eviction.
Improvements for landlords will include:
• No more confusing pre-tenancy notices, such as the AT5.
• Where a tenant is in rent arrears, a landlord can refer a case for repossession more quickly.
• A Scottish Government recommended ‘model tenancy agreement’, which will include standardised tenancy terms.
• A digital version of the Scottish Government ‘model tenancy agreement’, which will include discretionary terms that can be edited, allowing landlords to easily put together and send out a tenancy agreement suitable for their specific property.
• One simple notice when regaining possession of a property called a ‘notice to leave’ – this will replace the current ‘notice to quit’ and ‘notice of proceedings’.
• 18 modernised grounds for repossession, which include new grounds where the property has been abandoned or the landlord intends to sell.
PRIVATE RESIDENTIAL TENANCIES
Only new tenancies starting on or after 1st December 2017 fall under the new legislation. After that date, these will be classed as a Private Residential Tenancy as long as:
• The property is let to a person as a separate dwelling. A property can still be considered a separate dwelling even if some of the core facilities are shared with other tenants. For example, if a tenant rents only a bedroom in a flat, but has a right to use a shared bathroom and kitchen.
• The tenant lives in it as their only or main home.
• The tenancy isn’t excluded under schedule 1 of the Act. Your tenant will have the protections of a private residential tenancy, even if you give them a tenancy agreement for any other type of tenancy.
On the date the new tenancy comes in to force, any existing short assured or assured tenancy will continue until either the tenant or you bring it to an end by serving notice to quit the let property. If your tenant’s short assured tenancy is renewing on a contractual basis, this can continue to renew under the Housing (Scotland) Act 1988 until either you or the tenant bring it to an end by serving notice to quit the let property.
INCREASING THE RENT
If you want to increase the amount of rent your tenant pays you, you have to give at least three months’ written notice before you can do it. You must use the correct form to give your tenant notice of a rent increase — a ‘landlord’s rent-increase notice to tenant(s)’. The notice period begins on the date the tenant gets the notice, and ends three months after that date.
You can only increase the rent once in a year (you have to wait 12 months before it can be increased again).
If your tenant disagrees
If your tenant thinks the rent increase is too high, they are allowed to contact a rent officer within 21 days of getting your notice. They must tell you if they are doing this. The rent officer has the power to decide what the rent for the property should be and can vary the rent up or down.
Other than the rent, you can ask your tenant to pay a refundable deposit. This deposit can be no more than two months’ rent. It’s an offence to make your tenant pay any other:
• Administration fees
• Further deposits
• Additional charges, whether they’re refundable or not
RENT PRESSURE ZONES
Further restrictions shall apply in ‘Rent Pressure Zones’, whereby local authorities can apply to cap rent increases in certain areas at a rate that has been set by the Scottish Government.
ENDING THE TENANCY: NOTICE TO LEAVE
If your tenant wants to end the tenancy
Your tenant has to give you at least 28 days’ notice in writing if they want to end the tenancy (unless they ask for shorter notice and you agree in writing).
The notice period will begin on the day you get the notice from your tenant, and ends 28 days after that date. Your tenant can only give you notice to leave once he or she has started to live in the let property. Your tenant’s notice has to be given ‘freely and without coercion’. This means you must not have pressured or persuaded your tenant into leaving.
If your tenant gives you notice but then changes their mind before it ends, they can ask you to continue the tenancy instead. It’s up to you to decide whether to agree. To end a joint tenancy, all the joint tenants must agree to end the tenancy and sign the notice to leave. One joint tenant cannot terminate a joint tenancy on behalf of all the joint tenants.
If you want to end the tenancy
You can only end the tenancy by using one of the 18 grounds for eviction. If you decide you want to end the tenancy, you must serve your tenant a notice to leave document, which will tell them how long they have to move out. When you give your tenant notice to leave, you must tell them what eviction ground you are using. You can also provide any evidence you have to support the ground.
The amount of notice you have to give your tenant will depend on how long they’ve lived in the property and the grounds you’re using to evict them. You must give at least 28 days’ notice if they have lived in the property for six months or less, regardless of what eviction ground you are using.
You must give at least 84 days’ notice if they have lived in the property for more than six months, and you aren’t relying solely on any of the mandatory grounds listed below.
GROUNDS FOR EVICTION
There are 18 different grounds for eviction. If you want your tenant to leave the property at least one of these grounds must be given. If your tenant refuses to leave you can apply to the First-tier Tribunal for an eviction order under these grounds.
The first 8 grounds for eviction are ‘mandatory’. This means that if the Tribunal agrees that the ground exists, the tenant must leave the property.
1. Landlord intends to sell the let property
This ground applies if you plan on putting the let property up for sale within three months of the tenant moving out. You’ll need evidence to prove it – this could include a letter from a solicitor or an estate agent, or a recent home report for the property.
2. Let property to be sold by lender
This ground applies if your mortgage lender wants to repossess the property and sell it.
3. Landlord intends to refurbish the let property
This ground applies if you want to carry out major works to the let property that are so disruptive that the tenant wouldn’t be able to live there at the same time.Example of evidence could include planning permission, or a contract between you and an architect or a builder for the work to be carried out.
4. Landlord intends to live in let property
This ground applies if you want your tenant to move out of the property so that you or your joint landlord can move in. Evidence could include an affidavit saying this is what you are going to do.
5. Landlord intends to use the let property for non-residential purpose
This ground applies if you want the tenant to move out so you can use the property for something other than a home. Evidence could include planning permission that will let you use the property for a different purpose.
6. Let property required for religious worker
This ground applies if the property is held to be available for someone who has a religious job. The ground only works if the property has been used for this purpose before.
7. Tenant has a relevant criminal conviction
This ground applies if your tenant is convicted of an offence punishable by imprisonment that involved them either:
• using the property for illegal reasons
• letting someone use the property for illegal reasons
• committing a crime within or near the property
You have to apply to the Tribunal within a year of your tenant getting the conviction, unless you have a reasonable excuse for not applying before then.
8. Tenant is no longer occupying the let property
This ground applies if the property isn’t being used as the main or only home of your tenant or a legal sub-tenant. This doesn’t count if you’ve failed your duty to keep the property in good repair and the tenant has had to move out for their own safety.
The next eight grounds for eviction are ‘discretionary’. This means that even if the Tribunal agrees that the ground exists, it still has to decide whether it will issue an eviction order.
9. Landlord’s family member intends to live in the let property
This ground applies if a member of your family plans to move into the property as their only or main home for at least three months. You need evidence for this ground. This could include an affidavit stating that this is what your family member intends to do.
10. Tenant no longer needs supported accommodation
This ground applies if the tenant moved in because they had a need for community care and they’ve since been assessed as no longer having that need.
11. Tenant has breached a term of the tenancy agreement
This ground applies if the tenant hasn’t complied with one or more of the terms of tenancy. This doesn’t apply to cases where the tenant hasn’t paid their rent – there’s a separate ground for rent arrears.
12. The tenant has engaged in relevant antisocial behaviour
This ground applies if the tenant has behaved in an antisocial way to another person, by doing something which either:
• Causes them alarm or distress
• Is a nuisance or annoyance
• Is considered harassment
The First-tier Tribunal will consider the behaviour, who it involved and where it occurred to decide whether to issue an eviction order.
13. Tenant has associated in the let property with someone who has a criminal conviction or is antisocial
This ground applies if your tenant allows someone into their property and they behave in an antisocial way that would have them evicted if they were the tenant.
To use this ground, you have to apply to the Tribunal within a year of the conviction or behaviour taking place, unless you have a reasonable excuse.
14. Landlord has had their registration refused or revoked
This ground applies if you aren’t registered as a landlord in the local council area where the property is located.
15. Landlord’s HMO licence has been revoked
This ground applies if the HMO (House of Multiple Occupancy) licence for the property has been removed and keeping all the tenants in the property would no longer be legal.
16. An overcrowding statutory notice has been served on the landlord
This ground applies if an ‘overcrowding statutory notice’ has been served on you because the property is overcrowded to the extent that it may affect the health of the people living there.
Grounds which could be mandatory or discretionary
17. Tenant is in rent arrears over three consecutive months
This ground applies if the tenant has been in ‘rent arrears’ for three or more months in a row. If the tenant owes less than a month’s rent (or is no longer in arrears) by the first day of the Tribunal hearing, the ground is discretionary and the Tribunal will decide whether it is reasonable to issue an eviction order.
18. Tenant has stopped being (or has failed to become) an employee
This ground applies if you let the tenant move in because they were an employee of yours or were expected to become one, and now they aren’t.
MODEL TENANCY AGREEMENT
To help Landlords to manage the new legislation and changes and to ensure that there is uniformity among tenancy agreements, the 2016 Act has introduced a Model Tenancy Agreement. This provides a combination of core and mandatory rights and obligations along with discretionary terms which landlords may choose to add or remove. These can be found on the Scottish Government’s website
As you will see the new Private Housing (Tenancies) (Scotland) Act 2016 will mean significant changes for landlords and tenants alike. If you are a landlord and would like to discuss the implications on you and your rental property portfolio, please don’t hesitate to get in touch with one of the team at JRW and we will be happy to advise you.