Big Changes are Coming to the Private Rented Sector in Scotland – What do Landlords Need to Know?

09 Oct 2017

Landlords taking Vacant Possession of Rental Properties

As you may be aware the Scottish Government has introduced new legislation relating to tenancy agreements within the private rented sector. This change in legislation will have a material impact on the tenancy agreements we use for the majority of tenancies throughout Scotland and also the process for eviction where necessary, and as such, we need to get used to it!

The guts of the changes to legislation mean that instead of using the current Short Assured Tenancy (SAT), we will use a new Private Residential Tenancy (PRT) which will have different “grounds” or reasons to remove a tenant and obtain repossession of your rental property. In addition to the changes in the tenancy agreement, the First Tier Tribunal – which was initially set up to hear cases within the private rented sector relating to repair issues, or rent appeals – will now assume the role of the Sheriff Court, hearing eviction cases in order to grant an eviction order.

When is the change coming?

This change of legislation – Private Housing (Tenancies) (Scotland) Act 2016- has been confirmed as 1st December 2017.

Why have the government brought in this legislation now?

The new PRT was borne because the government thought that private rented sector tenants wanted longer tenancies and they were not being granted them by private landlords. They also wanted to remove the current “no fault” ground whereby a landlord can get repossession of their property for no reason- so they can have tenant, paying rent causing no problems in the property, but still serve the tenant notice for repossession.

What are the main differences between the old SAT and new PRT?

  1. No initial or fixed term of the lease agreement, the lease has a start date but no end date- notice has to be given by either party (see below)
  2. Standard tenancy template and simplification of paperwork (although the lease can still be modified to include specific clauses as required)
  3. Notice period from tenant – not less than 28 days BUT this can be modified to be longer – which Fineholm will be implementing – however we are unsure of the notice period we will use as yet, we will give you advance notice in due course
  4. Notice period from landlord – either 28 days or 84 days dependent on reason for giving notice (or ground) and also the duration of the tenancy before the notice is served.
  5. The way rent increases are implemented and notified will be different and tenants can refer any suggested rent increase to a rent officer if they feel they are unfair. The rent officer will offer a decision as to whether its above market rate or not.( Appeals can be made)
  6. The grounds which we can use to remove a tenant and get repossession are different from current grounds with an SAT. Under the new legislation, there are 18 Grounds to remove a tenant- 8 are mandatory and 8 are discretionary and 2 are mixed.
  7. The main grounds which will be used in practise, and will have to be served with 28 days notice, are:
    ground 1 – landlord intends to sell (Mandatory ground)
    ground 3 – landlord intends to refurbish (Mandatory ground)
    ground 4 – landlord intends to live in the property(Mandatory ground)
    ground 11 – breach of tenancy (Discretionary ground)
    ground 12 – rent arrears for 3 or more consecutive months (Mandatory if one months rent is in arrears when case calls as Tribunal court, Discretionary if not)

My tenant has an SAT running, will it still be an SAT?

If the tenancy at your property is an SAT and is our standard rolling SAT (it ran for an initial period then moves onto the rolling period) it will remain an SAT until the lease is brought to an end. If the SAT runs for a fixed period then requires a modification or extension, it will automatically become a PRT on the date PRTs “go live” If the lease is in “tacit relocation” it remains an SAT until brought to an end. Any new leases signed after the implementation date will be a new PRT.

FAQs

Can my tenant give 28 days notice at any time?
The act states that the tenant can give notice at any time, 1 day after moving in should they wish, and the minimum period is 28 days written notice. However there is nothing currently in the Act to stop landlords (agents) amending the notice period required.

Can I move into the property?
After serving the relevant notice (Ground 4) which is a mandatory ground which requires 28 day notice period, you can gain repossession.

What if I just want my property back?
This is one of the major differences and the real thrust behind the new legislation. You need a proper reason to regain your property, such as selling it, moving in, refurbishing it, rent arrears, you can’t just decide you want the tenant out. This is the removal of the no fault ground. If you pretend that you want to sell and don’t, the tenant can refer you to the First Tier Tribunal for misuse of grounds for eviction and you can be fined up to 6 months rent.

If there a minimum term?
There is no minimum term – just a start date and notice period as specified in the lease.