A new tenancy for the private rented sector – how will it affect you?

Guest article by Christopher Meaden – Dispute Resolution & Litigation at Lindsays Solicitors.

The Scottish Government published the long awaited Private Housing (Tenancies) (Scotland) Bill on 7 October after analysing the responses from two consultations.

The Bill’s aim is to improve the private rented sector by providing good quality homes, high management standards and encouraging growth through increased investment.

What is happening?

The Bill intends to create a new tenancy called a ‘Private Residential Tenancy’ for all future lets, replacing the current short assured and assured tenancy system. According to the Government it will be a simple and modern procedure and will benefit landlords and tenants.

The Bill is currently being reviewed by Committee, with views sought from all interested organisations and individuals. It is expected that the Bill will be placed before the Scottish Parliament by March 2016 and that the new tenancy would be introduced in 2017.

Notable differences

• The “no fault” ground for repossession would be removed. This means a landlord will not be able to terminate the tenancy just because their tenancy has come to an end.
• During the initial tenancy period a landlord can only give notice on certain grounds: rent arrears, antisocial behaviour, breach of the tenancy agreement, the tenant has a relevant criminal conviction, or the landlord intends to sell the property.
• The Scottish Government will create a model tenancy agreement detailing the required clauses and optional clauses, and a guidance note summarising the main clauses in plain language.
• The “notice to quit” and the “notice of proceedings” will be replaced by one document called the “notice to leave”.
• A landlord will have to give four weeks’ notice to a tenant to leave the property when a tenant has been in the property for six months or less and 12 weeks’ notice to a tenant who has been in the property for more than six months.
• Where a tenant has failed to pay any amount of rent due over a period of two consecutive months, a landlord can send a tenant a notice to leave detailing this and stating that if they fail to pay the rent lawfully due by the end of the third consecutive month, a referral could be sent to the First-tier Tribunal on the day following the expiry of the three month period.

 The grounds for repossession

The Scottish Government proposes 16 grounds for repossession. This is a change from the proposals in the consultations. The first consultation proposed 17 grounds for repossession with the second consultation detailing 11. The new proposed grounds for repossession are divided into four parts.

A mixed response

The removal of the “no-fault ground” for repossession has not been welcomed by some landlords. Critics anticipate that it would remove the flexibility characteristics within the rental market, and could harm confidence amongst investors.

The Bill could also impact on landlords who rent to students. The new initial tenancy period of 6 months may be felt more heavily as this group typically wish to take a 10 month lease.  Concerns have also been raised by landlords who operate short term holiday lets.

The Bill will require changes to letting agents’ and landlords’ practices, and will mean that actions like repossession should be carried out by an experienced and informed solicitor. Landlords should work closely with their solicitors to prepare for the change in tenancies.

If you have any further questions regarding the Private Housing (Tenancies) (Scotland) Bill, you can contact ChristopherMeaden@lindsays.co.uk.