Introduction of the New Private Residential Tenancy In Scotland – Are You Ready for Change?
21st November 2017
- BETWEEN CREATION AND TERMINATION
- EXISTING TENANCY AGREEMENTS
- A REMINDER OF YOUR OTHER OBLIGATIONS
On 1st December 2017 most of the provisions of the Private Housing (Tenancies) Scotland Act 2016 will come into force.
The new Private Residential Tenancy (PRT) will replace the current 'Assured Tenancy' regime for all future private sector tenancy lets. From this date, it will not be possible to enter into a new assured tenancy. According to the Scottish Government, the new PRT is designed to improve security of tenure for tenants and provide appropriate safeguards for landlords, lenders and investors.
This note will give you a brief overview of the new legislation and highlights some important issues that you must be aware of.
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In order to create a PRT, there are 2 required elements:-
- The individual tenant(s) must occupy this separate dwelling as their only or principal home; and
- The tenancy cannot be on the excluded list.
If any of the required elements are missing, then the tenancy cannot be a PRT and the agreement will be governed by the common law of leases (very dangerous territory for landlords and tenants alike).
Tenancies which are excluded from the scope of the 2016 Act, and which cannot constitute PRT's, are:-
There are certain terms which must be in every PRT called 'mandatory clauses'.
A Model Tenancy Agreement has been produced by the Scottish Government and is available from their website. The model agreement includes all of the mandatory clauses. It also includes certain optional clauses which can be removed or amended so long as they don’t contradict the mandatory clauses.
The mandatory clauses include, but are not limited to: rent; deposits; occupation and use of the property; repairs and tenant information (see Part 3 below).
The major change is that tenancies are no longer for a fixed period of time. The requirement that a tenancy must have a definite period and a specified and ascertainable end date (called an “ish”) does not apply to private residential tenancies. Termination will only be by notice.
1. Termination by the Tenant
Tenants under the new regime have security of tenure. However, provided that they give the necessary notice, the tenant may bring the tenancy to an end at any time without penalty.
A tenant can simply bring the tenancy to an end in writing, which is freely given and with a minimum period.
Failing a notice period being specified in the lease, the tenant must provide the Landlord with 28 days' notice to bring the tenancy to an end. This can be extended or reduced by agreement.
The minimum notice period is calculated from the day the notice is received by the landlord and ends on the day specified in the agreement between landlord and tenant. So, if the parties were to agree that the tenant could leave on giving 14 days’ notice and the notice were received by the landlord on the 12th of the month, the tenancy would end on the 27th of the month.
2. Termination by the Landlord
The legislation does not allow parties to specify an end date or to agree duration for the lease. Therefore, it will not be possible to terminate a PRT simply because it has come to the end of its term.
The tenancy only comes to an end where a Notice to Leave given and the tenant ceases to occupy the let property. The Notice to Leave replaces the Notice to Quit (it essentially does the same job although the timescales are different).
The date when the tenancy ends is either that date as set out in the Notice or is the date the tenant ceases to occupy the property.
The notice period is decided depending on the reason(s) given for the notice and the amount of time the tenant has occupied the property. There are 2 possible notice periods:-
1. 28 days' Notice
This is required where the tenant has been in the property for not more than six months or where any one of the eviction grounds marked * in Table 2 below apply.
2. 84 days' Notice
In any other case the period of notice is 12 weeks.
The Notice to Leave tells the tenant that the landlord is giving him notice to leave the property and that if the he does not do so, the landlord may apply for an eviction order from the First-tier Tribunal. The First Tier Tribunal will only grant an eviction order on the grounds laid down in the legislation.
There are 18 eviction grounds on which the Notice can be based. Some of those grounds are mandatory and the Tribunal will grant an eviction order if he is satisfied that one of the mandatory grounds has been met. The rest are discretionary and the Tribunal will make a determination based on all of the circumstances.
There is a financial disincentive to discourage landlords from misleading either the First-tier Tribunal into granting an eviction order or their tenants into leaving the property- up to 6 months’ rent payable to the tenant
BETWEEN CREATION AND TERMINATION
Whilst writing is not required to constitute a private residential tenancy, Landlords have a duty to provide certain information to tenants.There are two crucial elements:-
1. The duty to provide a written tenancy agreement.
As far as a written lease is concerned, the landlord has a duty to provide the terms of the PRT with a document setting out the terms of the tenancy on the day when the tenancy commences, if this has not already been done.
2. The obligation to provide ancillary information.
- If the tenancy agreement takes the form of the Model Tenancy Agreement as provided for by the Scottish Government, it must also be accompanied by a copy of the easy read notes, available on the Scottish Government website.
- If you use your own style of tenancy agreement, it must also be accompanied by a copy of the Private Residential Tenancy Statutory Terms Supporting Notes, available on the Scottish Government website.
Failing to provide a tenancy agreement in writing may lead to monetary sanctions of an amount not exceeding 3 months’ rent.
Rent can only be increased in accordance with the legislation and cannot be increased more than once in any 12 month period. The tenant will have the right to refer the rent increase to the rent officer for a determination. Any determination by a rent officer can be appealed to the First Tier Tribunal.
Rent Pressure Zones
The Local Authority will have power to designate an area a “Rent Pressure Zone setting a local rent limit where there is concern that increasing rents are causing undue hardship to tenants and where the Local Authority is under increasing pressure to provide more local authority housing as a consequence.
Jurisdiction of the First Tier Tribunal
The First Tier Tribunal (Housing and Property Chamber) will have jurisdiction in relation to all new PRT’s. The Tribunal will accept applications from tenants and landlords where the terms of the new PRT are not being met, or where there is disagreement with the rent that has been set for the property by the Rent Officer.
All applications to the First Tier Tribunal are free of charge.
Applications will be made to the First-tier Tribunal for Scotland (Housing and Property Chamber) based in Glasgow. While there is a central administrative centre, tribunal hearings will be held in locations across Scotland.
EXISTING TENANCY AGREEMENTS
Those assured/ short assured tenancies which are in existence can continue until they are brought to an end. Where there is a provision in a short assured tenancy that the tenancy can continue on a monthly or two monthly basis after the initial term, then this arrangement is provided for and is not excluded by the ban on new assured tenancies after the commencement date of the PRT regime.
However, beware the enactment of the provisions of the Housing (Scotland) Act 2014, also due to come into force on 1st December 2017. These provisions transfer jurisdiction form the Sheriff Court to the First Tier Tribunal in matters relating to assured/ short assured tenancies. Civil cases relating to the private rented sector will no longer be dealt with as a Summary Cause Action raised within the Sheriff Court.
If you require a court order to evict a tenant on or after 1st December 2017, you must apply to the First Tier Tribunal instead of the Sheriff Court.
There is also provision for anyone who wants to convert their assured tenancy to a private residential tenancy. There must be agreement between both the landlord and the tenant in order to convert the tenancy to a PRT.
A REMINDER OF YOUR OTHER OBLIGATIONS
As a landlord, you also have other obligations which include ensuring your rental properties, and their contents, comply with various safety regulations. Some of those obligations are listed below. This list is not exhaustive.
1. All private landlords and any agents appointed by them must be registered with the local authority in which the let property is located.
In addition a landlord must have a House in Multiple Occupancy (HMO) Licence if at least three tenants live in a property; and the tenants belong to three or more families; and the tenants who live there share a kitchen, bathroom or toilet. There are additional standards set by local authorities for HMOs.
2. Carbon Monoxide Alarm (for gas-served properties). Depending on the size of the property, more than one alarm may be required. Landlords should consider if it is preferable for a mains wired (with battery back-up) carbon monoxide alarm be installed. The landlord should ensure the alarm is regularly tested to ensure it is working.
Cost: Varies depending on work required to mains wire the device.
3. Mains Wired (with battery back-up) Smoke Alarms. Depending on the size of the property, more than one alarm may be required. Revised guidance makes it mandatory that such an alarm is fitted in a room which is most frequently used by the tenant for general day time living purposes, in every circulation space (halls and landings) on each floor where there is more than one floor, and a heat alarm in every kitchen. All alarms should be interlinked. The landlord should ensure the alarm(s) is / are regularly tested and maintained.
Cost: Varies depending on work required to mains wire the device.
4. Clear, written instructions on how your tenants should operate the central heating system, and what action they should take if there is a suspected gas leak of faulty gas appliance.
5. Guidance for tenants on how to turn off any gas supply in the event of a gas leak.
6. A fire blanket located in the kitchen.
Cost: £10 - £20.
7. Annual Gas Safety Check (must be carried out by a member of the Gas Safe Register). You must give your tenants a copy of the gas safety record within 28 days of the check being carried out. You must keep a record of the gas safety check for at least two years. Carrying out a gas safety check at the same time as a boiler service is good practice.
Cost: Varies, but expect to pay around £70.
8. 5 Year PAT Test (PAT – Portable Appliance Testing). At least once every five years during the course of the tenancy a Portable Appliance Test (PAT) Certificate must be obtained and signed by a qualified and accredited electrician. The report must be kept for 6 years.
Cost: Typically £1 per portable appliance, plus engineer’s time.
9. Electrical Installation Condition Report (EICR Certificate). 5 Year Check of electrical wiring circuits and mains board. The test should be carried out by a qualified and accredited electrician and an electrical safety report should be obtained. The report must be kept for 6 years.
Cost: Typically £12.50 per circuit tested, plus engineer’s time.
10. Landlords’ Responsibilities in general. Private landlords in Scotland are required by law to ensure that a rented house meets the repairing standard at the start of a tenancy and throughout a tenancy.
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at November 2017. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.