The Private Housing (Tenancies) (Scotland) Act 2016

The Private Housing (Tenancies) (Scotland) Act 2016 is due to come into force on 1 December 2017 in which a new form of residential tenancy known as the private residential tenancy (“PRT”) shall come into existence to regulate the private rented sector.

If you are  a landlord with a tenant under a short assured/assured tenancy agreement

• Only new tenancies created on or after 1 December 20017 will fall under the new legislation
• Any short assured/assured tenancy agreements granted on or before 1 December 2017 will not be affected by the new legislation. They will continue to run for the duration of the tenancy.

What are the significant changes?

Student Accommodation:

Purpose built student accommodation will not be affected by the legislation. If you are a landlord of accommodation that was granted planning permission (or a change of use of the building granted) for the purpose of letting to students, you can continue to offer fixed term leases as you were doing under the previous legislation.

If you are simply renting out a flat or residential property to students, the new PRT legislation will apply. 

Terminating the tenancy:

The new rules seek to curb landlord powers under tenancy agreements and confirm the notion of the tenant having security of tenure. The most significant change of the PRT is that, under the new rules, landlords will no longer be able to terminate the tenancy at a fixed date on a “no fault” basis. Where the termination of tenancy is non-consensual, tenancies can only be terminated by either: the termination by the tenant on 28 days’ notice; or termination by the landlord under one of the eighteen eviction grounds.

If the tenant disputes the ground that the landlord is using to evict them then they can have the matter referred to the First Tier Tribunal (“FTT”) who will decide if the ground has been established or not.

Some of these grounds are mandatory meaning that, if the landlord can establish one of them, then the FTT must grant an order to evict the tenant. Some of the grounds are discretionary, meaning that if the FTT decides the ground has been established it will only order an eviction if they consider it reasonable to do so.

Grounds for eviction can include the landlord’s intention to sell or refurbish the property. If a tenant establishes at the FTT that the tenancy agreement has been wrongly terminated, they may be entitled to a sum not exceeding 6 months’ rent.

A full list of these eviction grounds can be found at Schedule 3 of the Act: http://www.legislation.gov.uk/asp/2016/19/schedule/3/enacted

• Mandatory grounds: ss1, 2, 3, 4, 6, 7, 8, 10 & 13
• Discretionary Grounds: ss5, 9, 11, 12, 14, 15, 16, 17, 18
• Mandatory/Discretionary depending on the circumstances of the case: ss8 & 12

Raising Rent

There are also varying restrictions on rent increases. The landlord is restricted to one rent increase in a 12 month period and can do so by issuing a ‘rent increase notice’.

If the tenant objects to the raise, they can refer the increase to the Rent Officer where it can be amended by the Officer. Any amendment to the rent set by the Rent Officer can be appealed by the landlord to the FTT.

Further rent restrictions shall apply in “rent pressure zones”, whereby local authorities can apply to cap rent increases in certain areas at a rate set by the Scottish Government. Edinburgh City Council is currently considering making the whole city a rent pressure zone.

Model Tenancy Agreement

In the aid of helping the landlords navigate the new changes and producing uniformity among tenancy agreements, the 2016 Act introduces the Model Tenancy Agreement (MTA). The MTA is a mixture of both mandatory ‘core rights and obligations’ covering such areas as repairing standards and tenancy deposits, and discretionary terms which landlords may add to or remove. These can be found on the Scottish Governments’ website: https://beta.gov.scot/publications/scottish-government-model-private-residential-tenancy-agreement/

If you have any questions regarding the new legislation please contact Magnus Miller at magnus.miller@davidsonchalmers.com

Disclaimer 
The matter in this publication is based on our current understanding of the law.  The information provides only an overview of the law in force at the date hereof and has been produced for general information purposes only. Professional advice should always be sought before taking any action in reliance of the information. Accordingly, Davidson Chalmers LLP does not take any responsibility for losses incurred by any person through acting or failing to act on the basis of anything contained in this publication.