April 2016 – Private Residential Tenancies – Part 1

Author: Mitchells Roberton
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The Private Housing (Tenancies)(Scotland) Act 2016 (“the 2016 Act”) received Royal Assent this month. Not much of it is yet in force. But it makes sweeping changes to the law concerning private residential tenancies in Scotland. So this Note outlines some of the key changes that are in the legislative pipeline and the Bullet Point Update 5 for May will outline some others (under the following headings: termination by tenant – or by landlord; landlord application for eviction orders from First-tier Tribunal; death of the tenant; and miscellaneous points).

The “old regime”  – “assured” and “short assured” tenancies

  • Before the 2016 Act the vast majority of private sector residential tenancies were “assured” tenancies under the Housing (Scotland) Act 1988. An important sub-group of such tenancies were “short assured” tenancies where – as the word “short” suggests – a landlord could get their property back without having to have any reason for doing so other than that they wanted it back. The assured/short assured tenancy regime is referred to below as “the old regime”.

The “new regime” –  the 2016 Act and “private residential tenancies”

  • The 2016 Act sweeps away the scope for granting any new assured/short assured tenancies and replaces them with the “private residential tenancy” as defined in the 2016 Act. But, as mentioned above, the 2016 Act is not yet in force and probably won’t be so until next year. Meantime “assured” and “short assured” tenancies under the old regime can still be granted. It will only be after the relevant parts of the 2016 Act come into force that no new assured/short assured tenancies can be granted.
  • And, generally speaking, those tenancies that existed as assured/short assured tenancies before the date the 2016 Act comes into force will continue as such.

One particular striking difference

  • As mentioned above, under the old regime a landlord of a property that was let under a short assured tenancy could, in principle, get their property back without having to have any reason for doing so  – other than that they wanted it back.
  • One of the most striking differences between the old regime and the new regime is that a landlord will only be able to get their property back if one of the grounds for doing so specified in the 2016 Act applies. And, in relation to certain of those grounds, the landlord getting their property back will depend on whether an official Tribunal agrees that they are entitled to do so.

VARIOUS KEY ASPECTS OF THE NEW REGIME

This Note and its companion note for May are not intended to be comprehensive but pick out from the 2016 Act those elements that may be of particular interest.

Definition of PRT

  1. What counts as a “private residential tenancy” (“PRT”) is defined in the Act as being a tenancy where property is (a) let to an individual as a separate dwelling, (b) which they occupy as their home and (c) which is not a type of tenancy expressly excluded in the Act from being a PRT.
  1. Some particular points may be made about the definition of a PRT:

(a)          a tenancy is still deemed to be let to an individual even though it is jointly let to one or more individuals and another person (e.g. a company);

(b)          once a tenancy has become a PRT it does not lose that status simply because the tenant is no longer occupying the property; and

(c)           the types of tenancy expressly excluded from being PRTs are detailed in the Act the main exclusions being indicated by their headings as follows: shop; licensed premises; agricultural land; student let; holiday let; resident landlord; and tenancies under previous legislation – such as assured and short assured tenancies under the old regime.

Termination date & continuing rent not essential to being a PRT

  1. In principle, in order for there to be a valid tenancy there must be a rent payable and a termination date specifying when it ends – sometimes called an “ish” date. The 2016 Act controverts these requirements. It provides: “if an agreement would give rise to a tenancy but for the fact that it does not specify an “ish” date, it is to be regarded as giving rise to a tenancy”. And, if the tenancy qualifies as a PRT to begin with, it does not cease to be a PRT simply because rent stops being payable.

Statutory terms for PRTs

  1. The Act gives Scottish Ministers power to prescribe “statutory terms” which will apply to all PRTs. The relevant regulations have not been published yet but some terms are already specified in the Act itself under the headings: rent receipts; rent increases; notification about other residents; subletting etc; and access for repairs etc. In particular:

(i)            if anyone (who is not a joint tenant) aged 16 or over occupies the property as their main home the tenant must inform the landlord; and

(ii)           the tenant may not sub-let the property (or assign the tenant’s interest) without the landlord’s agreement in writing.

Writing not essential for creation of PRTs

  1. Most PRTs will be in writing. But a PRT may be created orally: writing is not required to constitute a PRT. (In technical terms, a PRT is not a “real right in land” for the purposes of section 1 Requirements of Writing (Scotland) Act 1995.) But the landlord has a duty to provide the tenant with a document which sets out all the terms of the tenancy and will generally be required to provide this when the tenancy commences. A landlord may not charge the tenant for providing this document. There are sanctions for failing in such duties.

Rent increases

  1. Rent increases may only be made in terms of the Act and, in particular, the rent may not be increased more than once in any 12 month period. In relation to a proposed rent increase the tenant may refer the question to a rent officer to determine the “open market rent”. A rent fixed by a rent officer may be appealed by the landlord or tenant to the First-tier Tribunal whose decision is final.

Rent Pressure Zones

  1. A particular innovation in the Act is the introduction of “Rent Pressure Zones”. In broad terms, this measure is designed to keep a lid on rents in an area if it is felt that they are increasing such as to cause undue hardship for tenants or having a detrimental effect on a local authority’s housing system in general. A local authority may apply to the Scottish Ministers to have an area designated as a “rent pressure zone” whereby increases in that area will be restricted in accordance with a formula prescribed in the Act.

No termination by agreement

  1. Importantly, the Act provides that a PRT “may not be brought to an end by the landlord, the tenant, nor by any agreement between them, except in accordance with [Part 5]” of the Act. Part 5 of the Act (and various other points) are outlined in the Bullet Point Update 5 for May 2016.

Note: This material is for information purposes only and does not constitute any form of advice or recommendation by us. You should not rely upon it in making any decisions or taking or refraining from taking any action. If you would like us to advise you on any of the matters covered in this material, please contact Euan David: euan@mitchells-roberton.co.uk

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