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A Tenant’s right to sit….pretty?

 

Commentary by Marcus Whyte & Tracey Campbell-Hynd

Landlords and letting agents take heed, the private rental market in Scotland is about to be revolutionised; root and branch.

For good or for bad (or perhaps somewhere in the middle), the Private Housing (Tenancies) (Scotland) Act 2016 was passed by the Scottish Parliament in March 2016 and received Royal Assent on 22 April 2016.

Private Housing (Tenancies) (Scotland) Act 2016

In part, to allow existing tenancies to run their course, the new law will not come into force until late 2017/early 2018.

The main changes are as follows:

  1. All Assured Tenancies (including Short Assured Tenancies) will be abolished on the appointed day;
  2. Going forward, private tenancies will be statutory rather than contractual - called a ‘Private Rented Tenancies’ (PRT). NB - The rental of purpose built student accommodation and holiday lets will be governed under different arrangements;
  3. There will be no pre-tenancy notices (i.e. the AT5), in part due to the introduction of PRT’s as open ended tenancies and removal of the no-fault ground for repossession;
  4. The duration of a PRT could be for less than 6 months, but might carry on indefinitely;
  5. The new tenancy agreements will be in standard form and will be in plain English;
  6. Landlords will not be entitled to take the rental property back purely because the lease has reached its natural conclusion – e.g. 6 months after the tenant takes entry;
  7. Eviction will need to be based on a new ‘Notice To Leave’ and the relevant notice period in each case will be between 28 and 84 days, depending on the grounds relied on and the length of time the tenant has lived in the property;
  8. Tenants will be able to appeal the ‘Notice To Leave’ to the Private Rented Sector Housing Tribunal (the entity that is likely, in the future, to deal with most if not all housing disputes);
  9. If a landlord wrongly seeks to terminate the tenancy (e.g. based on bogus grounds) then the Tribunal can award a value up to 6 month of rent in damages to the tenant;
  10. Landlords will only be able to seek rent increases once a year and based on giving notice of at least 3 months, so as to allow tenants to budget for increases and to ensure tenants are not forced out because they cannot afford the new rent;
  11. Local authorities will be able to create ‘Rent Pressure Zones’ (RPZ), where they deem that rent increases are pricing people out of those areas.

The legislation is arguably socialist in nature and proponents argue that the new Act will help redress the balance between landlord and tenant, seeking to ensure that people have access to affordable long term housing and protect more people from homelessness. Laudable? More in line with the rest of Europe?.... Perhaps!

Critics argue that the pendulum has swung too far and that the legislation will allow non-paying tenants to sit pretty for even longer than the current legislation allows for. Critics go further, arguing that coupled with (a) the recent increases in LBTT (new form of “Stamp Duty”) on purchasing Buy To Let (BTL) properties, (b) the abolition of tax relief on mortgage interest and (c) in general increasingly strict an onerous controls and constraints (all of which, some say, is all part of an overarching vilification of landlords) will, in fact encourage landlords to sell their residential portfolios and get out the market. If this comes to fruition, this is legislation will be counter-productive and could mean a lack of rental of properties with the market being unable to provide enough homes for rent!

Some of the specific criticism of the new law is that it may make landlords wary of committing to lease flats to before existing tenants have vacated (theoretically the new law allows existing tenants to sit indefinitely). There is also no ground allowing a landlord to terminate a lease to rent the property to a new employee – particularly pertinent in rural areas.

The free marketeers, who believe that the industry is already over-regulated, oppose the reform. The argument is that this new legislation, coupled with the aforementioned changes to taxation and ‘Stamp Duty’, is simply making it too difficult to make a financial return in the private rental market so that otherwise “good” landlords may just think it’s too much hassle, for not enough reward.

As with any new legislation, only time will tell as to how the new law will work in practice and whether landlords’ fears will bear out.

One comment we would make in response to the government’s concerns over perceived forced homelessness is that the landlords we act for do not want to constantly chop and change tenants. That makes no commercial sense. Our perception is that the “concerns” are, at best, based on a skewed perception of reality.

By contrast, in general, our clients seek to set rents at an affordable level, in the hope that tenants will view rental properties as long term homes and thereby also providing a reliable income. This is neither a capitalist nor a socialist way of thinking; it's just plain common sense.

 

TCH Law regularly deal with all manner of landlord and tenant disputes. These can be taking a case through the whole remit of serving termination Notices on a Tenant, arranging for a formal checkout of the tenant with the landlord present, to raising eviction proceedings in court.

We also pursue for rent arrears and assist in resolving disputes where there are other breaches of the tenancy agreement.

We are acutely aware of the commercialities on the part of the landlord as well as having vast experience in dealing with debtors and debtor tenants. We use this experience to resolve disputes as quickly, pragmatically and favourably to our clients as possible!

If you have a tenancy dispute we would be delighted to help. Contact us on 01698 312080 or email us at mail@tchlaw.co.uk and one of our specialist dispute resolution team will contact you straight back.