The Scottish Government is currently carrying out a second public consultation on replacing the Short Assured Tenancy with a new modern tenancy regime - the Scottish Private Rented Tenancy.
There is a PDF version of the Second Consultation and a word document available online for respondents. There is also an 'at a glance' table which summarises the proposals, apart from those on rent which are illustrated below.
- Replacement of the so called 'no fault ground' by more extensive and clearly defined grounds for eviction. The new grounds are intended to cover all reasonable circumstances where a landlord may wish to recover possession, from non-payment of rent to selling the property, moving back in, or even for renovating the property.
- Introduction of a clearer prescribed lease document, with the ability to add clauses which are bespoke to the property. Simplify the paperwork, remove the need for an AT5 document and reduce the documentation required to serve notice on tenants.
- Initial rent levels would continue to be set at open market rent by agreement between landlord and tenant.
- Landlords will be able to review rent annually and give 12 weeks notice of any increase to tenants.
- Tenants can already apply to have their rent assessed by the Private Rented Housing Panel (PRHP). Under the new tenancy regime tenants would be able to apply to a new First Tier Tribunal if they believe the landlord has increased their rent unreasonably; the tribunal will consider this by assessing the local market.
New Grounds for Reposession
The proposed new repossession grounds, some of which will be mandatory and some discretionary, are as follows. Mandatory means that if it reaches a tribunal the tribunal must award in the landlords favour as long as they followed due process.
- The landlord is selling the home - mandatory
- The mortgage lender is selling the home - mandatory
- The landlord or a family member of the landlord wants to move into the property - mandatory
- Refurbishment - mandatory
- Change of business use - mandatory
- The tenant failed to pay the full rent for three consecutive months - mandatory or discretionary depending on circumstances
- Antisocial behaviour - mandatory where conviction in place, discretionary if not
- The tenant has otherwise breached their tenancy agreement - mandatory or discretionary depending on circumstances
- Abandonment - mandatory
- The tenant is no longer employed by the landlord - mandatory
- The property is required to house a full-time religious worker - mandatory
As under the Housing (Scotland) Act 2014, all civil PRS cases will be considered by the First Tier Tribunal rather than a Sheriff. This is intended to ensure disputed cases are heard and resolved more quickly.
Statistics should always be challenged. It has been suggested that no changes are required in the sector because 89% of tenants surveyed said they were satisfied. However, with over 300,000 households living in the sector, that could mean as many as 33,000 individuals, couples or families are living in unsatisfactory conditions.
Some of the campaigners for stricter regulation have exaggerated the problems in the Private Rented Sector (PRS) and the buy to let industry, and some landlords may feel aggrieved at some of the comments made. The majority of landlords do try to be fair to their tenants and provide good homes for them, but there are issues that should be addressed.
On the other hand, there is some misrepresentation of what the Scottish Government is proposing. There are no plans to control rent, only to control the frequency of rent rises during a tenancy and allow tenants to apply to a tribunal if they believe the rise is unfairly high when compared to the local market - a right which ALREADY exists. Families are more likely to rely on the PRS for their home in the future, and we believe a greater degree of certainty on rent and tenure is essential.
The Scottish Government proposals seem a fairly balanced approach. The removal of the automatic right of landlords to end a tenancy was resisted by most bodies representing landlords and by the RICS in their response to the original consultation which Jonathan Gordon drafted. It has now been set in stone, albeit subject to parliamentary srutiny as part of the propesed bill. The changes can be presented in a way which makes it sound draconian. However, if the proposals are read in detail, it is clear that they are asking landlord groups and related bodies to help them ensure that all reasonable grounds for eviction are mandatory in the new legislation. In fact, following the first consultation, they have followed through on this by adding new grounds recommended by the Royal Institution of Chartered Surveyors (RICS) and others and have again asked whether respondents believe this list is sufficient.
We would urge all landlords to carefully consider the proposals and respond thoughtfully to the consultation before 10 May 2015 to ensure that they get the detail right.
Clan Gordon is broadly supportive of the Scottish Government plans. The current Short Assured Tenancy regime is out dated, overly complex and has multiple layers of legislation and paperwork which few landlords, tenants or even letting agents understand.
Can key new grounds for eviction such as when selling, or moving back in, be clear enough to remain mandatory when they reach the bill stage? If not, then the removal of the 'no fault' ground will be problematic, even for good landlords. We understand that the documents required to end the tenancy using one of these new grounds will be much simpler to use and the process for ending a tenancy will therefore be more straightforward for both tenant and landlord to understand.
The proposal to limit rent increases to once a year, and ensure reasonable notice is given, seems fair but we have some concerns which we hope will be resolved by evidence to the second consultation and through the drafting process for the legislation.
How will the tenant's right to apply for a rent review be implemented? As it stands it seems very similar to existing tenant rights but any changes coming out of the second consultation will be monitored.
Our primary area of concern is the proposal to allow hotspots to be declared by local councils. We don't think this will be workable in practice. We strongly hold the view that an investor's primary requirement is certainty. Allowing councils to declare hotspots that restrict rent rises, despite plans to require Scottish Government approval of each application, may be a step too far.
In September 2013 the Scottish Government set up the Private Rented Sector (PRS) Tenancy Review Group, which included Jonathan Gordon representing the RICS, to analyse the current assured and short assured tenancy regime and report back to the Scottish Government.
The Review Group's purpose was to examine the suitability and effectiveness of the current PRS system and consider whether changes in the law were needed.
The Review Group produced a report for Ministers on 9 May 2014. It had one main recommendation: 'that the current tenancy for the Private Rented Sector, the Short Assured Tenancy and the Assured Tenancy, be replaced by a new private tenancy that covers all future PRS lets'. Ministers accepted this recommendation.
To be clear, the Review Group did not propose the removal of the no fault ground, nor any changes to how rents are reviewed.
The Scottish Government produced proposals for a new tenancy regime and held a public consultation between October and December 2014.
The findings were used to develop a Second Consultation on a New Tenancy for the Private Sector.
As already mentioned, there is a PDF version of the Second Consultation and a word document available online for respondents. There is also an 'at a glance' table available to illustrate the proposals.
You can find the RICS response below: