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Urgent Update - New Lettings Legislation - Scotland

The purpose of this article is to highlight the major changes in Scottish lettings legislation that will come into force from 1 December 2017 and some of its impacts.

The purpose of this article is to highlight the major changes in Scottish lettings legislation that will come into force from 1 December 2017 and some of its impacts.

I’m sure that some of you are well aware of this legislation and its likely ramifications for landlords and letting agents.

However, because this is a complex area and some of these changes are wide-ranging, complex and potentially very significant I felt I must outline the key points to you all.

I have included links to the Scottish Government website below which provide more detailed information on the act in and specifically the new Private Residential Tenancy. Additionally there are numerous other online sources of information available including the Scottish Association of Landlords.

https://beta.gov.scot/publications/private-residential-tenancies-landlords-guide/

http://www.gov.scot/Resource/0052/00526246.pdf

I must emphasise that my opinions on this legislation, whether it is a proportionate response to the issues etc are irrelevant, the fact is it is in place and will be in effect shortly.

For me both as an agent and a landlord, the new legislation raises a number of issues, hopefully most of which will prove to be ‘manageable’ once we are more familiar with the legislation and the processes behind it

However there are several, which I feel personally, might prove very troublesome. The most significant of which I feel are:

  1. The loss of the ‘No Fault Ground’.
  2. Grounds for ending a tenancy. 
  3. No minimum tenancy. 

I will explain briefly what each of these means and what I perceive the possible consequences to be: 

  • Effectively point 1 & 2 are the same. Currently if a landlord wants a tenant to vacate all they have to do is serve the relevant notice, on the correct date, in the correct manner and two clear months later the tenant should vacate. No reason has to be given and in reality it can’t be effectively challenged in court, though it can be delayed.
    • Going forward there is no such Ground. Instead the act provides for a variety of grounds (18 of them) that can be used e.g. the landlord is selling the property; the landlord wants to move back in, rent arrears etc.
    • The issue from a practical standpoint is that the “No Fault Ground” was routinely used to terminate the tenancies of constant late payers, anti-social tenants etc as it was the easiest way deal with the issue without having to go to court.
    • Under the new act the landlord/agent will need to provide proof of, for example, anti-social behaviour. If the tenant refused to vacate after notice was served then the issue would go to the Housing & Property Chamber for a decision. In my experience getting sufficient evidence to convince a Sherriff of anti-social behaviour is extremely difficult, I see no reason why the HPC will be any different. The people who do the complaining mostly will not attend a court/tribunal come to court or complete statements, therefore you have no evidence. Getting support from the relevant parts of the local authority is problematic at best.
    • Similarly for the other ‘Grounds’ for giving notice, if the landlord says they wish to sell the property then there must be some ‘evidence’ If the tenant wont vacate after notice is served then it goes to the HPC. In addition not all the ‘Grounds’ for eviction are mandatory, some are discretionary e.g. they depend on the decision of the HPC and how they interpret the situation. A full breakdown of the grounds can be found using the links provided earlier in the document.
    • What we don’t know at this point is how often serving notice under one of the more routine ‘Grounds’ will necessitate the landlord or agent attending the First Tier Tribunal, only time will tell.
  • Point 3 is another potential problem area. Currently landlord and tenant sign a Short Assured Tenancy for a minimum period of 6 months and neither party can get out of that contract unless both parties agree or there is a breach.
    • Under the new legislation there is no minimum term for a tenancy. This means in practical terms that the tenant can sign the tenancy and then the very next day give 28 days’ notice that they are leaving with no financial penalty apart from the 28 days rent.
    • I know that some will argue that if the property is in good condition and the tenant wants a home then why would they, however I think that is naïve at best. 
    • I have had plenty of tenants who fell out with their partner/flat mate the day or week after they moved in, decided that the flat wasn’t as big as they remembered when they viewed it or just found a better flat elsewhere and wanted to end the tenancy. These are just a few of the possible scenarios.

There are a variety of other potential issues; one that has been raised with me by a number of people is that local authorities can put in place Rent Pressure Zones. In these areas the ability to increase rents is restricted.

However, I personally think this is a non-issue. Whilst it can be done it does not mean you can’t put the rent up. The amount is restricted to 1% above the Consumer Price Index, once a year. Additionally there is nothing that says you can’t put the rent up between tenancies. 

I would encourage anyone who is a private landlord in Scotland to read the information that is available online or contact Belvoir Lettings Dundee. 

To reiterate the key issues for me is it is likely to be harder to get rid of bad tenants and secondly that there is likely to be a higher ‘turnover’ of tenants if they chose to leave at the slightest hiccup in their personal lives or the tenancy. 

So what can we do on a day-to-day basis about the two main issues? 

Well, regarding the Grounds and the HPC, not too much at this point. Partly we will need to see how the legislation actually works in practice. 

Hopefully, most tenants will accept the relevant notice to quit without resorting to the HPC, certainly if confronted with the relevant ‘evidence’ to support the Ground so it is clear to them that they would lose even if they went to the HPC. 

I don’t doubt there will be those, particularly ‘anti-social’ tenants who will cause issues around this but we have very few of those due to our exceptionally strong referencing process which is an area we are also reviewing to see if it needs to be even more robust.

I also feel that it will be up to us as agents/landlords to hold the local anti-social behaviour teams, councillors, MSP’s and police to account if they don’t deal with anti-social tenants in properties other than ours where its affecting our tenants. I find that local authorities are particularly bad at dealing with ‘poor’ council tenants for a variety of reasons; This can no longer be accepted if it affects your tenants/properties.

The 28 days notice for tenants is a bigger issue for me. I mentioned previously I think that we are going to see an increased turnover in tenants as a result of this and indeed an increase in tenants who only want a ‘short’ let e.g. a month or two.

If you’re a landlord/agent I think you need to make sure that your properties are in the best possible condition and all repairs are up to date before the tenant moves in (I know you would anyway). I feel this initial period will be the most dangerous. Going forward, excellent communication and dealing with repairs in a very timely manner to ensure a good relationship with the tenant is key.

I also think that landlords with older, dare I say dated, properties where they have been delaying upgrades for some years really need to consider their position as tenants are quite likely to become more ‘choosey’ in the properties they not only apply for but then stay in. Remember there is now nothing to prevent a tenant moving into you’re property and then next day or next month when one they really like comes on the market just giving you 28 days notice, we will have no control over that.

We will also, I fear, have to become more ‘social workers’ than we already are in so far as trying to deal with tenants relationships, issues etc in order to facilitate a ‘smooth’ tenancy.

One general point you should also be aware of is that the new tenancy/legislation only applies to tenancies put in place from the 1st December 2017. Any existing Short Assured Tenancies carry on exactly as they are, with the same caveats and the ‘No Fault Ground’ etc in place.

This only changes when a new tenancy is put in place from that date, so rest assured your current tenancies are fine.

Finally, I would point out that no one knows exactly how this legislation will work in the ‘real world’. Hopefully once it has bedded in and we all have some experience with it then it will prove to be not nearly as much of an issue as I fear.

It is my job to highlight matters like this to my landlords (and the wider lettings community). 

If anyone wishes to raise any specific points, has any queries (one of my landlords or not) then please don’t hesitate to email me at nick.horan@belvoirlettings.com and I will endeavour to respond. 

I must emphasise that this is as new to me as to you and exactly how it will function on a day-to-day basis has yet to be demonstrated. However, we at Belvoir Lettings Dundee will, as always, be as prepared and proactive as possible to minimise the impact on our landlords.

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