Private Residential Tenancies: A Guide for Landlords
Over the last two decades there has been an exponential rise in the number of properties in the Private Rented Sector and in December 2017 there was a radical change in the law regulating tenancies in Scotland. The change was to address perceived issues under the old system and concern over the growing number of households with children who may be more susceptible to the residual effects of upheaval that a family forced to leave their home face. The aim was to give tenants security of tenure, in other words, the right to remain in the property indefinitely subject to complying with the terms of their agreement with their Landlord. There was also a concern that the sector is made up of an increasing number of, what might be referred to as, accidental landlords or landlords with only a small number of properties.
Most tenancies under the old regime were Short Assured Tenancies. If set up correctly, a Short Assured Tenancy allows a landlord to recover possession by giving two months’ notice. A tenancy can also be ended on a shorter period of notice for other reasons including rent arrears, with mandatory recovery in the event of three months’ arrears. The mechanism to end a tenancy has several potential pitfalls and actions to recover possession were historically dealt with in the Sheriff Court.
From December 2017 all new tenancies in the Private Sector are Private Residential Tenancies or PRT’s for short. Pre-existing tenancies continue under the old scheme. PRT’s give tenants security of tenure and have no fixed duration and the right of automatic recovery is no longer available. However, before you panic, the grounds for recovery are more flexible. For example, landlords can now recover possession if they intend to sell the property. The right to recover possession for rent arrears is also more favourable from a landlord’s perspective with mandatory recovery if the rent account is in arrears for three consecutive months with no less than one month due at the end of that period. On balance the new system is fair but is not without its problems.
December 2017 also saw the introduction of the First-tier Tribunal, Housing & Property Chamber and applications to recover possession are now subject to intense scrutiny and many are refused due to issues with either the creation of the tenancy or more commonly the procedures adopted to bring it to an end. We can offer specialist advice and I strongly recommend that you seek our guidance if you wish to bring a Short Assured Tenancy to an end. We can serve the necessary forms at a relatively modest cost to ensure your application begins with a solid platform.
For an amateur landlord, the task of creating a PRT is very straight forward. The Scottish Government have developed an excellent website with a tool to generate a Model Tenancy Agreement together with all the relevant guidance forms attached. All you need do is key in some required information. Landlords are not obliged to use the Model Tenancy Agreement, but a bespoke agreement must contain core mandatory clauses to give tenants essential rights. However, the one size fits all, model agreement is functional, and we commend its use.
The mechanism to end a tenancy has also been streamlined with the introduction of a “Notice to Leave.” Forms are available to download but we recommend caution. Some grounds carry a 28-day notice period while others require 84 days’ notice. However, in order to calculate the effective date of the notice the rules specify that you assume two days for service and allow an extra day after the expiry of the notice period. But a word of warning, if you are a day or so short, the Notice to Leave is invalid. Arguably, the same applies even if you give your tenant too much notice. As stated above, applications to the Housing & Property Chamber are now scrutinised on submission and are often rejected if the Notice to Leave is defective in any way. It is for that reason that specialist advice can and often does prove invaluable and for relatively minor expense our firm can offer you peace of mind that documents will be protected from challenge at a later stage when the cost of remedial action may prove an expensive undertaking.
The new regime is most definitely for the benefit of tenants and landlords are justified in expressing concern. It is often remarked that the new system takes longer to recover possession and that is true in many cases, however, in our experience the most significant change is the level scrutiny that applications receive and therefore it is vitally important to seek expert legal advice to begin the steps necessary to end a tenancy. Tenants often leave voluntarily when they receive the required Notice, however, on the occasions when an order from the Tribunal is necessary it is vitally important that you start from a solid foundation.
If you require guidance on any landlord/tenant issue, please contact me by telephone or email. It’s never to early to consult your Solicitor!
Contact the author, Ken Caldwell with any queries at firstname.lastname@example.org