Private Residential Tenancies - A New Regime

  • Insight

14 September 2017

From 1 December 2017 it will no longer be possible to grant a lease of a house using the familiar and common Short Assured Tenancy (and the less common Assured Tenancy).

They will be replaced by the “Private Residential Tenancy”, when the substance of the Private Housing (Tenancies) (Scotland) Act 2016 (“the 2016 Act”) is brought into force.

The Scottish Government has issued guidance for private sector landlords on this legislation, which is available here.

What is the Private Residential Tenancy?

The Private Residential Tenancy (“PRT”) applies to lets of residential property by private sector landlords. It will eventually become the only form of private residential tenancy – subject to certain exclusions, such as houses let with agricultural land, or ancillary to shops or licenced  premises, student lets and holiday lets. Here is a brief recap of its features.

Creating the tenancy

The Scottish Government will issue a model tenancy agreement containing the mandatory terms which must be included in a PRT. This is expected towards the end of October 2017.

Ending the tenancy

The ability of a landlord to bring a PRT to an end is more limited than for a Short Assured Tenancy.

It will no longer be possible to end a lease just because it has reached the end of its contractual term. Instead either both landlord and tenant should agree, or the tenant should give notice, or the landlord should give notice which meets one of the statutory grounds entitling a landlord to end a PRT. If relying on a statutory ground, the landlord must apply to the First-tier Tribunal for an eviction order if the tenant does not leave the property at the end of the notice period.

The statutory grounds leading to mandatory eviction are:

  1. The landlord intends to sell the property;
  2. The property is to be sold by a bank or other lender;
  3. The landlord intends to refurbish the property;
  4. The landlord intends to live in the property;
  5. The landlord intends to use the property for a non-residential purpose;
  6. The property is required for a religious purpose (for example, for use as a manse or a house for an imam, or rabbi);
  7. The tenancy was entered into to provide an employee with a home and the tenant is no longer, or never became, an employee;
  8. The tenant is not occupying the property as his or her home;
  9. The tenant is in rent arrears (but conditions apply); or,
  10. The tenant has a relevant criminal conviction (this is defined in the legislation and includes using the property for an immoral or illegal purpose).

The statutory grounds on which the First-tier Tribunal has discretion over whether to evict the tenant are:

  1. A family member of the landlord intends to live in the property;
  2. The tenancy was entered into on account of the tenant having an assessed need for community care and the tenant has since been assessed as no longer having that need;
  3. The tenant has failed to comply with an obligation under the tenancy (except the obligation to pay rent);
  4. The tenant has engaged in certain anti-social behaviour;
  5. The tenant associates in the property with a person who has a relevant conviction or who has engaged in relevant anti-social behaviour (both are defined);
  6. The landlord is not registered by the relevant local authority under the Antisocial Behaviour etc (Scotland) Act 2004;
  7. The property is not licensed as an HMO but should be; or,
  8. An overcrowding statutory notice has been served on the landlord.

Finally, a PRT does not end on the death of a sole tenant and may be succeeded to by persons including the deceased tenant’s spouse or partner, certain family members, and certain live-in carers.

Rent control

Rents may only be increased once in any twelve-month period. Rents will be varied using a statutory notice procedure which may lead to referrals to the rent officer or the Housing and Property Chamber of the First-tier Tribunal to set a new rent.

Further control on rising rent can be exercised by the local authority, who may seek to have all or part of its area designated as a rent pressure zone by application to the Scottish Ministers. Rent increases within a rent pressure zone are restricted according to a mathematical formula. A variable within the formula is fixed for each zone, depending on how pressured the zone is considered to be. So, maximum rent increases within a pressure zone will be lower the more acute the pressure is deemed to be. Designation lasts for up to five years.

There are early indications that the local authorities for both Edinburgh and Glasgow will seek rent pressure zone designation.

Sub-tenancies

Detailed provisions are made regarding lawful sub-tenants. Whilst there will be few who qualify as a lawful sub-tenants this is likely to apply in the situation where agricultural tenants have sub-let secondary cottages in a farm lease. Detailed discussion of this point is outwith the scope of this note but if it might affect you please contact us for further information.

How will existing tenancies be affected?

Once the Act is in force it will not be possible to create new Assured or Short Assured Tenancies. Existing tenancies will be phased out, for example a tenant inheriting an Assured or a Short Tenancy will acquire a PRT instead. Other than in the case of inherited tenancies, existing Assured, Short Assured, Protected and Regulated Tenancies will remain in place but if and when houses are re-let the lease will be in the new form. It will be possible for existing tenancies to be converted to be a PRT by mutual agreement of the landlord and tenant.

For more information on this topic, contact