The ‘no fault’ ground for taking back possession of a rental property will no longer be legal in Scotland from December 1.
A new model tenancy agreement has been issued by the Scottish government and will have to be used by agents.
The new Private Rental Tenancy (PRT) replaces Assured or Short Assured agreements, known in Scotland as SATs. It will not affect existing agreements, but will have to be used for all new tenancies.
It gives 18 statutory grounds for a landlord to end a tenancy which include the landlord wanting to sell, occupy the property themselves, or refurbish it.
Other grounds include where a tenant has owed rent for three consecutive months, has shown anti-social behaviour or abandoned the property. However, there is no ground equivalent to Section 21, where landlords do not have to give a reason for wanting their property back.
Another change is the notice period.
The PRT does not allow for tenants and landlords to agree a minimum period for occupancy, and the tenancy continues automatically.
If tenants want to leave they must give the landlord 28 days notice in writing.
Adrian Sangster, of Aberdeen agent Aberdein Considine, said: “While removal of the no fault ground is a major change, the new 18 specified grounds to recover possession do cover the majority of reasons for wishing to do so.
“The biggest impact is the removal of the minimum term which means in theory a tenant could serve 28 days notice a day after moving in.
“In practice this is unlikely to occur as the vast majority of tenants are looking for a home, and if the landlord keeps up their side of the bargain by providing a safe and comfortable environment, tenants will stay.
“In our own experience the average tenancy lasts in the region of 18 months.
“Where I’m less certain however is what the attitude of lenders will be where the property is mortgaged.
“Currently as long as the rent covers the mortgage and a six month SAT is in place, the majority will be reasonable to deal with.
“However, where that six-month term is no longer available, will they become less likely to grant approval to let? I am not sure what discussions the Scottish Government have had with lenders regarding this issue.”
ARLA is holding a series of workshops in Scotland to explain the changes, starting next week.
There has already been some pressure in England for ASTs to be replaced and the ‘no fault’ ground to be abolished. It has also been noticeable that trends in Scotland – bans on letting agent fees and compulsory registration – tend to be subsequently copied in England.
Comments (9)
The Model PRT Agreement was published circa Fri 20 Oct along with Guidance Notes and is much better presented that the draft seen at Consultation stage. Implementation date is confirmed as 01 Dec 2017. Whilst we will officially be in default with our existing Mortgage Terms as no minimum 6 months, the much more urgent issue is Insurance, as many brokers and companies are not even aware of the proposed introduction of the PRT. So will be some interesting conversations as insurance policies come up for renewal.
However, all existing SAT are allowed to continue until the tenant leaves or a new Agreement drawn up.
Specific challenges for those landlords with student lets who seek to sign up new tenants in the Spring with existing students in occupation, for which being a member of Scottish Association of Landlords (SAL) will bring clarity.
Although ‘buy to let’ landlords probably won’t worry too much about the 84 days notice period required to end a tenancy after the tenant has been in the property six months, a lot of potential landlords who are having to consider letting because their circumstances are taking them away from the area for a period of time will probably decide against it if there is a possibility that they can’t get back into their properties for seven months! So fewer properties available in an already declining market – cause and effect. I do not understand why the PRS is hammered by Governments in the UK when Local Authority housing is virtually non-existent (the Borough of Greenwich alone has 16,000 people on its housing waiting list).
I have been advising clients not to take benefits clients in Greenwich for a number of years since having had to deal with a client’s property in the Borough of Greenwich and the experience we suffered.
The might be concerned if they have a bad tenant who does not pay his rent or pay it regularly!
Let’s see what the lenders say…too much noise is being made in the media (tabloids) that has managed to make tenancies and landlords a thing of hate and Ms Sturgeon loves to jump on such things. However as we all know, there is such a thing as the rule of unintended consequences…..
Shame the rest of the UK did not have chance in the Scottish referendum to decided if they wanted to get rid of Scotland.
“unintended consequences…..” – higher rents if supply drops as a result. It certainly will not increase rental stock, for sure.
Absolutely Peter….my point made with a hint of sarcasm.
Will be interesting to see if landlords start selling off their stock as government screw them.