The new private residential tenancy

Anew type of tenancy for private rented property in Scotland comes into effect on 1st December 2017. It’s called a Private Residential Tenancy and it replaces the current Short Assured Tenancy. The changes contained in this legislation are extensive and it’s important to look at how these affect both Landlords and Tenants.

Here are the headlines:

• Landlords must provide written terms containing mandatory clauses.
• Tenancies will be open-ended and continue until the tenant wants to leave, or the landlord has a prescribed ground for eviction.
• The ‘no fault’ ground of termination will be removed.
• There is no longer any need for a pre-tenancy notice.
• Only one notice to leave will be needed to end the tenancy.
• The rent can be reviewed only once a year.
• If a tenant has lived in a property for more than 6 months, unless the tenant has done something wrong, the minimum period of notice the landlord has to give is 84 days.
• The minimum tenancy period of 6 months is no longer necessary.
• Tenants can apply to the First Tier Tribunal if they think they were misled into moving out and seek a “wrongful termination order”.

From 1st December, the Private Residential Tenancy becomes the required tenancy agreement between private residential landlords and tenants.

The basics

The agreement must be in writing. The landlord must give a new tenant the written terms and conditions of the tenancy by the end of the day on which the tenancy has started. The agreement can be “signed” by typing the landlord’s and tenant’s names onto it and exchanging it by email. Of course, the agreement can also be signed by both parties.

Reviewing the rent

The Private Residential Tenancy legislation allows the landlord to review the rent only once a year. There is a specific form to be used to serve notice of the proposed increase in rent on the tenant. The aim of the legislation is to strike a balance between the landlord’s and tenant’s needs. From the landlord’s perspective, it allows a review of rent to a market level. From a tenants’ perspective, the aim is to protect the tenant from unjustified increases in rent to force them out. If a tenant feels the rent increase can’t be justified, an application can be made to a Rent Officer to determine the correct level of rent for the property.

Bringing the tenancy to an end

The current short assured tenancy has come under fire from tenant groups for not providing security of tenure for tenants. Under the current legislation, if the correct notice procedure has been followed, landlords can recover possession of their property when the tenancy ends on the basis of what is known as the “no fault” ground for repossession.  There are no ‘no fault’ grounds for recovery of possession of the property under the new legislation. This means that the tenancy will continue indefinitely unless the tenant serves notice that they want to leave. If the tenant serves notice of termination, that notice should specify the date the tenancy comes to an end and that date must be at least 28 days from the date of the notice and, in where there is more than one tenant, all tenants should sign. If the landlord wishes to bring a tenancy to an end, a Notice to Leave must be served on the tenant. In addition, landlords will have to satisfy one of the 18 grounds, 8 of which are mandatory – that means the Tribunal must grant termination, 8 are discretionary and two are a combination of the two. As well as establishing the grounds to bring the tenancy to an end, the landlord must also give the correct Notice. The minimum period of notice is 28 days (4 weeks) but the tenant may be entitled to 84 days (12 weeks). If the landlord satisfies both the grounds and notice criteria, the tenancy can be brought to an end.

The eight mandatory grounds are:

• The landlord intends to sell the property for market value within three months of the tenant leaving the property.
• The property is to be sold by a lender who holds a mortgage over the property.
• The landlord intends to refurbish the property involving disruptive works to, or in relation to, the property.
• The landlord intends to live in the property as his or her only or main home.
• The landlord intends to use the property for a purpose other than giving a person a home.
• The property is owned by the landlord for the purpose of being occupied by someone who works for a religious purpose. This means that the person carries out religious work from the property AND the property has actually been used for this purpose at some time before the tenant began living there.
• The tenant is not living at the property as his or her only or main home or has left the property (other than for a temporary period);
• After the tenancy began, the tenant is found guilty in a court either (i) of using, or allowing the use of, the property for an immoral or illegal purpose or (ii) of a crime for which the tenant could be sent to prison. This crime needs to have taken place in, or in the neighbourhood of, the property. For this ground, the landlord would usually have to apply for the eviction order within 12 months after the date that the tenant was found guilty.

The eight discretionary grounds are:

• A member of the landlord’s family intends to live in the property as his or her only or main home.
• The tenancy was entered into because the tenant had a need for community care (as decided by the local council) and the local council has decided that the tenant no longer has that need.
• The tenant has breached any of the duties of the tenant under the tenancy – but this does not apply to a failure by the tenant to pay rent as there is a separate ground for this.
• The tenant has acted in an antisocial manner to another person and the Tribunal is satisfied that it is reasonable to issue an eviction order. For this ground, the landlord would be expected to apply for the eviction order within 12 months of the antisocial behaviour taking place.
• The tenant is meeting or socialising in the property with a person who has (i) been found guilty of a crime or (ii) been involved in antisocial behaviour. This applies if, in either case, the Tribunal would have been able to issue an eviction order if it was the tenant who had been found guilty of that crime or the tenant who had been involved in that antisocial behaviour. For this ground, the landlord would be expected to apply for the eviction order within 12 months of the antisocial behaviour taking place.
• Landlord registration has been refused or cancelled by a local council – as, in that case, the law would not permit the landlord to let out the property that they own.
• A House in Multiple Occupation (HMO) licence for the property has been cancelled by the local council, as the law would not permit the landlord to let out the property to three or more tenants who are not members of the same family. There may be times where a tenancy can continue for a short time without there being an HMO licence.
• The local council has served a notice on the landlord about the property being overcrowded.

 The two mandatory or discretionary grounds

• The tenant is in arrears of rent. The circumstances of the arrears of rent play a significant part as to whether the Tribunal must grant termination or whether it’s in their discretion to refuse the termination.
• The tenancy was granted to the tenant because he or she was employed by the landlord (or was expected to be employed) and the tenant is no longer an employee or never became an employee. The discretionary element of this ground could be exercised if the application for eviction is made more than 12 months after the date the tenant stopped being – or failed to become – an employee.

Notice of Termination

It will no longer be possible to allow tenancies to roll from month to month, as a month or two months’ notice to end a tenancy may not be enough. The notice to be given will depend on how long the tenancy has lasted and whether you are the landlord or the tenant. If the tenant wishes to terminate the agreement, there must be at least 28 days’ notice to the landlord. If a landlord wishes to end a tenancy the dual procedure of notice to quit and notice of proceedings has been scrapped. Only one notice to leave will be needed. That notice may only be served on the basis of at least one of the grounds for repossession. The following notice periods will apply to landlords:

• Tenancy lasted for six months or less – 28 days’ (4 weeks) notice
• Tenancy lasted for more than six months – 84 days’ (12 weeks) notice
• Regardless of the length of the tenancy, 28 days’ notice where the tenant: o failed to pay three consecutive months’ rent in full; or behaved antisocially or in breach of the tenancy agreement; or committed a relevant criminal offence.

Repossession and eviction

If the landlord wishes to enforce the removal of a tenant, an application has to be made to the First Tier Tribunal requesting an eviction order. This request will be based on one of the grounds for termination specified above. For mandatory grounds, if established, the Tribunal must grant the eviction order. If the grounds are discretionary, as the name suggests, it is within the Tribunal’s gift to grant or refuse the eviction order. The two combined grounds will be applied depending on the nature of the breach.

The Scottish Government has published extensive notes on Private Residential Tenancies and you can read that here. It has also published a Model Private Residential Tenancy Agreement which is likely to be widely adopted. The Model Agreement contains all of the mandatory clauses required in this new type of tenancy agreement. You can view this here.

If you would like to discuss the new Private Residential Tenancy or require any more information please call us on 0141 227 2200 or use the contact button below.

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