The Private Housing (Tenancies) (Scotland) Bill was introduced in the Scottish Parliament on 7 October 2015. The Bill introduces a new tenancy (called the "private residential tenancy") for all future private sector tenancy lets. The new type of tenancy will supersede the assured tenancy (including the short assured tenancy (or "SAT")) introduced under the Housing (Scotland) Act 1988.
Potential impact of the Bill on the PBSA sector
We commented on rent control measures included in the Bill in an article published on our website on 9 October entitled "Rent control measures in the Private Housing Tenancies (Scotland) Bill".
In the weeks following the Bill's introduction, however, much of the attention of the property industry has focussed, not on rent control measures, but on the fact that the Bill removes the "no fault" ground for repossession in residential tenancies currently available in SATs. The debate has centred on the impact this could have on the provision of rented accommodation for students, and in particular the purpose-built student accommodation ("PBSA") sector.
Under the current Scottish system, a PBSA provider can be confident of recovering possession at the end of a SAT as long as the prescribed forms of statutory notice are used. It is common in Scotland for PBSA providers to enter into 10 month SATs of student accommodation (covering September to the end of the summer term in June), following which the property is vacated and available for summer lettings. There is a particular advantage to having student accommodation available during the summer in Edinburgh, where short term "festival lettings" provide accommodation for a significant proportion of the huge influx of visitors to the city in August. There is a growing realisation that removal of the no-fault ground of repossession will mean lack of certainty over whether rooms will be vacated by students at the end of summer term. This would mean that PBSA providers would not be able to advertise rooms (safe in the knowledge that the property would be vacant at the end of the term of the lease) sufficiently far in advance to maximise occupancy levels at the start of an academic year. Lack of certainty affects investor confidence, and there are concerns that the Bill (as currently drafted) could inhibit growth of the PBSA sector in Scotland.
It is worth mentioning that the Bill states that tenancies of student accommodation by universities (and other specified categories of educational establishment) "cannot be private residential tenancies", meaning students who let from such bodies will not have security of tenure under the Bill. It has been suggested by property sector representatives that one way of ensuring that the Bill does not discourage investment would be to extend this exemption to all PBSA.
Call for views
On 9 October the Scottish Parliament's Infrastructure and Capital Investment Committee ("the Committee") published a call for views from interested organisations and individuals on the Bill’s proposals and their likely impact. The deadline for submitting views is 19 November. Comments can be submitted by completing an online survey form or by email, the details of which are on the Committee's Call for Views web-page.
The Committee has a web page on which responses submitted so far can be viewed, here.
Scottish Property Federation discussions
The Scottish Property Federation ("SPF") has recently had meetings about the Bill with key figures in the Bill's implementation team, and Scottish Government officials. Among the issues discussed was the potential impact of not exempting purpose built student accommodation, the loss of the ‘no fault’ ground for repossession and the creation of uncertainty among investors. The SPF says that it intends to submit its views on these issues to the Committee shortly.
A useful guide to the Bill
On 28 October the Scottish Parliament published a detailed guidance paper on the Bill with commentary on its main provisions. The paper includes a useful table (at pages 38-41) comparing the key features of tenancies under the existing assured tenancy regime with the new private residential tenancy. The fact that concerns have been expressed to the Government in relation to the effect that the Bill may have on the student lettings market are commented on briefly at pages 13-14. The guidance paper can be downloaded here.
After the 19 November deadline for submission of written comments, the Committee is expected to hear oral evidence from various organisations with an interest in the Bill. The next major milestone in the life of the Bill is likely to be the Stage 1 report on the Bill which will be produced by the Committee after considering the responses and evidence submitted to it in the coming weeks. This report will be considered during the Bill's Stage 1 debate in the Scottish Parliament, which is likely to take place in the middle of January 2016. We will be following the Bill with interest, and will publish further updates during its progress.
As one would expect, there are no official indications as yet, on the subject of when, if passed, the Bill would be likely to come into force. However, the Scottish Parliament guidance paper referred to above appears to suggest (at page 4) that it is currently envisaged that the new private residential tenancy will be introduced in the latter part of 2017.
Response to call for views
Organisations with an interest in the Bill are encouraged to make their views known to the Committee by 19 November.