The Private Residential Tenancy (PRT) will become the new residential tenancy for Scotland from 1 December 2017. The PRT will become the standard tenancy agreement between residential landlords and tenants and will replace the Short Assured Tenancy and the Assured Tenancy.
Creating a PRT
Pre-tenancy notices such as the AT5 will no longer be needed but landlords and tenants will not be entirely free to negotiate the tenancy agreement. The Scottish Government has produced a model tenancy agreement which can be used by landlords. It contains compulsory clauses indicated by the bold print and optional clauses in ordinary typeface which can be varied or excluded. Landlords choosing not to use the model tenancy must include clauses dealing with receipts for rent paid in cash, rent increase notices, subletting, notification of other residents, access for repairs and termination.
Reviewing the rent
Landlords may review the rent once a year by serving a rent increase notice on the tenant at least three months before the increased rent is to become payable. Following a rent increase notice from the landlord, tenants can seek an order for determination of the open market rent from a rent officer; appeals can be made against such orders to the First Tier Tribunal.
The biggest talking point prompted by the new PRT is the potential for Rent Pressure Zones. Local authorities may apply to the Scottish Ministers for consent to cap PRT rents in a designated zone within their area. How big or small that zone will be is still to be seen. The local authority will have to provide the Scottish Ministers with evidence showing that rents payable in the area are rising too much, these increases are causing problems for tenants and, as a result, the authority is under pressure to provide housing or subsidise the cost of housing. The Ministers will consult parties affected before making their decision.
A rent pressure zone can be put in place for a maximum of five years, and if the local authority is successful, landlords in the affected area will not be able to increase existing rents to an amount greater than CPI + 1%. Rent pressure zones will not affect the setting of initial rents and will still allow for the rent to be reviewed annually. Investors have generally reacted positively to the minimum cap of CPI + 1%. While some fear that the mere mention of rent controls will spook investment in the market others have been quick to point to the attraction of knowing what the controls will be.
Edinburgh City Council and the City of Glasgow Council have announced that they will investigate the possibility of introducing a rent pressure zone. Aberdeen City Council is also monitoring rental levels in the city.
Ending the tenancy
If the correct notice procedure has been followed, landlords can recover possession of their property when a short assured tenancy ends on the basis of what is known as the ‘no fault’ ground for repossession. There will be no such ‘no fault’ ground for recovery of possession of the property under the new PRT. There will be no specific date at which landlords will be able to recover possession of their property, and the tenancy will continue indefinitely unless the tenant serves notice that they want to leave, or the landlord can satisfy one of the grounds for eviction summarised in Appendix One at the end of this briefing.
It is hoped that with the increased security of tenure, tenants will feel more confident about living in rented properties and, at the same time, landlords will benefit from a longer term steady flow of income.
The notice to be given to end the tenancy will depend on how long the tenancy has lasted and whether you are the landlord or the tenant. Tenants must give four weeks’ notice or, such other notice period agreed with their landlord, no matter how long the tenancy lasted.
For a landlord wishing to end a tenancy, the dual procedure of notice to quit and notice of proceedings has been scrapped and 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 in Appendix One, giving notice as follows:
- Tenancy lasted for six months or less – four weeks’ notice
- Tenancy lasted for more than six months – 12 weeks’ notice
- Regardless of the length of the tenancy, 28 days’ notice where the tenant:- (i) is not occupying the property as his home; or (ii) failed to pay three consecutive months’ rent in full; or (iii) behaved antisocially or in breach of the tenancy agreement; or (iv) committed a relevant criminal offence.
A number of tenancy agreements including holiday lets and larger purpose-built student accommodation (over 30 beds) cannot be PRTs and are not subject to the new rules on termination. Tenancy agreements granted to students in smaller purpose-built and mainstream student accommodation such as tenement flats will be subject to the new regime; the landlords will be unable to end the tenancies at the end of the ten month academic term time as many do at the moment. They will have to rely on students serving the notice to leave.
Succession to a tenancy
Family members aged 16 and over and carers may succeed to a tenancy on the death of the tenant, in addition to spouses/civil partners and partners. A number of conditions must be met before the successors can succeed to the tenancy including the requirement to have lived in the property as their principal home for a continuous period of at least 12 months before the death of the tenant (unless they are a spouse or civil partner, in which case there is no such time limit). Any succeeding carer must also have given up their previous principal home. If there is no one to inherit the tenancy, it will end on the death of the tenant. If a tenant under an assured or short assured tenancy dies and has an eligible successor in terms of existing provisions, the tenancy inherited by the successor will become a PRT and become subject to the new legislation.
What happens to existing tenancies?
The PRT will replace the assured and short assured tenancies as the only option for new tenancies to be entered into from 1 December 2017. Existing assured and short assured tenancies will continue on the same terms and conditions. Landlords and tenants can agree to convert existing short assured or assured tenancies to PRTs but as yet, the legislation does not require them to do so. Click here for the PRT Model tenancy form with explanation of statutory and discretionary terms.
This note is a summary and commentary on the Private Housing (Tenancies) (Scotland) Act 2016 and the Scottish Private Residential Tenancy and is intended as a general guide only. It should not be treated as a substitute for legal advice on specific circumstances.
Grounds for repossession of property let under a PRT
If the landlord wishes to end the tenancy, he would have to serve a notice to leave on the tenant and if the tenant did not leave, then apply to the First-tier Tribunal to issue an eviction order against the tenant, on the basis of one of the following grounds. Some of the grounds are mandatory; others leave discretion for the Tribunal when making their decision.
- The landlord is selling the home
- The mortgage lender is selling the home
- The property is to be refurbished (significant disruptive works will be taking place)
- The landlord or a family member wants to move into the home for at least three months
- The property is to be put to a non-residential use
- The property is needed for religious purposes
- The tenant’s employment entitling him to stay in the property has been terminated
- The tenant no longer needs supported accommodation
- The tenant is no longer occupying the property as their home
- The tenant has breached their tenancy agreement
- The tenant has been in rent arrears for three or more consecutive months
- The tenant has a relevant conviction for criminal behaviour or has associated at the property with a person who has a relevant conviction
- The tenant has engaged in antisocial behaviour or has associated at the property with a person who has engaged in antisocial behaviour
- The landlord is no longer registered under the antisocial behaviour legislation
- The landlord’s HMO licence has been revoked
- An overcrowding notice has been served on the landlord