Since the passing of the Private Housing (Tenancies) (Scotland) Act 2016 (“the Act”) earlier this year, there has been a certain level of confusion about the new regime, what it will do and when. Here we cover some of the inaccuracies we have heard mentioned and let you know the facts.
First and foremost – the legislation is not yet fully in force. Although it received Royal Assent back in April, the only parts of the Act brought into force by that were administrative ones – essentially ones that allow the Scottish Government to bring other parts into force in future. So, if you are renting out a property just now (and until further notice), you should be treating it as business as usual and putting in place a Short Assured Tenancy (SAT).
Once that SAT is in place, it (and all other SATs and other tenancies of varying types) will be able to continue even after the relevant parts of the Act come into force as well. It is not the case that SATs and other tenancies will disappear overnight or be converted into the new Private Residential Tenancy (PRT). Once the Act comes fully into force, it won't be possible to create new SATs (just as when the assured tenancy regime was introduced in 1989, no other type of tenancy could be created thereafter). However, there is no general automatic conversion from one to the other. There will be an option to convert, and there will be an automatic conversion if your existing tenant dies and someone succeeds to the tenancy interest.
Once the legislation does come fully into force, there are some significant changes. The main one is well trailed – removal of the ‘no-fault’ eviction ground. It will no longer be possible to end a tenancy simply because the contractual tenancy period has ended. Indeed, there is no contractual period with a PRT. When the legislation was initially introduced to parliament, there was provision for a minimum (unless both parties agreed otherwise) six month initial period, in which both parties would be bound into the tenancy, but that was removed in the process of the Bill going through parliament. In the final Act, there is no period in which both parties are bound; once the contract is entered, either party could give notice to leave the next day (the landlord can do this only if one of the eviction grounds in the Act applies; the tenant does not need a specific reason).
Various eviction grounds are based on the property being required for another purpose, for example for the landlord to live in, or to sell. A landlord must provide evidence to the tribunal to prove the ground is genuine, for example, a letter of engagement from an estate agent or solicitor instructed in the sale. If the landlord subsequently does not sell and decides to re-let the property, they do not have to offer the property to the previous tenant. This was something mooted at consultation stage but never featured in the legislation. What does feature in the legislation is the ability for a tenant who considers that they have been misled into leaving the property, or considers that the tribunal has been misled into granting an eviction order, to apply for a “wrongful termination order”. If granted, such an order can require the ex-landlord to pay to the ex-tenant a sum of up to six months' rent to the ex-tenant. A wrongful termination order is also notified to the local authority in which the landlord is/was registered, and this is likely to be taken into account at the landlord's next registration renewal. For any landlord with more than one property, this should act as a major disincentive to seeking to misuse the eviction grounds.
The first commencement orders for the Act are awaited but it is understood that it will likely be autumn 2017 before the Act comes fully into force and PRTs can start being created.