The Private Housing Scotland Acts was recently passed by Scottish Parliament. I’m going to paraphrase most of the important parts of the Act in my article here but if you want to read much more then you can see details here.
It’s quite incredible really and it makes me glad that I am landlord in England and not a landlord in Scotland! However I fear the creep of legislation into the English system is only a matter of time and this act will probably set the precedent for future English law, depending on which the government is in power but it’s only a matter of time.
We already know that the Labour party wish to see fixed long-term tenancies as the standard, rent controls and would like to abolish Section 21 No Grounds Possessions. Despite the fact that there is no evidence that the market requires long-term tenancies as the standard, in-fact, quite the opposite, the flexibility of the short term tenancy is what has made Britain a much more mobile society than it was 20 or 30 years ago !
Let’s take a look at the men at the salient points of the Scottish Act
Quite incredibly, this act will replace all existing tenancy agreements, normally (but not always) when a new act comes into place, there is a start date for the new regime, But on this occasion this legislation takes out any existing tenancy agreements ! can you imagine that?
The most striking part of this act is the fact that the landlord must now have a ground to evict a tenant, no longer can the landlord rely on Section 21 (no fault eviction), that’s finished!. This means that the landlord can no longer ask tenants to leave the property because they have reached the end of their tenancy, instead landlord will have to state a ground for the eviction.
The grounds for eviction include:
- the landlord intends to put the property up for sale. This is a new ground (the landlord has to show proof).
- the landlord intends to refurbish the property to the extent it is impracticable for the tenant to occupy the property. This will be a question of degree and will depend on how much disruption the tenant can live with.
- the landlord wants to use the property for a non-residential purpose. This is a new ground;
- the landlord or a family member of the landlord intends to live in the property. Unlike previous legislation, a family member is now defined as a spouse, civil partner, cohabitant, parent, grandparent, child, grandchild or sibling of the landlord;
- the tenant is in rent arrears for 3 or more consecutive months. If such arrears amount to at least 1 month’s rent the tenant will be evicted (but they have to be in arrears for three months first!). if the arrears are less than 1 month’s rent the new Tribunal will have discretion on whether to evict the tenant. This is a significant change as at present the mandatory ground of possession requires 3 whole months’ rent arrears but the Act means the tenant will be evicted if they do not pay a full month’s rent and those arrears are outstanding even if over the next 2 months they pay the full monthly rent;
- the tenant is carrying on criminal or anti-social behaviour at or in the vicinity of the property
- the tenant has breached the tenancy agreement. This will be clearer once the model tenancy agreement is produced by the Scottish Government but such breaches will likely include subletting without landlord’s consent, taking in a lodger or assigning the lease, or failing to give the landlord reasonable access on notice.
A NEW TRIBUNAL
A new Tribunal will be set up with the aim of dealing with disputes in a “user-friendly fashion” and the Act includes safeguards designed to stop landlords getting round the eviction grounds by, for example, putting the property on the market at an unrealistically high price or downgrading the intended refurbishment once the tenant is out.
For those of us who have had the experience of dealing with the Tenancy Deposit Arbitrator, we all know just how “user friendly” these committees are. They are heavily weighted towards the tenants and not towards the landlord so I would have very little confidence with this as an idea.
What they have said is that if a landlord is unable to sell and wishes to re-let the property, or the landlord or a family member does not move into the property as intended, the landlord must offer the tenancy to the former tenant again! The landlord will have to produce evidence to the Tribunal to support the ground of eviction such as a letter of engagement from a marketing agent or advertising particulars, or an application for planning permission or building warrant in the case of refurbishment, or a change of use application where the landlord intends non-residential use.
The Tribunal can make a wrongful termination order and require the landlord to pay the former tenant up to 6 months’ rent.
The notice periods to recover possession will change. At present, a landlord can evict a tenant on 2 months’ notice if the lease term has expired. Under the Act a landlord will need to give a tenant 4 weeks’ notice of eviction if the tenant has been in occupation for 6 months or less and 12 weeks’ notice where the tenant has been in occupation for more than 6 months.
Tenants cannot be held to a minimum term under the new rules and will be able to terminate the tenancy at any time on giving the landlord 28 days’ notice. This means a tenant could give notice to terminate shortly after commencement of the tenancy.
How is that fair? tenants can simply walk away from a legal contract by giving 28 days notice (and as landlords, we know that many of them they walk without giving notice in any case) but landlords must give up to 3 months notice!
RENT INCREASES AND RENT CONTROLS
Landlords will be able to seek an increase in rent by issuing a rent increase notice to the tenant. The rent cannot be increased more than once in any 12 months. If the tenant thinks the proposed rent increase is unreasonable they can refer the matter to a rent officer to determine open market rent whose decision can be appealed to the Tribunal.
Local authorities will be able to apply to the Scottish Government to designate an area as a “rent pressure zone” which, if so designated, means rent increases can be no greater than a percentage set by the Scottish Government.
The Scottish Government have indicated that such zones will likely be occasional to protect tenants from large rent increases in certain areas, but there is concern the use of rent pressure zones could be a wider attempt by the Scottish Government to introduce statutory control of rent which will not be popular with landlords and might deter investment.
As A Landlord Myself…..
I simply cannot believe the stupidity of this legislation, can’t they see that this will deter landlords? Paradoxically, I can see this happening in England & Wales in due course. Landlords are hated by Local Authorities and Governments, so much so that we are under constant attack; if it’s not “tenant rights” it’s tax attacks, it’s one thing after another and from what I have seen so far, this legislation is typical of those in authority who have no idea what it’s like to be a landlord, absolutely clueless.
Before a Scottish landlord can apply for an eviction notice under “Rent Arrears”, the tenant must be three months in arrears. Add to that the notice period, the time it will take to get the case in front of the “Tribunal”, all of which the tenant is unlikely to be paying any rent and the poor landlord is probably looking at nine or more months without income! It’s a business model which simply will not work. Ask yourself this, “how many other business are forced to supply a service without being paid?” I find it incredible!
They say that they are doing this because there is a housing crisis, well I say to all Scottish Landlords (and to English & Welsh Landlords for that matter), give the Scottish Government a housing crisis they will remember and one they deserve! All good things come to an end, so sell up and do something far less stressful with your money.