Clara Zang looks at the very recent changes to the private rented sector in Scotland and wonders if England and Wales might ever follow suit.
The Private Housing (Tenancies) (Scotland) Act 2016 (“the Act”) received Royal Assent on 22 April 2016 and came into force on 1 December 2017. The Act introduces a new type of tenancy, the private residential tenancy, which replaces the short assured tenancy and assured tenancy scheme for all future lets in Scotland starting on or after 1 December 2017. Existing assured and short assured tenancies will not convert automatically into private residential tenancies and will continue to take effect under the previous legislation until they are terminated.
What is a Private Residential Tenancy?
A tenancy starting in Scotland on or after 1 December 2017 will be a private residential tenancy if:
- A property is let to an individual as a separate dwelling,
- the tenant occupies the property (or any part of it) as his only or principal home and
- the tenancy is not one which is excluded under Schedule 1 to the Act (e.g. holiday lets, agricultural land, licensed premises etc).
A model tenancy agreement and guidance is available to download from the Scottish government website here. The parties are not required to use the model agreement but the agreement used must include the mandatory clauses highlighted in bold in the model agreement. Section 10 of the Act puts landlords under a duty to provide tenants with the written terms of the tenancy no later than the day on which the private residential tenancy commences or, if the tenancy only later becomes a private residential tenancy, within 28 days of it becoming one.
The Act also creates a new tribunal, the First-tier Tribunal for Scotland (Housing and Property Chamber), which will deal with all disputes relating to private residential tenancies. This is a welcome change as it will enable specialist tribunal members to deal with tenancy matters quickly and efficiently. The sheriff courts will continue to deal with existing assured and short assured tenancies.
Increased Protection and Security for Tenants
The Act provides levels of protection and security for private tenants, which far exceeds the rights of assured shorthold tenants in England.
Indefinite security of tenure: The private residential tenancy provides tenants with indefinite security of tenure by creating an open-ended tenancy with no fixed term.
Longer Notice periods: Tenants can terminate the tenancy at any time by giving 28 days’ notice to leave. Where there is a joint tenancy, all tenants must sign the notice to leave. On the other hand, landlords can only terminate the tenancy if they satisfy one of the 18 grounds listed in Schedule 3 to the Act. Further, the landlord must give 28 days’ notice to terminate the tenancy within its first six months and 84 days’ notice to terminate the tenancy thereafter.
The landlord is only required to give 28 days’ notice to terminate regardless of the tenancy start date if he is seeking to evict the tenant on grounds of failure occupy the property as his only or principal home, breach of tenancy agreement, rent arrears for three or more consecutive months, relevant criminal conviction, relevant anti-social behaviour, or association with a person who has a relevant conviction or has engaged in relevant anti-social behaviour.
Grounds for terminating: Schedule 3 of the Act sets out the following 18 grounds under which a landlord may seek eviction.
- The landlord intends to sell the property for market value within three months of the tenant ceasing to occupy it. (Mandatory)
- The property is to be sold by the mortgage lender. (Mandatory)
- The lender intends to refurbish the property and which will entail significantly disruptive works. (Mandatory)
- The landlord intents to live in the property as his or her principal home. (Mandatory)
- A member of the landlord’s family intends to live in the property as his or her only or principal home. (Discretionary)
- The landlord intends to use the property for a purpose other than providing a person with a home. (Mandatory)
- The property is held for a person engaged in the work of a religious denomination as a residence from which the duties of such a person are to be performed; the property has previously been used for that purpose; and the property is required for that purpose. (Mandatory)
- The tenancy was granted to an employee and the tenant is no longer an employee. (Mandatory if application for eviction is made within 12 months of the tenant ceasing to be an employee and discretionary if the application is made after 12 months.)
- The tenancy was entered into on account of the tenant having an assessed need for community care and the tenant has since been assessed as no longer having such needs. (Discretionary)
- The tenant is not occupying the let property as his or her only or principal home. (Mandatory)
- The tenant has breached the tenancy agreement (excludes the payment of rent). (Discretionary)
- The tenant is in rent arrears. (Mandatory if the tenant has been in arrears continuously for three months or more, and on the day the tribunal considers the case, the arrears were at least one month’s rent. The tribunal must also be satisfied that the arrears were not due to a delay or failure in the payment of a relevant benefit. This ground is discretionary if the tenant has been in arrears of rent for three or more months, and on the first day the tribunal considers the case, the arrears are less than one month’s rent and the tribunal is satisfied that it is reasonable on this basis to issue an eviction order.)
- After the tenancy has begun, the tenant is convicted of using, or allowing the use of, the let property for an immoral or illegal purpose, or is convicted of an imprisonable offence committed in or in the locality of the let property. (Mandatory)
- The tenant has acted in an anti-social manner to another person and the tribunal is satisfied that it is reasonable to issue an eviction order. (Discretionary)
- The tenant is associating in the let property with a person who has a relevant conviction or who has engaged in relevant anti-social behaviour. (Discretionary)
- Landlord registration has been refused or revoked by a local authority. (Discretionary)
- House in Multiple Occupation (HMO) license revoked by the local authority. (Discretionary)
- Overcrowding statutory notice in respect of the property has been served on the landlord. (Discretionary)
Rent Increases: Rent increases will only be allowed once every 12 months and landlords must follow the process set out in section 22 of the Act. This provides that the landlord must give a rent-increase notice, the notice period must be 3 months or whatever longer period has been agreed between the landlord and tenant, and the tenant may contest a proposed rent increase by referring the cease to a rent officer for adjudication if they think it is too high. Section 35 also provides that a local authority may make an application to designate all or part of the authority’s area as a rent pressure zone. Rent increases will be capped at the amount calculated by the Scottish Ministers if the tenancy relates to a property that is situated in a “rent pressure zone”.
Comparison with Assured Shorthold Tenancies
The Scottish private residential tenancy is a stark contrast to the assured shorthold tenancy regime that applies in England and Wales pursuant to the Housing Act 1988 (“HA 88”). Under the HA 88, assured shorthold tenants do not enjoy long-term security of tenure and section 21 of the HA 88 provides landlords with a powerful tool for evicting tenants upon expiry of a fixed-term assured shorthold tenancy by serving a notice without providing any reasons or grounds for doing so. Courts must grant the landlord an outright possession order as long as the relevant procedural requirements have been met, unless it will cause exceptional hardship to the tenant, in which case the court may postpone the date of possession for up to six weeks.
There are currently no proposals in place for such major reforms to the assured shorthold tenancy scheme in England and Wales. Although there have been a number of recent changes which have provided tenants with some additional security (e.g. tenancy deposits, retaliatory eviction, procedural restrictions on a landlord’s ability to serve a notice to terminate a tenancy under section 21 HA 88), these are not nearly as ambitious as the Scottish reforms.