From 1st December 2017 the way that private residential tenancies are implemented will change across Scotland. The new Private Residential Tenancy will be introduced, replacing the current Short Assured Tenancy, which has been widely used for residential tenancies since 1989. We look at the 6 key changes facing Edinburgh landlords.
1. Lease Paperwork
- Landlords can use a model lease provided by the Scottish Government.
- There are no pre-tenancy notices.
When beginning a Short Assured Tenancy, landlords can draw up their own lease as long as it contains prescribed information. For this type of lease all tenants must sign an AT5 ahead of signing the lease agreement, and landlords (or their letting agent) must provide a Tenant Information Pack.
From 1st December all new tenancies will be Private Residential Tenancies. Landlords beginning a Private Residential Tenancy will have the option to use a model lease drawn up by the Scottish Government. The model lease has optional and discretionary clauses; landlords can remove or alter the discretionary clauses to meet their needs. The PRT will have no pre-tenancy notices, further simplifying the lease paperwork.
2. Lease Dates
- Leases have a start date only.
- No minimum term for tenancies.
- No end date for tenancies.
Unlike Short Assured Tenancies, which must include an end date and have a minimum term of 6 months, a PRT has a start date only, so there is no set term for the tenancy. Removing the minimum term means that tenants can serve notice at any point from the start date of the tenancy. This gives tenants increased flexibility and security of tenure.
3. Rent Reviews
- Rent reviews once per year only.
- Tenants must get three months’ notice of a rent increase.
Landlords have always had the right to set and review their rent at the market rate and this will continue under the new tenancy regime.
Landlords with Short Assured Tenancies can review the rent at any time during the tenancy, subject to the terms outlined in the lease. In most tenancy agreements this tends to be once per year and out with the initial term.
For Private Residential Tenancies, landlords will be restricted to once per year for rent reviews and must give tenants a minimum of three months’ notice that their rent will be changing.
4. Rent Pressure Zones
- Local councils can apply for rent pressure zones.
Rent Pressure Zones (RPZs) do not currently exist in Scotland, these will be introduced with the new tenancy regime.
From 1st December 2017, local councils across Scotland have new powers to apply to the Scottish Government for a RPZ if they feel that rent levels in the area are rising too quickly. If approved, the RPZ will mean that rent increases will be capped, but increases of a minimum of 1% above CPI will still be allowed.
RPZs will only be permitted in extreme circumstances where local councils can prove that excessive rent levels are causing undue hardship to tenants.
5. Ending a Tenancy (Landlords)
- Serve a single Notice to Leave to end a tenancy.
- 18 revised grounds for eviction.
- The notice period can vary between 28 and 84 days.
Ending a Short Assured Tenancy can be a complicated process for landlords, involving issuing various notices including a notice to quit, a Section 33 notice, and sometimes an AT6. The Private Residential Tenancy will require landlords to serve a single Notice to Leave form, simplifying this process.
Landlords can currently end a Short Assured Tenancy by giving two months’ notice to the end date of the tenancy, or by using one of 17 grounds for ending the tenancy such as rent arrears or damage. Under the new regime the notice period will vary depending upon the ground that is being used to end the tenancy and, in some cases, the length of time that the tenant has lived in the property.
The grounds for ending a tenancy have been modernised for the new Private Residential Tenancy, there are now 18 grounds, which include the landlord selling the property, extensive renovation works, or moving back in.
For the majority of the grounds the landlord will have to give tenants 28 days’ notice if the tenant has occupied the property for less than 6 months, or 84 days’ notice if they have occupied the property for more than 6 months. However, for grounds applied when the tenant is in breach of their lease or the law (grounds 10 – 15), the landlord will be required to give 28 days’ notice, regardless of how long the tenant has occupied the property.
6. Ending a Tenancy (Tenants)
- Standard 28 day notice period.
- Tenants can give notice at any point from the start of the tenancy.
A Short Assured Tenancy can be ended once the tenancy has passed the initial fixed term period – a minimum of six months – most leases set one or two month notice periods for tenants, or 28 days by default if it is not mentioned in the lease.
Tenants with PRTs now have a standard notice period of 28 days, which must be issued in writing, and can be given at any date from the start of the tenancy.
Existing Short Assured Tenancies, entered into before 1st December 2017, will continue until ended by either the landlord or tenant.
It is important that all landlords in Scotland are aware of the above changes and are ready for the transition to the Private Residential Tenancy on 1st December. Visit www.clangordon.co.uk if you are concerned about any of the above changes and would like advice specific to your property or tenancy.