Key changes proposed to Residential Tenancies
The Scottish Government has proposed fundamental changes to the way residential tenancies are operated in Scotland. The government launched its consultation document on 6 October 2014.
Landlords are urged to make representation on all of the proposals by 28 December 2014.
“The wellbeing of rural Scotland is dependent on the smooth operation of the vibrant residential tenanted sector. This is an open consultation so residential tenants and landowners alike should make themselves aware of the proposed changes and ensure they have their say in influencing the final legislation”.
Kenneth Munn, Savills Rural Team
To find out how to engage with the process please contact Kenneth Munn who will be able to advise you.
The specific proposals which could affect your land and property holdings include:
Removal of no-fault ground for repossession
Currently, under SATs, a landlord can end the tenancy at the end of the fixed term. It is proposed that this right is to be removed. This is of significant concern to landlords as, ultimately, they would not be able to secure vacant possession except under the revised statutory grounds identified below. In effect this grants tenants absolute security of tenure, other than in eight exceptional circumstances (see below).
On this basis, unless the landlord can end the tenancy under one of the specified eight grounds, then the tenant will continue to occupy the property until they wish to end their occupation.
The minimum term would be six months, the same as the existing regime. The proposals allow for tenants to request (not demand) a shorter term; this could prove attractive to both landlords and tenants as, under the current regime such flexibility does not exist except in a small number of exceptional circumstances.
roll-over Tenancies currently revert to a month to month basis at the end of the fixed term. This would be removed and the tenancy would continue for a further fixed term, of not less than the original term (therefore not less than a further six month period).
Notice to quit
The proposals recommend linking the notice period to the length of occupation by the tenant.
- Landlords - The notice periods would range from 4-16 weeks.
- Tenants - The notice periods would range from 4-16 weeks.
Grounds for repossession
There are currently 17 grounds for repossession, some mandatory and some discretionary. The new mandatory grounds are:
- 1. Landlord wants to sell the home
- 2. Mortgage lender wants to sell the home
- 3. Landlord wants to move into the house
- 4. Refurbishment
- 5. Change to the use of the home
- 6. Tenant failed to pay three full months’ rent
- 7. Tenant is anti-social
- 8. Tenant has otherwise breached the tenancy agreement.
Notices to Quit of 28 days would apply for: non-payment of rent; anti-social behaviour; and breach of lease.
The notice procedure would be simplified, including requirement to identify grounds for repossession.
Notice of proceedings
Currently there is a variable notice period of 28 days - two months, depending on ground for repossession being relied upon. There will now be a standard notice period of four weeks.
Model tenancy agreement
There will be a prescribed form of tenancy agreement with mandatory and discretionary clauses together with statutory guidance note.
The consultation notes that: “rent setting currently forms part of the existing assured tenancy system, so it seems sensible to consider rent setting and how this might work with the proposed new system”.
This implies that Scottish Government wish to introduce a form of rent control, rather than allowing parties to agree market rents.
On this basis, in addition to considerably greater security of tenure for tenants, the landlord would be concerned about the potential suppression of rents.