Worrying times………….

20 November 2014:

The Scottish Government is looking for responses to their newly launched ‘Consultation on a New Tenancy for the Private Sector’.

With the private rented sector in Scotland now totalling over 330,000 homes (twice as large as it was fifteen years ago), the Scottish Government feels that it is time to bring in a major review of private rented tenancies for the first time since the Housing (Scotland) Act 1988, with a view to providing improved security of tenure for those tenants who want it with the continued flexibility that many tenants, such as students and young families, currently enjoy.

With this in mind the Private Rented Sector (PRS) Tenancy Review Group was set up in September 2013. The Review Group recommended in May 2014 ‘that the current Short Assured Tenancy and Assured Tenancy be replaced by a new private tenancy that covers all future private rented sector lets’, along with other recommendations such as new roll-over arrangements at the end of the tenancy, removing some grounds for repossession and introducing a new model tenancy agreement.
Following the Review Group’s recommendations, responses are being gathered by the Scottish Government on the following policy issues:

1. Whether the current assured and short assured tenancy system should be scrapped in favour of a new tenancy system.
2. Whether or not this new tenancy system should remove the ‘no fault’ ground for repossession (the ‘no fault’ ground of repossession currently allows landlords to repossess the property at the end of the tenancy).
3. If the new tenancy system should allow roll-overs for only the length of the original tenancy.
4. Whether or not landlords should issue a tenancy of no fewer than six months.
5. A proposal to reduce the number of grounds of repossession to eight and make them all mandatory (which would mean a Sheriff’s discretion is no longer required). The proposed new grounds are:
   a. the landlord wants to sell the home;
   b. the mortgage lender wants to sell the home;
   c. the landlord wants to move into the home;
   d. refurbishment;
   e. change to the use of the home;
   f. the tenant failed to pay three full months’ rent;
   g. the tenant is anti-social, and;
   h. the tenant has otherwise breached the tenancy agreement.
   It is proposed that all of these grounds would have a four week required period before proceedings can be raised.
6. Whether only tenants should have the ability to issue a notice to quit.
7. Should a model tenancy agreement be introduced including both mandatory and discretionary clauses with an easy-to-understand guidance note?
8. Should the Scottish Government take any action to address rent levels in the private rented sector?

The proposals are far reaching and will, if carried forward, have a major impact on both tenants and landlords.

Landlords and investors will be worried by the final question regarding Government intervention in rent levels in the private rented sector – do we really want to go back to an age of rent caps? If the proposals are implemented in their current form, lenders may be less willing to agree buy-to-let mortgages. The new rules could be a step too far for not only your average buy-to-let landlord, but may well put off institutional investment in the residential sector, something that has long been needed especially now that property prices seem to be on the rise again. A major issue facing the housing sector in Scotland is lack of supply and if the new rules result in less flexibility in the private rental market this could exacerbate that problem.

Some tenants, particularly students, may also be concerned that the proposals provide less flexibility for renting than the current short assured tenancy regime.

The Scottish Government recently published a comprehensive analysis of rent levels in the private rental sector and, following this, it will be interesting to see whether they intend to regulate rent levels in due course.

The Scottish Government consultation on a New Tenancy for the Private Sector is currently live and all responses will be made public at the end of the consultation. The deadline for responses to the consultation is 28 December 2014.  The consultation can be found on the Scottish Government website here.

– See more at: http://www.burnesspaull.com/blog/2014/11/end-buy-let-scotland-we-know-it#sthash.XIlEcrYx.dpuf

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