How will the new Private Residential Tenancy regime affect me as a landlord or investor?
Information for landlords and investors with properties in ScotlandDid you know that, in less than two months, tenancies in the Scotland’s private rental sector will be changing? The Scottish Government will be bringing the new Private Residential Tenancy (PRT) into effect from 1st December 2017.
What is changing?
Currently, all Lease Agreements either have a fixed-term or can be terminated after the initial fixed term by either party by given the required notice period (e.g. two months’ notice). However, with the new PRT tenancies, there will be no fixed-term contracts. To end the tenancy, the tenant simply has to give 28 days’ notice by serving the landlord with a ‘Notice to Leave’. This can be done at any point during the tenancy.
Therefore, the decision of when to leave the property will rest mainly with the tenant. There will, however, be certain circumstances where the landlord can end the tenancy. There are 18 different grounds for a landlord that can be used for ending the tenancy. A few examples of this are;
- If the Landlord decides to sell the property.
- If the Landlord decides that you would like to live in the property yourself.
- If the landlord decides to refurbish the property which would cause serious disruption for any tenants living there.
- If the Landlord decide to use the let property for non-residential use.
- The tenant has breached terms of the tenancy agreement.
All grounds for a tenancy eviction can be found on The Scottish Government’s official website for landlords, here.
How will this affect my property?
Existing Short Assured Tenancies which are in place before 1st December 2017 will continue as Short Assured Tenancies. However, it will not be possible to create a new short assured tenancy after this date.
We believe that the relationship between good landlords and high-quality tenants will continue to be strong, leading to a high number of tenants continuing to stay long-term in the property.
We do anticipate major changes in how the student market operates. Without fixed term dates we may have no or little availability of properties to promote at the university accommodation fairs traditionally taking place in February and March each year. Currently, we find that over half of our student tenants renew their lease every year, we do not see any reason for this level of potentially continuity to change with the new PRT tenancy; in a way the new process will make it easier for tenants to do so by doing nothing. In order to inform their landlord or letting agent of their intention to leave they must all sign a formal prescribed document called a 'Notice to Leave'.
As part of the process of reviewing rent 3 months ahead of the annual anniversary of a PRT we will be having dialogue with occupants both about rent and future occupancy. We hope therefore that in time a due process will develop which allows there to be a structured market place making planning by both landlords and tenants more practical.
What happens next?
On 23rd October 2017, the Scottish Government will publish the Model Tenancy (MT) which we will use as the basis for our new PRT contracts from 1st December. Some parts of the tenancy are obligatory and some sections can be adapted by agents and landlords. We will add our own conditions on behalf of our landlords where we believe the MT is inadequate or inappropriate. We will be working with our lawyers to ensure we meet all legislation and we will be following Propertymark’s Code of Practice.
As much as this new legislation means major changes for the industry, we believe they will be manageable and we are confident that it will work well for not only tenants, but landlords too.
For further information on what the PRT will mean for you as a landlord, view the Scottish Government’s landlord guide here.
If you wish to discuss this with our expert team, please contact us at investment@cullenproperty.com or call us on 0131 221 1818.