News

The Scottish Government’s Consultation on a New Tenancy for the Private Sector 2014

Summary

On the 6th October the Scottish Government launched a public consultation on the development of a new type of tenancy for the private rented sector.

The overarching aim of the tenancy is to improve security of tenure for tenants, while providing appropriate safeguards for landlords, lenders and investors.

Covered in this article

Why does the Scottish Government want to create a new tenancy?

Who will the new tenancy affect?

What does the consultation for a new tenancy propose?

Who will the new tenancy rules apply to?

When will the new tenancy take effect?

1LET’s official response

 

Why does the Scottish Government want to create a new tenancy?

The Government has recorded a noted increase (more than double) in the size of the private rented sector since 1999. The number of Scottish homes that are rented privately is now thought to be 333,231.

This growth means that the market is significantly bigger and now caters to a growing variety of tenants, landlords and investors. Consequently, this has highlighted the need for greater flexibility within Scotland’s private rented sector with regards to tenancies in Scotland.

Who will the new tenancy affect?

Tenants Some tenants need more secure, longer-term tenancies, while others greatly value the ability and flexibility to move in and out of tenancies. The private rented sector is important in giving many tenants the flexibility they need in their living arrangements; but an increasing number could also benefit from improved security of tenure.

Landlords The proportion of landlords owning a small number of properties (often one or two) has remained broadly similar but since 2007 there has been a growth in those who have become landlords because they were unable or reluctant to sell their property, as well as this some new landlords will have buy-to-let mortgages.

Investors There is also the significant potential for, and growing interest from, new institutional investors in the sector to help fund the supply of new homes to privately rent. In developing these proposals, considerations have been taken with regards to landlords, lenders and investors and the requirements of each in the new tenancy structure.

 

What does the consultation for a new tenancy propose?

There are a number of proposals set out by the consultation for a new tenancy, these include:


Excluding the no-fault ground for a landlord to repossess their property: The ‘no fault’ ground basically refers to the ability of a landlord to serve notice without the necessity of a tenant breaching their tenancy agreement.

Excluding roll over tenancies from the new tenancy system: at this present moment in time, after the original tenancy period expires, tenancies can roll over on a monthly basis. The proposal by the Scottish government is that the roll over period cannot be less than the original tenancy period. 

Minimum duration of 6 months for new tenancies: the Scottish Government propose that the new tenancy system will require a minimum tenancy of six months.

No maximum period for tenancies: Unlike the proposal for a minimum tenancy length, the consultation proposes there will be no maximum.

Tenants to be allowed to request a shorter tenancy: a tenant will be able to request a tenancy agreement shorter than six months to meet their personal circumstances, e.g. A seasonal or travelling worker.

Linking the notice period with the length of time a tenant has lived in the property: the longer a tenant has lived in a property the longer the notice period landlords will have to give tenants:
o Six months or less in the property = four weeks' notice
o Over six months up to two years in the property = eight weeks' notice
o Over two years up to five years in the property = 12 weeks' notice
o Over five years in the property = 16 weeks' notice

Mandatory repossession grounds to include:
o Landlord wants to sell the home
o Mortgage lender wants to sell the home
o Landlord wants to move into the home
o Refurbishment
o Change to the use of the home
o Tenant failed to pay three full months' rent
o Tenant is anti-social
o Tenant has otherwise breached the tenancy agreement.

Landlords should be able to recover possession of their property with a 28-day notice period in particular circumstances: if repossession grounds 6, 7 or 8 (see list of 8 proposed mandatory grounds above) apply, meaning that landlords will be able to give tenants 28 days' notice to quit regardless of how long the tenant has lived in the property.

Landlords should no longer have to issue pre-tenancy notices to recover possession of their property: in the current form, the tenancy requires that landlords have to give advance notice to the tenants of their property if they intend to make use of some repossession grounds. With the proposal in the new tenancy system, pre-tenancy notices will now be necessary.

Notice period for all proceedings should be four weeks: the current system has a range of notice period required depending on which ground is being used, this time ranges from 2 weeks to 2 months. In the consultation for the new tenancy, there will be a standard of 4 weeks before any proceedings can be raised.

Introduction of a model tenancy agreement: the consultation highlights the proposal to introduce a model tenancy agreement “containing mandatory and discretionary clauses and a statutory guidance note that outlines the clauses in plain language. This will remove the need to issue a tenant information pack, so we propose to remove this requirement.”

Who will the new tenancy rules apply to?

The new tenancy proposal has been set by the Scottish Government and will therefore only apply to Scottish tenancies.

When will the new tenancy take effect?

There is no set date for the new tenancy as of yet(correct on 19/12/2014), but it is thought that it will become effective sometime in 2016.

1LET’s Official Response

Ewan Foreman, 1LET’s Managing Director, has made his response on behalf of 1LET public. To read this response read the pdf document: 1LET’s Official Response.


Related documents and information:

The Scottish Government’s comparison table of current tenancy system and proposed tenancy system