Private Tenancy Sector in Scotland Undergoes Radical Change

The Private Housing (Tenancies) (Scotland) Act 2016 will come into force on 1st December 2017. This legislation seeks to replace the Short Assured Tenancy (SAT) system in the country with Private Residential Tenancy (PRT). All current tenancies will continue to be SATs until they are terminated, modified, or extended.

Some of the changes that will be brought about by the act are:

1)     Tenancies will no longer come with an expiry date. Leases can be terminated only if one of the parties gives notice for the same.

2)     The existing ‘no fault’ ground to remove a tenant can no longer be used. Currently, a landlord can remove a tenant without specifying the reason for the same.

The notice period of the notice given for termination of the lease by the tenant must not be less than 28 days. In the case of a landlord, such a notice must be based on one of the 18 grounds specified in the act. The notice period for a notice given by the landlord for repossession could be either not less than 28 days or not less than 84 days, depending on the ground invoked by the landlord and the duration for which the tenant has been staying in the property.

The grounds to end tenancy as given in the act include sale of property, sale by mortgagee, renovation of property, conversion of property for religious purpose, conversion of property for non-residential purpose, breach of tenancy agreement, non-payment of rent for three consecutive months, and  tenant’s conviction of a criminal offence, among others.

If a landlord invokes one of the grounds given in the statute to end the lease, and then is later found to have invoked the ground in bad faith to remove the tenant from the property, the landlord will either have to offer the tenant so aggrieved either a new tenancy or have to pay the tenant six months’ rent as compensation.

A tribunal which deals exclusively with tenancy issues will be set up. Also, under the new act, Scottish ministers will have the power to determine the maximum level of rent that can be levied in a district.

Though the act has been enacted with the noble intention of according protection to tenants, the provisions of this act could deter people from investing in the private rental sector. The increased difficulty of evicting a tenant combined with the introduction of a tenant-friendly tribunal and ceiling levels on rents introduced by this act could prove counter-productive for the tenants if landlords choose to leave or not invest in residential rentals.