If you are considering letting a house or a flat you should take legal advice before embarking upon the advertising of the property for let.
- From 1.12.17 the Private Residential Tenancy ‘rules’ now apply in Scotland regulating mandatory terms and conditions of residential leases. This is covered in more detail below.
- Residential landlords must apply for registration with the local authority covering the area in which the property being let out is situate. If letting out properties in different local authority areas, landlords must register with each of the local authorities separately.
- If the property you are letting is subject to a mortgage, you will almost certainly have to obtain the consent of your mortgage lender to the letting out of the property although some ‘buy to let’ mortgages will automatically allow letting subject to the lease terms and conditions complying with the mortgage lenders requirements usually detailed within the mortgage agreement. Further, you must stipulate in your Lease Agreement that the Tenancy may be terminated in the event of repossession of the property by the mortgage lender.
- Any gas appliances in your property must be checked on an annual basis by a qualified person
- A Carbon Monoxide Detector with an integrated long-life battery must be fitted in the property by Residential Landlords. Additionally, landlords must ensure that there is a carbon monoxide detector fitted in any room that is used partly or wholly as living accommodation which also contains any appliance which burns, or is capable of burning, solid fuel. This would include log and coal burning stoves and open fires, even if they are not normally in use, but does not include gas and oil boilers. If an open fireplace is purely decorative and not useable then it is not covered by the regulations. Gas is not a solid fuel and so there is no requirement to fit one near a gas boiler. It is still advisable as best practice however.
- If the property is let out on a furnished basis, all furniture and furnishings must carry a permanent label which states that it has been manufactured in compliance with government flammability tests.
- From 1st December 2015 Private Landlords are responsible for ensuring that an electrical safety inspection of their property is carried out by a registered electrician at least every 5 years and that anything which fails to pass the inspection is replaced and/or repaired immediately. At minimum, an electrical safety inspection must be carried out (a) before a tenancy starts and (b) during the tenancy at intervals of no more than 5 years from the date of the previous inspection. A copy of the most recent electrical safety inspection reports must be provided to both new and retained Tenants. The person conducting the checks must be employed by a firm that is a member of accredited registration scheme recognised by the Scottish Government [for example NICEIC or Select].
- Please note that any new Tenant must receive an Electrical Installation Condition Report (EICR), which was formerly known as the Periodic Inspection Report (PIR), covering the safety of electrical installations, fixtures and fittings if the tenancy started after 1st December 2015. Any EICR produced after 1st December 2015 will also include a Portable Appliance Test (PAT) report on any portable appliances provided by the Landlord.
- If the property is let on a multiple occupancy basis (for example, individual rooms are let to students), some different regulatory requirements apply and the local authority will probably have published a code in respect of the proper standard of management required of an ‘HMO’ and in respect of matters such as the adequate provision of bathroom facilities which will be determined by the number of occupants.
- Fire regulations may apply to the property creating a requirement for a separate means of fire escape, provision of fire doors internally etc.
- Always focus on insurance aspects such as the insurance of the building, of those contents belonging to you as landlord and landlord liability. An insurance policy specifically tailored to a property which is being let should be secured. Standard domestic house buildings and contents insurance will ordinarily not be sufficient. Loss of rent and landlord liability are often additional risks covered in tailored ‘landlord insurance’.
- Letting Agents must also register with the local authority. Letting agents offer a wide range of services from the sourcing and screening of a tenant to the management of the Lease to include the collection of rent, arrangement of repairs etc.
THE NEW FORM OF PRIVATE RESIDENTIAL TENANCY IN SCOTLAND
The new form of Scottish residential tenancy known as the "private residential tenancy" [PRT] was introduced in Scotland on 1 December 2017 by the Private Housing (Tenancies) (Scotland) Act 2016 ("2016 Act"). The PRT criteria replaces the existing "assured tenancies" regulatory system, introduced by the Housing (Scotland) Act 1988 ("1988 Act"). Assured tenancies include the Short-Assured Tenancy [‘SAT’] favoured in past by residential landlords. It is not permissible to enter into a new assured tenancy on or after 1 December 2017.
Key components of the new Private Residential Tenancy [PRT]
The PRT will not specify a minimum or maximum length of tenancy such as 6 or 12 months as was popular under the SAT set up. The length of the tenancy is effectively ‘indefinite’ until lawfully terminated.
- Landlords will only be able to recover possession of their property using one of 18 specified grounds for repossession.
- The "non-fault" ground for repossession which applied to short assured tenancies (SATs) will not be available for PRTs.
- It will not be permissible to enter into an assured tenancy on or after 1 December 2017, but an assured tenancy which started before 1.12.17 will not end automatically and will continue to be regulated by the 1988 Act, including regulations under the 1988 Act relating to termination of tenancies, until the assured tenancy is lawfully terminated.
- In PRTs there will be no minimum term of the tenancy. A tenant can bring a PRT to an end on giving 28 days' notice in writing at any time after the tenancy commences. After the tenancy has commenced, it is open to the parties to agree in writing to alter the 28-day notice period.
- The period of notice that a landlord is required to give to a tenant to terminate a PRT is 28 days (where the tenant has been in occupation of the property for not more than six months), or 84 days (where the tenant has been in occupation of the property for more than six months). In certain circumstances (such as where the tenant has engaged in antisocial behaviour, or where the tenant has been in rent arrears for three or more consecutive months) only 28 days' notice is required by the landlord regardless of how long the tenant has been in occupation.
- Under the new PRT, if the tenant does not vacate the property after being given notice by the landlord, the landlord will have to seek repossession through the newly established First Tier Tribunal (FTT) which will decide on the merits of each case.
- A tenant may apply to the FTT if they believe their tenancy has been wrongfully terminated.
- No pre-tenancy notices [such as AT 5 forms] will be required for PRTs and the PRT set up has less complex notice procedures to terminate the tenancy.
- PRT landlords may increase rents once in every 12-month period and only with three months' prior notice to the tenant. If a tenant is of view that any proposed rent increase would make their rent above the rents charged for comparable properties in the same area, the tenant may refer the increase for adjudication to a Rent Officer at Rent Service Scotland, a Scottish Government entity.
- Local authorities may apply to Scottish Ministers to approve a rent pressure zone (or zones) covering all or parts of its area. If an area is designated as a rent pressure zone, rent increases for sitting tenants under PRTs can be limited for up to five years, though landlords may still increase rents by a minimum of the CPI [measure of inflation +1 percent].
- The 2016 Act specifies types of lettings which are exempt and cannot be PRTs. This is pretty similar to the types of lettings which cannot be assured tenancies under the 1988 Act. Although exempt tenancy types (eg: student accommodation provided by education institutions) are not covered by the 2016 Act (and are therefore not be subject to the 2016 Act's rules on matters such as tenancy duration and notice periods), such exempt tenancies remain regulated to some extent under legislation relating to matters such as accommodation standards, licensing of landlords, houses in multiple occupation, and rent deposit schemes.
- Lettings within qualifying purpose-built student accommodation (PBSA) built by private accommodation providers is a category of exempt letting now exempt under the 2016 Act. To qualify for the PBSA exemption the student accommodation must include at least 30 bedrooms in the same building or complex.
- A recommended Model Tenancy Agreement (MTA) has been published by the Scottish Government. The MTA itself is however not mandatory but it does contain mandatory and discretionary clauses and a statutory guidance note. The landlord and tenant can elect to enter into the lease electronically. It is anticipated that use of the Model Tenancy Agreement will become the conventional means of recording residential lease terms and conditions. Adhering to the MTA avoids the risk of a lease contravening the new criteria in relation to mandatory terms and conditions clauses.
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