The New Private Residential Tenancy - How Will It Affect Tenants and Letting Agents?
Our recent blogs have looked the new Private Residential Tenancy, due to come into effect on 1 December, and its likely impact on landlords. In this blog we look at the likely effect on tenants and letting agents.
How will it affect tenants?
The main difference for tenants, and one of the key objectives of the legislation, will be enhanced security of tenure At present, it's easy for a landlord to terminate a tenancy once the initial contractual term has expired. That easiness was deliberately introduced in the 1980s to encourage more landlords to enter the market and thus overcome the housing shortage brought about largely by the rent controls prevalent in the 1970s. It has been successful in achieving that aim, but not without some downsides: Some landlords have exploited that ease of termination by chosing to respond to tenant requests that repairs be attended to by ending the tenancy instead, hoping to then secure a "less demanding" tenant, and this has led to some reluctance amongst tenants to assert their legitimate entitlements and an undesirably high proportion of poorly maintained rented housing.
Under the new provisions landlords will be able to end a tenancy only in certain circumstances, which we'll come to shortly, so tenants should enjoy a much greater sense of security. Hopefully too, we will see higher standards of maintenance and repair.
Tenancy documentation will be much simpler, with fewer documents to sign.
Landlord/tenant disputes will be referred to a First-tier Tribunal (The Housing and Property Chamber) which will be a less formal and less daunting process than the Sherriff Courts. The Tribunal process should also be quicker.
Under the new regime, a residential tenancy will run without a specified end date until such time as the tenant chooses to end it by serving 28 days' written notice. Landlords on the other hand will not be able to end a tenancy unless one of the mandatory grounds applies, of which the most likley ones perhaps are -
- a genuine need to return to live in the property
- a firm plan to dispose of the property or to substantially renovate it
- a situation of rent arrears
- anti-social behaviour by the tenant.
The first two of these grounds are already applicable under the current regime but there is now a new right of redress if landlords use these grounds fraudulently. The second two obviously come into play only if the tenant is in breach. It's worth taking time to look at all 18 of the grounds by clicking on the link above. You will see that some are mandatory, meaning that the Tribunal must grant the landlord a posession order, while others are discretionary but, in short, responsible tenants should have no concerns about the new regime, and can be more confident in requesting that statutory repairs be attended to. The landlord/tenant relationship may also become more business-like.
How wil it affect letting agents?
Agents will need to be careful in tenant selection otherwise their landlord clients may run into difficulties which are not easily escaped, and this won't make for a happy agent/client relationship. Here at Simply Let we use external professional referencing agents and have never experienced rent arrears nor had a property deliberately damaged, so we're comfortable that the enhanced security provisions won't affect our landlord clients' interests unduly.
Agents will need to revise their tenancy documentation to align with the new provisions and tenancy agreements will need to be based on the new mandatory model tenancy agreement. Additional property-specific clauses can be added provided these are lawful and don't conflict with the model clauses. At Simply Let we're keen to put the new style tenancy documentation in place, but are frustrated in this because of the delay by the Scottish Government in publishing the model agreement. Without that we can't make a meaningful start. We're currently marketing properties with late November availability, and it is entirely feasible that we'll find prospective tenants seeking early December entry. We're not yet able however to let them see what provisions their tenancy agreement will contain. Our plea to government is "Let's have the model agreement now please".
The bigger issue for Simply Let is the advent of Letting Agent Regulation next January. This gives rise to the need to revise our agency agreement with landlord clients and, although Simply Let is regulated by RICS and already operates to standards higher than those which all agents will have to adhere to after January, we are well down the road in overhauling our documentation to take account of the new Letting Agent Code of Practice. This is a time-consuming task, which brings us no business advantage whatsoever while diverting resources away from developing and optimising our services to landlords and tenants.
Having said that, we welcome both pieces of legislation as we do believe they will be effective in raising management standards across the Scottish private rented sector.
As with previous blogs on the new tenancy, this summary is just that, and there’s lots more we won’t bore you with here. Get in touch if you have any questions, or take a look at the guidance for tenants on the Scottish Government website.