RESIDENTIAL TENANCIES: MORE REGULATION ON THE WAY
Letting properties within the Scottish private rented sector is a heavily regulated activity and it is easy to fall foul of the ever-increasing amount of regulation.
The latest in a series of developments is the Housing (Scotland) Bill (the “Bill”), which was introduced by the Scottish Government in March 2024. The Bill contains a package of proposed reforms increasing the rights of tenants and which, according to the explanatory notes accompanying the Bill, will “help ensure people have a safe, secure and affordable place to live”.
The Bill is a large and complex piece of legislation and in many respects is a framework, with much of the detail being left to secondary legislation. Some of the key points insofar as they relate to the private residential tenancy (“PRT”) regime are summarised below. In some cases, similar provisions affect other types of residential tenancies.
The Bill also proposes to phase out existing assured tenancies (including short assured tenancies) by giving the Scottish Ministers powers to appoint a date upon which these types of tenancies would convert to PRTs. If this is brought into force, one effect will be that “no-fault” termination of short assured tenancies will no longer be possible.
Rent control
A large part of the Bill is dedicated to rent control including the introduction of rent control areas. The Scottish Ministers would have powers to designate the whole or part of a local authority area as a rent control area and to determine the level of cap which applies, but only where “necessary and proportionate for the purpose of protecting social and economic interests of tenants in the area” and where this is a “necessary and proportionate control of the landlords’ use of their property in the area”.
To inform the Scottish Ministers’ decision making process, local authorities would carry out five yearly assessments of the levels of rent and rent increases in the private sector. Landlords would be under a duty to provide local authorities with certain information about their let properties (including the level of rent and rent increases), with penalties for failure to comply.
For properties outwith a rent control area, rent cannot be increased more than once in any 12 month period and no rent increase in the first year of the PRT would be permitted. Rent increases would not be capped, however the Bill proposes to amend the rent determination process so that if a tenant were to formally challenge a rent increase, the rent will be the lower of that specified in the landlord’s rent increase notice and the open market rent.
Evictions
The First-tier Tribunal would be under a duty to consider delaying evictions. A number of factors would be taken into consideration, including whether the tenant, any member of tenant’s household or the landlord has any disability and whether not delaying the end of a tenancy would cause the tenant, any member of the tenant’s household or the landlord financial hardship.
The Bill also seeks to increase the potential damages payable by a landlord for a wrongful eviction to a minimum of three months’ rent and a maximum of 36 months’ rent.
Terminating joint tenancies
Changes to the PRT regime are proposed so that where the tenancy is a joint tenancy, one tenant can terminate the tenancy for all tenants.
Tenant alterations and pets
Regulations would follow setting out permitted alterations which a tenant could make to the let property. There would be two categories of permitted alterations: those which do not need landlord’s consent and those which do need landlord’s consent. The Bill also proposes that a tenant may keep a pet or pets at the let property with the landlord’s consent.
In both cases, where landlord’s consent is required, a landlord may not unreasonably refuse consent but may impose reasonable conditions when giving consent. The Scottish Ministers have powers to make regulations setting out when it would be “reasonable” for a landlord to refuse consent and what constitutes a “reasonable” consent condition.
Timing
A target date for passing the Bill has not been publicised and the Bill awaits the parliamentary process where it will be considered and amendments to it are certain to be made. Once enacted, secondary legislation would be required for certain elements and it is likely that there will be transitionary provisions.
In the meantime, the Scottish Parliament’s lead committees for the Bill published a consultation seeking views on the proposals which closed on 24 May 2024. An analysis of the responses was published this month and is available here.