Scottish Housing News (08/10/2015) - The Scottish Government has today published a new bill which aims to give more security, stability and predictability to tenants renting in the private rented sector (PRS).
The Private Housing (Tenancies) (Scotland) Bill will protect 700,000 people from the prospect of unforeseen and unfair eviction and unpredictability over rent increases, as well as ensuring the sector is attractive to investors, with better management and regulation.
Proposals in the bill include:
- A more streamlined system with no confusing pre-tenancy notices, modernised grounds for repossession and easier-to-understand tenancy agreements
- Legislation which will mean tenants can no longer be asked to leave their home simply because the tenancy has reached its end date. Landlords will have modern protection for repossessing their property, such as intention to sell or move in themselves
- Rent increases limited to only one per year, with three months’ notice – designed so tenants will have advance notice of changes, and can budget accordingly
- The opportunity for local authorities to implement rent controls in areas where there are excessive increases in rents and a concern about the impact this is having on tenants and the wider housing system
- More progressive repossession grounds for rent arrears cases, as well as new repossession grounds introduced for landlords where they want to sell their property or the tenant has abandoned the property
Housing minister Margaret Burgess said: “The Scottish Government is committed to ensuring every person in Scotland has a safe and warm place to stay, and that there is a sustainable, long-term solution to addressing housing affordability. This includes investing in house building and modernising the private rented sector, so we have a system fit for today’s tenants and landlords.
“The changes outlined in this bill will give tenants greater security and stability in their home and community. It will also give landlords reassurance that their tenants will treat their property as a long-term home, rather than somewhere temporary.
“The private rented sector is changing. It is now home to a growing number of people in Scotland, and we recognise there are some areas where rents are increasing significantly. It is right and responsible to give local authorities the ability to introduce rent controls in order to ease areas under pressure.
“The range of measures brought forward under this bill will ensure the private rented sector is better managed, simplified and successful, and creates a system that works for everyone.”
The bill forms a key part of the Scottish Government strategy to grow and improve the private rented sector. In response to an action set out in the strategy, Ministers set up an independent Tenancy Review Group which recommended a new tenancy. The introduction of the bill follows two full public consultations, which were undertaken as part of this process and received around 10,000 responses.
Jon Sparkes, chief executive of Crisis, said: “Today’s announcements on tenancy reform are a major step forwards, with Scotland once again taking the lead in protecting people from the devastation of homelessness. As the private rented sector continues to grow, we are delighted that the Scottish Government has put greater protection for tenants at the heart of its housing plans by removing the ‘no fault’ grounds for eviction.
“It is also pleasing to see acknowledgement of the challenge posed by high rents in some areas of Scotland, which can put secure housing out of reach for many. These areas badly need more affordable homes to prevent the housing crisis escalating further.”
To help secure new investment in the private rented sector and help meet the demand for more homes the Scottish Government has agreed to explore the development of a financial guarantee mechanism to stimulate private rented sector expansion in Scotland.
As part of this drive to support growth, Scotland’s chief planner haswritten to the heads of planning in every local authority to re-emphasise the importance the Scottish Government is placing on boosting the supply of housing across all tenures. He has encouraged local authorities to consider the role PRS homes can play in meeting housing need and demand in their areas.
Subject to an application from a local authority, Ministers will have the ability to introduce local rent controls for sitting tenants in areas under rent pressure. Consultation with landlords and tenants would be part of this process, with Ministers deciding on rent caps for a period of time not exceeding five years.
Last week, a spokesperson for the Scottish Association of Landlords (SAL) welcomed some provisions under discussion ahead of the bill’s publication, however questioned plans for possible rent controls.
“SAL supports the drive to increase standards in the private rented sector and agrees it is time for the overall rental regime to be modernised,” said SAL chief executive, John Blackwood.
“However, heavy-handed rent control will only endanger investment in the private rented sector.
“The solution is to ensure increased housing supply which will increase standards and drive down rents.
“We hope the Scottish Government proposals strike the right balance between protecting tenants and encouraging investment by landlords and letting agents.”
The main aspects of the provisions are:
- Introduction of a new open-ended Private Residential Tenancy for all future PRS lets.
- Landlords will no longer have the ability to regain possession of their property simply because the tenancy has come to its end date (otherwise known as the ‘no-fault’ ground). Instead, a landlord will be required to use one of the proposed new modernised grounds for repossession. These, broadly, are:
- Landlords intends to sell.
- Property to be sold by lender.
- Landlord intends to refurbish.
- Landlord or family member intends to live in property.
- Landlord intends to use for non-residential purpose.
- Property required for religious purpose.
- No longer an employee.
- No longer a student (staying in student accommodation).
- Not occupying let property.
- Breach of tenancy agreement.
- Rent arrears.
- Criminal behaviour.
- Anti-social behaviour.
- Landlord has ceased to be registered.
- HMO licence has been revoked.
- Overcrowding statutory notice.
- Introducing notice periods linked to how long the tenant had lived in the property, which include shorter notice periods under certain specified circumstances.
- Introducing a Model Tenancy Agreement for all future PRS lets.
- Rents can only be increased once in a 12 month period (with 12 weeks’ advance notice) to allow rent predictability. Tenants will also be able to refer perceived unreasonable rent increases, that takes their rent beyond the market rate, for adjudication to protect them from rent hikes. Scottish Ministers have the power to cap the levels of rent increases for sitting tenants in Rent Pressure Zones (RPZs). This is a discretionary power which local authorities may apply to Ministers to make use of.
Source: Scottish Housing News. Additional reporting by CSPP.
Image: First Minister Nicola Sturgeon has suggested that rent controls could be applied in the city of Aberdeen.