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From time to time we will post news articles and announcements relating to the firm and to various legal issues that may be of interest to you.

The New Private Residential Tenancies in Scotland - All Change for Landlords and Tenants

Major changes are shortly due to impact the tenancy laws of Scotland. At present, most private tenancies in Scotland are let under the assured tenancy regime. The majority of these lets are short assured tenancies and are governed by the Housing (Scotland) Act 1988. However, the Private Housing (Tenancies) Scotland Act 2016, due to come into force in December 2017,will do away with the current private tenancy regime and replace it with a new Private Residential Tenancy (PRT) for future lets in the private sector.

The purpose of the new PRTs is to provide 'security, stability and predictability for tenants, as well as appropriate safeguards for landlords, lenders and investors.' However, there are already concerns that the provisions to limit rent rises and repossess properties are going to adversely affect landlords.

The new PRT will be an open ended tenancy, which means that a landlord will no longer be able to ask a tenant to leave simply because the term of the lease has expired. Tenancies will also last for a minimum of six months, unless both parties agree otherwise.

The grounds for repossession (i.e. to allow a landlord to regain possession of the property) have been streamlined. However, it is expected that the practice of repossession will become more difficult. There will no longer be any need to serve both a Notice to Quit and Notice of Proceedings. Instead, these will be replaced by a single Notice to Leave, which can only be served where one of the fewer available grounds for repossession applies. A landlord can serve a Notice to Leave at any point of the tenancy within a PRT, but only where one of the grounds for eviction are satisfied; namely the landlord intends to use the property for another purpose, criminal or anti-social behaviour is being carried out by the tenant within the property, or the tenant is in rent arrears for three consecutive months. Tenancies subsisting for less than six months only require 28 days' notice to be given to the tenant, with those subsisting for more than six months requiring a notice period of 84 days. Repossession of the property by the landlord is now not possible until the end of this notice period, as opposed to the current regime which allows landlords to repossess the property as soon as the tenant vacates the property following their eviction.

In addition to the concerns surrounding the practice of repossession, there are also concerns in relation to the rent restrictions due to be introduced by the new Act. Rent will only be able to be reviewed annually and at least three months advance notice must be given to the tenant if any increase is intended. As a result of such rent restrictions, the landlord may find it difficult to fix rents which cover all of their anticipated costs for the year. This could inevitably affect the landlord's ability to maintain mortgage repayments. In turn, said rent restrictions may equally impact the tenant. There is a risk that the initial rent may be set too high as insurance against unforeseen eventualities, thus potentially impacting the tenant's ability to afford rental payments.

The Act is expected to come into force in December 2017. Any existing assured and short assured tenancies will continue on the same terms and conditions. It is possible for both parties to agree to convert it to a PRT but, at present; the legislation does not require them to do so. It is worth noting that if an existing tenancy is inherited by a successor, it will become a PRT and hence subject to the new legislation.

For expert legal advice on private residential tenancies contact our specialist litigation lawyers today.

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