Its a common enough scenario , two persons sharing and one decides to leave. Under the terms of the PRT it would seem that under these circumstances not only must the departing tenant give notice but in fact all parties must do so to effectively end the PRT. This may be an unforeseen consequence of the legislation but until its resolved it has pretty far reaching implications for the tenant who leaves because his / her liability for the payment of rent and so on continues regardless. There are several solutions available which involve agreement between the landlord and their tenants the most obvious of which is the assignation of the tenants interest to someone else , that person being their replacement but its complicated and gets even more so when organising return of deposits and signing up to the original terms of the PRT. We shall watch how this develops and post again if further changes are implemented to keep our landlords fully aware of any changes.
Minimum Standards on Energy Efficiency.
The Scottish Government proposes that by 2019 the minimum rating allowable for Energy Performance Certificates be Band E and by 2022 this is set to further shrink back to Band D . Landlords whose properties do not meet the criteria will have a period during which the required upgrades may be completed or risk being fined. Basically this is all part of the larger drive to ensure that properties are meeting a modern , energy efficient standard and that the sector offers tenants the opportunity to live in warm , well insulated housing thus going a long way to eradicating high energy bills and fuel poverty which has dogged the sector for many years.
GDPR deadline approaches.
Dont get caught out. If you are a private landlord this has implications for you . If you wish to have an informal discussion with our team here about this subject please give us a call. More information will be added to our Blog on this shortly.
Improved standards to benefit Landlords & Tenants alike.
The end of January 2018 heralded the implementation of the new statutory code of practise for letting agents. In simple terms that means that all Letting Agents in Scotland have to comply with this Code and should also now apply to join the Scottish Letting Agents Register.
For landlords and tenants this effectively lays down a minimum standard of service that they can expect to receive from their Agent and gives them a way of challenging poor practise should this occur. This is only one part of a larger raft of regulatory changes affecting the sector , which have been covered at length in earlier posts. The important thing here is that Letting Agents have clear guidelines regarding their conduct and that staff meet the required standards having completed relevant training leading to SCQF level 6 or its equivalent.
All Agents must have gained access to the Register by October 1st 2018 or they will not be able to continue to offer these services.
Rentlocally is keeping well ahead of all the relevant dates and has in place a robust strategy to ensure that we are fully ready to meet the challenges of this new and more regulated future.
Condensation and some reminders about its prevention.
Many tenants report dampness to landlords or managing agents which turns
out to be condensation. This happens when warm air comes into contact with
a cold surface and moisture in the air turns into droplets of water.
If your tenants property has condensation, you may find a blackish mould
growing on the inside face of external walls, in the corners of rooms, on
window frames and behind wardrobes and other furniture. The mould is a
result of the condensation not being cleaned & dried in time.
Condensation is one of the main reasons why a full deposit is not returned to
a tenant at the end of the tenancy period. This is because it is normally the
responsibility of the tenant to take all reasonable steps to adequately
ventilate as well as heat the house.
If any condensation develops, the tenant is normally expected to wipe down
and clean the affected surfaces from time to time to prevent the growth of
mould and any other associated damage that can be caused to the window
frames, floor, walls and ceilings.
Tenants can reduce the risk of condensation by doing the following:
1. Open a window when you are cooking and keep lids on saucepans.
2. Leave the bathroom window open after a bath or shower to clear steam.
3. Keep the bathroom door shut when you are having a bath or shower.
4. Do not block air vents of airbricks.
5. Open windows in all your rooms for a few minutes each day to let some
fresh air circulate.
6. Leave some background heating on all day in cold weather.
7. Do not cover radiators or storage heaters with damp clothing.
Lending down / Rents moving up.
New investment in the buy-to-let market has fallen by £20bn in two years as the lethal combination of tighter tax and mortgage rules has begun to take its toll on landlords.
Figures released yesterday by IMLA, the mortgage broker trade body, show that the value of new money raised to invest in buy-to-let properties has fallen by 80pc, from £25bn in 2015 to just £5bn in 2017.
In that period, a series of reforms have had a punitive effect on landlords. The stamp duty surcharge on additional properties was introduced in 2016, making expanding a portfolio more expensive, and the phased removal of mortgage interest relief which began last year has also squeezed profits.
Meanwhile some landlords now face an uphill battle getting mortgages at all, thanks to changes to lending restrictions ushered in by the Prudential Regulation Authority, a part of the Bank of England, at the tail end of last year.
There are currently 4.5 million people living in the private-rented sector and, IMLA warned that if demand continues to increase at current rates the crackdown on landlords may force average rents upwards.
Letting Agents Code of Practise.
Now introduced in Scotland , there are stringent new directives that must be adhered to for any business that would fairly be described as a letting Agent or some derivative thereof. These set out standards of practise which should ensure that all Agents are fully equipped to provide a professional service and that as an industry a benchmark level is implemented across the board.
The areas covered are : Approved system for the handling of client money , both tenants and landlords alike. All Agents having professional Indemnity Insurance . Agents being listed on a register of approved businesses. This approval being dependent on certain basic training standards being met.
Ministers will have the power to obtain the necessary proof that compliance has been observed and powers to address any breaches of the code.
Agents must have written processes to cover the need for identity checks , proof of ownership , reference checks , proper tenancy agreements , management of the properties , key handling and staff training.
Agents must have detailed records of all qualifications held by the principal , Partner or Director who would have hands on responsibility for overseeing the actual letting process or active involvement in same. Such persons must have a plan for continuing professional development and staff training .
All Agents must be in a position to offer a separate client account and must have client money protection insurance.
Key points concerning the new private residential tenancy ( PRT )
On December 1st 2017 the present assured and short assured tenancy will be replaced with a new tenancy regime hereafter referred to as a PRT. Our objective is to outline to you what this means for you as a landlord and should any points require additional clarification we would aim to be able to provide further specifics on request
Let us look at the main points in turn :
The Scottish Government has produced a model lease which contains two types of clauses.These are either Mandatory and must form part of the PRT or Discretionary and can either form part of the agreement or not . Please note , it is not compulsory to use the model tenancy agreement but all PRT leases must contain certain statutory terms.
The government is presently working on a digital interface to allow landlords to generate PRT leases online but this has not been finalised as yet. Once it has we will provide our landlords with a link.
Only one date is required on the lease – the START DATE. This is because the legislation does not permit the parties to specify a duration period for the lease , hence no actual end date. The tenancy can be terminated at any point after the start date by either party.
As at present the landlord may set the initial rent even if the property is located in what are to be termed Rent Pressure Zones of which more later.
Tenants must also be issued with guidance notes and there are 2 versions of these.
Version 1 – if a landlord uses the Scottish Governments model lease , they must give their tenants the easy read notes which provide a simple commentary on each of the mandatory terms and on any discretionary terms where the landlord has used the governments suggested wording.
Version 2 – where the model lease is not used a set of supporting notes must be provided. These only cover the statutory tenancy terms which landlords are required by law to include in any PRT lease.
Rent Increases.
The first increase can be carried out at any time after the start of the lease but thereafter the rent cannot be increased more frequently than once a year. The tenant has to be given three months notice of a rent increase in writing. If the tenant feels that the increase is too high they can ask a rent officer from the Housing & Property Chamber to set the rent. The rent Officer will set the rent at the Open Market level.
If a property is in one of these Rent Pressure Zones , Scottish Ministers will place a cap on rent increases but this must be at least 1% above the consumer prices index. Rent pressure zones or RPZ can be designated by the Scottish Government only in extreme circumstances where rents are rising to such a level that they are causing undue hardship to tenants and putting pressure on the local Authority to provide housing or subsidise the cost.
Ending the tenancy – if a tenant wants to leave they must give the landlord at least 28 days notice in writing. They can issue this at any point after the start date.
The landlord can only end a tenancy if one or more of 18 grounds for possession apply. These being :
1. Landlord intends to sell the property at market value within 3 months of tenant
leaving (mandatory)
2. Property is to be sold by mortgage lender (mandatory)
3. Landlord intends to refurbish which will entail significantly disruptive works and it will
be impracticable for the tenant to occupy the property during the work (mandatory)
4. Landlord intends to occupy the property as their principal home for at least 3 months
(mandatory)
5. Family member intends to occupy the property as their principal home for at least 3
months (discretionary)
6. Landlord intends to use property for non-residential purpose (mandatory)
7. Property required for religious purpose (mandatory)
8. Tenant is no longer an employee of landlord (mandatory if application made within 12
months of tenant ceasing to be employee)
9. Tenant is no longer in need of supported accommodation (discretionary)
10. Tenant is not occupying the property (mandatory)
11. Tenant has breached tenancy agreement (but not rent clauses) (discretionary)
12. Tenant has owed some rent for 3 consecutive months (mandatory if on day of tribunal
hearing tenant owes at least one months’ rent and arrears are not due to delay/failure
in benefit payment)
13. Tenant convicted of using property for immoral/illegal purpose or convicted of offence
committed at/near property (mandatory)
14. Tenant has acted in anti-social manner (discretionary)
15. Tenant associates with someone who has a criminal conviction or who has engaged in
anti-social behaviour (discretionary)
16. Landlord has been refused registration or had registration revoked (discretionary)
17. Landlord’s HMO licence has been revoked (discretionary)
18. Overcrowding statutory notice has been served on the landlord (discretionary)
The notice period for most of these is 28 days if a tenant has been entitled to occupy a property for 6 months or less. This increases to 84 days if a tenant has been entitled to occupy a property for more than 6 months.
Grounds 10 -15 require 28 days notice regardless of the duration of time a tenant has been entitled to occupy a property.
To end the tenancy the landlord must issue the tenant with a prescribed notice called a notice to leave and this must identify which of the grounds apply.
Eviction –
If a tenant does not leave when required to do so the landlord should apply to the HPC to have them evicted. Any such applications will be free of charge and landlords and tenants are expected to represents themselves at the chamber. The hearing will be run and determined by a panel comprising a solicitor who specialises in tenancy legislation and at least one property / housing expert. If the ground is mandatory then the tribunal has to issue an eviction order if the ground is proven.
If the ground is discretionary the tribunal will only issue an eviction order if it considers it reasonable to do so.
Exisiting tenancies – the new regime does not affect these provided that the fixed term is still running , these will continue under the old regime.
Please note ; Legal opinion had been divided on whether a short assured tenancy which is renewing on a contractual basis would become a PRT at the first contractual renewal after the new legislation is implemented. The Scottish Government has after consultation with the industry decided that tenancies of this sort will not become PRTs but rather will continue as short assured tenancies in perpetuity until termination by either party.
Further information will be issued to our landlords as it emerges especially connected to the wording of the various notices required when giving notice to leave / rent increases and so on.
Is the party Over ?
Edinburgh has become a so called party flat mecca for certain property owners who are offering these properties for stag dos and the like. The consequent issues of noise and anti social behaviour have been affecting residents across the City and not unreasonably they want to know how and when its going to stop. The most obvious solution might be to have the Short term letting market handled solely by Agents but its hard to see how that could be enforced. BBCs Panorama is launching an investigation into the rise of this new phenomena and discussing its consequences on the lives of those most affected by it.
Tenant Surveys find only 14% are renting by choice.
Many commentators refer to the supposed sea change in peoples approach to property. The commonly held view that it is a lifestyle choice and offers greater flexibility and freedom of movement might indeed be true for some but a recent survey commissioned by Go Compare mortgages suggests a somewhat different picture.
A third of tenants in the survey cannot envisage ever owning their own home , not because they do not wish to do so but because they cannot see how it might be financially possible. This is linked to the rise in rents which further erodes their capacity to save for a deposit. So are rents in fact rising ?
21% of this sample thought that because of the restriction of interest tax relief on buy to let mortgages it would lead to a reduction in the supply of rental properties in their area and as part proof of this has either experienced a rent increase or been advised that one was likely in the near future.
This is the true dilemma of the housing market. Rising rents because of reduced supply versus stagnant wage rate growth. Its an issue the Government will have to grapple with in the years ahead to avoid a housing crisis and there is plenty of coverage on this topic to be found elsewhere.
