The Private Residential Tenancy In Scotland

The Private Residential Tenancy In Scotlanda

The Private Residential Tenancy (PRT) will become the new residential tenancy for Scotland from 1 December 2017. The PRT will become the standard tenancy agreement between residential landlords and tenants and will replace the Short Assured Tenancy and the Assured Tenancy.

Creating a PRT

Pre-tenancy notices such as the AT5 will no longer be needed but landlords and tenants will not be entirely free to negotiate the tenancy agreement. The Scottish Government has produced a model tenancy agreement which can be used by landlords. It contains compulsory clauses indicated by the bold print and optional clauses in ordinary typeface which can be varied or excluded. Landlords choosing not to use the model tenancy must include clauses dealing with receipts for rent paid in cash, rent increase notices, subletting, notification of other residents, access for repairs and termination.

Reviewing the rent

Landlords may review the rent once a year by serving a rent increase notice on the tenant at least three months before the increased rent is to become payable. Following a rent increase notice from the landlord, tenants can seek an order for determination of the open market rent from a rent officer; appeals can be made against such orders to the First Tier Tribunal.

The biggest talking point prompted by the new PRT is the potential for Rent Pressure Zones. Local authorities may apply to the Scottish Ministers for consent to cap PRT rents in a designated zone within their area. How big or small that zone will be is still to be seen. The local authority will have to provide the Scottish Ministers with evidence showing that rents payable in the area are rising too much, these increases are causing problems for tenants and, as a result, the authority is under pressure to provide housing or subsidise the cost of housing. The Ministers will consult parties affected before making their decision.

A rent pressure zone can be put in place for a maximum of five years, and if the local authority is successful, landlords in the affected area will not be able to increase existing rents to an amount greater than CPI + 1%. Rent pressure zones will not affect the setting of initial rents and will still allow for the rent to be reviewed annually. Investors have generally reacted positively to the minimum cap of CPI + 1%. While some fear that the mere mention of rent controls will spook investment in the market others have been...