2015 was a significant year of change in the Scottish private rented sector. From the introduction of letting agent regulation to a new proposed tenancy system, we have put together a brief summary of some recent changes set to have an impact in the sector;
Private Housing (Tenancies) (Scotland) Bill
The Bill was introduced in the Scottish Parliament in October 2015 with the intention of replacing the current short assured and assured tenancy system in Scotland. The current tenancies would be replaced with a single new tenancy called a Scottish Private Residential Tenancy (SPRT). The Scottish Government is of the opinion that this new tenancy model will provide appropriate protections for landlords, lenders and investors.
The Government also stated it will ensure that tenants have more ‘’security, stability and predictability’’ in the Scottish private rented sector.
There are however concerns on the changes from many landlords and letting agents, including;
- Removing the ‘no fault’ ground for possession. Landlords can no longer regain possession of their property simply due to the tenancy coming to a natural end and will be required to use one of sixteen new proposed grounds of possession.
- Concerns on a ‘one size fits all’ model and if it will accommodate the likes of Students (who may only require a 9 or 10 month lease)
- Caps on rent increases for tenants in ‘’Rent Pressure Zones’’
The new Bill was under debate in Parliament last week and received initial backing from MSP’s, who were in agreement with its basic principles.
Increased Stamp Duty Tax (or LBTT)
The Scottish Government have recently announced an increased level of Stamp Duty tax (or Land & Buildings Transaction Tax in Scotland) in respect of purchasing a second home and buy-to-let property. A 3% surcharge on the price of the property will be introduced effective 1st April 2016 on any properties over £40,000.
The changes have led to many landlords pushing through transactions prior to the new tax rate taking effect. Many in the sector are however concerned that it may have a direct long-term effect on the supply of buy-to-let property.
Carbon Monoxide Legislation
With effect from 1st December 2015, it became compulsory for all private landlords in Scotland to provide a carbon monoxide detector in all rooms that contain a fuel burning appliance. It is stipulated that the detector must have a sealed long-life battery designed to operate for the duration of the device. The detector must also cover all types of fuel and not just gas.
The Government stated in no uncertain terms that it was the landlord’s responsibility to meet with the Repairing Standard and ensure they are maintaining their duty of care towards tenants.
Electrical Safety Inspection
Effective 1st December 2015, all rented properties in Scotland are required to have an electrical safety inspection in respect of fixed wiring carried out by a qualified electrician at least once every 5 years.
This will apply to any new tenancies taking effect from 1st December 2015.
Smoke Detector Guidance
In January 2015 the Scottish Government released revised statutory guidance on the requirement of smoke alarms in all rented properties in Scotland.
The revised Domestic Technical Handbook, produced by the PHRP (Private Rented Housing Panel), states that there should be at least;
- One functioning smoke alarm in the room which is frequently used by the occupants for general, daytime living purposes
- One functioning smoke alarm in every circulation space, such as hallways and landings
- One heat alarm in every kitchen
- All alarms should be interlinked
Letting Agents Code of Conduct
The Housing (Scotland) Act 2014 have introduced initial outline for the regulation of letting agents in Scotland, the letting sector’s equivalent of the Property Factors (Scotland) Act 2011 Code of Conduct.
The draft Code of Conduct is currently at consultation stage with the Government and is seeking responses from the sector, however the basic principles include;
- a mandatory register of letting agents with an associated ‘fit and proper’ person test
- a training requirement that must be met to be admitted to the register
- a statutory code of practice all letting agents must follow
- a way for tenants and landlords to resolve complaints against letting agents for breaches of the statutory Code of Practice through a new specialist First-tier Tribunal
- powers for Scottish Ministers to obtain information and to inspect to monitor compliance and enforce regulatory requirements
Once implemented, expected 2018, the Government state these measures will help increase the overall standards of service and professionalism within the letting industry and provide customers (tenants and landlords including former tenants and landlords) with an effective way to challenge bad practice.
Jamie McKenzie Cert CII
Property Account Executive