The law and the private rented sector
Contents:
Types of occupation agreements
Who is a private landlord?
There is no fixed legal definition of private landlord – but on these pages we mean any landlord who is not:
- a local authority
- a registered social landlord
- Scottish Water
We also use the term landlord to include instances where the owner has let the property on a licence.
Tenancy or licence?
Some landlords provide written agreements that are headed as ‘licence agreements’. But it is not the words in the agreement that ultimately determine the status but the actual arrangements (see next section). Nowadays this distinction has become less important because from December 2017 all new private tenancies issued in Scotland are Private Residential Tenancies (PRTs). Existing assured and short assured tenancies will remain in place until they come to an end, as explained here.
What is a tenancy?
Any arrangement where the occupier pays ‘rent’ for possession for a ‘duration’ is usually a tenancy. It is the actual arrangements that determine this, not the wording on the agreement.
Three essential elements are required in order to create a valid lease:
- The parties – the lease must have a landlord and a tenant who are separate persons. The parties must both be named and identifiable.
- The subjects – the property being leased must be identifiable.
- The rent – there must be money paid for the right to occupy. It is possible to have a legally binding contract allowing a person to occupy a property rent free. However, this would not be a lease agreement, instead it would be a licence.
What is a licence?
A licence has been defined as ‘a contract, falling short of a lease whereby not the heritage itself but a right to use a particular part of it or to put a particular part of it to some use is granted’.
If no rent is paid or there is no exclusive possession or there is exclusive possession but the lease is terminable at any time the owner requires, and parties have agreed to this, then the arrangement might be a licence.
The two common circumstances where the agreement might be a licence instead of a tenancy are:
- the occupier pays rent but shares the living space with the owner without any exclusive possession of any part of the dwelling: for example a family member or friend, or a lodger who can be asked to move rooms by the owner; or
- hotel or hostel accommodation where the occupier could be asked to move rooms, or where rooms are only provided on a night-by-night basis.
What is security of tenure?
‘Security of tenure’ means the tenant has the right to continue in occupation until the tribunal has granted an eviction order. PRTs and assured tenants enjoy the greatest degree of security: the tribunal will only grant possession if either a mandatory or discretionary ground has been satisfied. In the case of mandatory grounds, the tribunal must grant an eviction order if the ground has been proven whereas in the case of discretionary grounds the tribunal must also be satisfied that it is reasonable to grant eviction. Short assured tenants have less security: see below.
Types of tenancy
There are various different forms of tenure in the private rented sector in Scotland. The most common has been an assured or short assured tenancy, for a minimum period of six months, but all new tenancies now have to be a PRT. Tenancy types are described here and what follows are additional notes for advisers.
Private Residential Tenancies
The Private Residential Tenancy (PRT) was introduced by the Private Housing (Tenancies) (Scotland) Act 2016. It replaced assured and short assured tenancies for new lets from 1st December 2017. Schedule 1 of the Act specifies a number of tenancies which cannot be PRTs. These include:
- Tenancies where the rent is less than £6 per week.
- Tenancies provided by a university, another educational institution or an institutional provider of student accommodation.
- A holiday let.
- Social housing tenancies.
- Accommodation for a homeless person provided under Part II of the Housing (Scotland) Act 1987.
- Accommodation provided by an offender under the Social Work (Scotland) Act 1968.
- Accommodation provided for an asylum seeker under section 4 or Part VI of the Immigration and Asylum Act (1999).
- Accommodation under the Displaced Persons (Temporary Protection) Regulations 2005.
Unlike the short assured tenancy, this type of tenancy does not have a fixed end date. The tenancy can only be ended by the tenant giving 28 days’ notice to their landlord or by the landlord giving notice based on at least one of 18 grounds for eviction set out in Schedule 3 of the Act. Depending on the length of time the tenant has lived in the property and which ground for eviction is being used, the landlord must give 28 or 84 days notice.
If the tenant does not agree to leave or does not agree with the stated ground for eviction, the case will be decided by the Housing and Property Chamber of the First Tier Tribunal. Some eviction grounds are mandatory, some are discretionary and some have mandatory and discretionary elements. The tribunal now deals with all private rented sector disputes including those relating to older tenancies.
Assured tenancies and short assured tenancies
New assured tenancies cannot be created but existing ones are still valid. There are some tenancies that were specifically excluded from being assured tenancies. As well as local authority and housing association tenancies, the other exclusions were similar to those for PRTs.
A tenancy is an assured tenancy provided it is let as a separate dwelling, at least one of the tenants is an individual and at least one of the tenants occupies it as his only or principal home.
A short assured tenancy is a type of assured tenancy so all the assured tenancy possession grounds apply. The distinguishing feature of a short assured tenancy is that the landlord has an absolute right to recover possession of the property when the term of the tenancy comes to an end. The landlord has to serve a notice terminating the tenancy prior to the termination date, serve a two-month notice requiring possession and apply for an eviction order (s.33, Housing (Scotland) Act 1988). The landlord does not require to prove that grounds exist.
Most landlords granted a fixed-term tenancy for six months or one year but it can be longer. If the tenant remains in possession once the fixed term has ended the tenancy automatically renews by tacit relocation on the same terms as the original tenancy.
Financial arrangements
Tenancy deposits
Where a tenancy or occupancy arrangement has been created and a deposit has been charged the landlord must protect the tenant’s deposit by using a government-approved tenancy deposit scheme and inform the tenant that they have done so (Tenancy Deposit Schemes (Scotland) Regulations 2011, Reg. 3). The landlord’s notice to the tenant must contain all of the information required by the regulations.
If the landlord fails to protect a deposit, the tenant can apply to the tribunal for an order requiring the landlord to pay the tenant an amount not exceeding three times the amount of the tenancy deposit (Deposit Scheme Regulations, Reg. 10). The tenant can do this even after the tenancy has come to an end and they have left the dwelling but the application must be made not later than three months after the tenancy has ended.
It is illegal in Scotland to charge anything apart from a refundable deposit or rent in advance in exchange for the granting of a tenancy. The maximum deposit chargeable is two month's rent.
Duty to provide a written lease and rent book
The Scottish Government has developed a model tenancy for setting up a new PRT, and an online tool for generating it, that can be used by private landlords to meet their legal obligations. If a landlord chooses to use this tenancy, they must provide their tenant with accompanying easy read notes. Alternatively, landlords can develop their own PRT but they must ensure that all of the standard clauses that are legally required have been included. They must also provide their tenant with a guide to the standard clauses.
Guidance on the PRT has been produced by the Scottish Government and is available for landlords and tenants.
Under the PRT, landlords and tenants may agree for the main method of communication to be via email, including notice to increase the rent and notice to end the tenancy. It is important to note that this is optional and should only be by agreement from both parties. If the tenant wants to receive communication in writing, they should be able to agree this with their landlord.
The landlord of an older, assured tenancy must provide the tenant with a written lease. If the landlord fails to do so, the tenant can apply to the tribunal to order the landlord to prepare the document (s.30(1), Housing (Scotland) Act 1988). If rent is paid weekly, the landlord must provide a rent book (s.30(4), Housing (Scotland) Act 1988). If the landlord fails to do so he is guilty of a criminal offence.
Rent increases and changes in rent
Landlords and tenants may agree any increase in rent that they choose. The initial rent will be contained in the tenancy agreement.
The procedure a landlord has to follow to increase rent depends on the type of tenancy. Under a PRT, rent increases are limited to one in any 12 month period and the landlord must give their tenant at least three months notice. In general, there is no limit to how much the rent can be increased by but if the tenant thinks that the proposed increase is unreasonable, they can appeal.
However, local authorities have been given discretionary powers which allow them to apply to have a particular area designated as a Rent Pressure Zone (RPZ) if they can provide Scottish Ministers with specific evidence that rents are rising too much, causing problems for tenants in the area and creating pressure on affordable housing. If an RPZ is designated, rent increases in that area will be capped at CPI plus 1% plus an additional amount set by Ministers (the additional amount could be zero or any increment of 0.5%).
In the case of assured tenancies, rent increases cannot be made during the fixed term unless the tenant agrees to it or the tenancy agreement permits it to be increased. After the fixed term expires the rent can be increased if:
- The tenancy agreement contains a procedure for rent increases which the landlord follows.
- The landlord gives written notice of the proposed increase in form AT2 (an AT2 can only be given once per year).
- The landlord gives a written notice in form AT1(L) to change the terms of the tenancy agreement, including rent. This form of notice can only be given if the contractual tenancy has been terminated and the tenant continues to occupy the property as a statutory assured tenant, i.e. after service of a valid notice to quit.
All forms can be found in the schedule to the Assured Tenancies (Forms) (Scotland) Regulations 1988.
In respect of short assured tenancies, the landlord cannot increase the rent during the fixed term, only when they seek to renew.
Tenants have the right to complain to the Housing and Property Chamber of the First Tier Tribunal if they think the rent is too high. However, the landlord of short assured tenants could simply terminate the tenancy rather than proceed with the tribunal procedure. Tenants should also be aware that under the PRT, if they dispute a rent increase notice, the tribunal could actually decide that the rent should be increased in line with similar properties in the area.
The condition of the property
Disrepair and remedies by a tenant
The landlord of a residential tenancy must provide a property that is habitable and tenantable. This duty is incorporated in the Housing (Scotland) Act 2006.
The starting point for dealing with disrepair is always the tenancy agreement.
If there are no express terms in the agreement the next stage is to establish whether there are any implied terms and if so enforce them. The following terms are implied into the tenancy agreement by section 13, Housing (Scotland) Act 2006. These implied term are generally referred to as ‘the Repairing Standard’. The details of the standard are given here.
The landlord is not in breach of the obligation until they have been given notice of the defect and they have failed to remedy it within a reasonable period. What is reasonable depends on the disrepair.
Where a landlord has failed to respond to notice of the defect and/or remedy the disrepair, the tenant can apply to the First-tier Tribunal for an order that the landlord has failed to comply with the Repairing Standard. Where the tribunal determines that a landlord has failed to comply they can require the landlord to carry out the necessary work by making a Repairing Standard Enforcement Order (RSEO). The RSEO will specify a reasonable time period in which the work should be carried out. Where the RSEO has not been complied in a reasonable time the tribunal can make a rent relief order. The rent relief order is an order reducing the rent payable by a specified amount not exceeding 90%.
Applications to the tribunal are free. Local authorities can also make a third party representation to the tribunal – they can present evidence either on behalf of a tenant or if a tenant does not want to but the local authority feels it would be beneficial.
Remedies by the local authority
The local authority has powers to take action against landlords for bad housing conditions. A complaint can be made to the enforcement team. Actions that local authority enforcement officers can take against a landlord include:
- Service of an abatement notice and subsequent prosecution if the property is in such a state as to be prejudicial to health or a nuisance: ss.79-82, Environmental Protection Act 1990.
- Repair of a building in the area and recovery of the cost from the owner: s.87, Civic Government (Scotland) Act 1982.
- Paying for a missing share of a communal repair and recovering the cost from an owner/landlord: part 6 of the Housing (Scotland) Act 2014.
- Service of a defective building notice requiring an owner to rectify defects: s.28, Building (Scotland) Act 2003.
- Service of a works notice requiring owners to carry out work to deal with sub-standard housing, failing which the local authority can carry out the works: chapters 5 and 6, Housing (Scotland) Act 2006.
Councils can also apply for extra powers to deal with areas of poor quality private rented housing under the Enhanced Enforcement Areas Scheme.
Overcrowding
Local authorities can serve an overcrowding statutory notice on the landlord of a house which is overcrowded, where the local authority considers that the overcrowding is having an adverse effect on the health or wellbeing of any person or on the amenity of the house or its locality (s.17, Private Rented Housing (Scotland) Act 2011). The notice will set out the steps to be taken by the landlord to rectify the situation, the period within which the steps must be taken, and any other conditions considered appropriate.
A property is statutorily overcrowded if either the ‘room standard’ or the ‘space standard’ is breached (s.135, Housing (Scotland) Act 1987):
- The ‘room standard’ is breached if two people of opposite sexes, who are not living together as husband and wife, must sleep in the same room but: children under ten are not counted; a living room counts as a bedroom (s.136, Housing (Scotland Act 1987).
- The ‘space standard’ is breached if the number of persons sleeping in the dwelling exceeds the ‘permitted number’ allowed (s.137, Housing (Scotland) Act 1987) – see the legislation itself for tables which set out the calculation.
Overcrowding is one of the grounds for eviction under the new PRT tenancy.
Houses in multiple occupation (HMO)
If a landlord lets a house to three or more occupants and they come from more than two families they must obtain a licence from the local authority under section 124, Housing (Scotland) Act 2006, unless it falls within one of various exempt categories (s.126, Housing (Scotland) Act 2006).
It is an offence for an owner of a HMO:
- not to have a licence
- to breach a condition included within the HMO licence
- to permit someone to reside whilst a breach of a HMO condition is being rectified
- to hold out to have a valid licence when it has ceased.
Penalties for the above offences include (s.156, Housing (Scotland) Act 2006) fines, revocation of an existing licence or disqualification from holding a licence.
The local authority must keep a register of HMO licences and applications in their area available for public inspection.
A property is a HMO (s.125, Housing (Scotland) Act 2006) if it is living accommodation occupied by three or more persons who are not all members of the same family or of one or other of two families. A person is treated as occupying living accommodation only if it is occupied as his only or principal home. In defining a HMO:
- ‘living accommodation’ is a house, or accommodation which forms part of, any premises or group of premises owned by the same person and its occupants share one or more of the basic amenities with each other
- ‘basic amenities’ are a toilet, personal washing facilities, and facilities for the preparation or provision of cooked food
- persons are to be treated as being in the same family as, and as being related to, each other if they are a couple, one of them is a relative of the other, or one of them is a relative of one member of a couple and the other is a relative of the other member of that couple.
Harassment and illegal eviction
Criminal offences
It is a criminal offence for any person to deprive an occupier of his or her home or any part of it, unless that person can show they had reasonable cause to believe that the occupier had left (s.22(1), Rent (Scotland) Act 1984).
It is also a criminal offence for anyone to do anything that is likely to interfere with the peace or comfort of the occupier and members of their household, if that is done with the intent to cause the occupier to leave or to discourage them from pursuing any legitimate rights or remedies in respect of their home. This includes acts such as interfering with services or facilities that the occupier reasonably requires to continue living there e.g. the supply of water or fuel (s.22(2), Rent (Scotland) Act 1984).
In general, these offences are committed where a landlord tries to evict or harass a tenant in order to make them leave, without going to the tribunal for a possession order. The offence can be committed by the landlord or anyone acting as their agent. The perpetrator has a defence if he or she can show that they had reasonable grounds for doing the acts or for interfering with the services.
Another criminal offence that might be committed in the course of an eviction is harassment: a person must not pursue a course of conduct which amounts to harassment of another and is intended to amount to harassment of that person (s.8(1), Protection from Harassment Act 1997). Conduct includes speech and harassment includes causing alarm or distress. This conduct must occur on at least two occasions.
Under a PRT, if the tribunal has been misled into issuing an eviction order or the tenant thinks they have been misled into leaving the property without a proper ground for eviction, the tenant can apply for a wrongful-termination order. The tribunal can award up to six months rent in compensation to the tenant if their tenancy is found to have been wrongfully terminated.
Civil remedies
If an occupier is unlawfully deprived of his or her home by their landlord/landlord’s agent the occupier has the right to apply to the tribunal for an interdict preventing the landlord from undertaking the conduct complained of, or to re-admit them to the property and for an award of damages.
One means of obtaining damages is via section 36(1) and (2), Housing (Scotland) Act 1988 which sets out the statutory damages that can be awarded to a tenant who has been unlawfully evicted. The damages are calculated via a formula set out in the legislation (s.37, Housing (Scotland) Act 1988).
Damages can be obtained from one route only. Therefore, the tenant must choose between a contractual or statutory claim. Legal aid, subject to a means and merits test, is available for bringing a claim for an interdict and/or damages where there has been or there is about to be an illegal eviction.
