Opinion: The Private Housing (Tenancies) (Scotland) Act 2016

There has been a lot of negativity in the press about the new Private Housing (Tenancies) (Scotland) Act 2016, primarily focused on the removal of the “no fault ground” and the end of the fixed term. Our feeling is that the new PRT isn’t as frightening as perhaps some people might have us believe for the reasons we list below.

The level of demand for good quality rental stock is significant and growing with the result being that tenants will often choose to stay in a property for longer than the current six months minimum term. In fact, the average length of tenancy in the east of Scotland currently stands at approximately 20 months and in the majority of cases it is the tenant who terminates the lease and not the landlord.

The structure of the Private Rented Sector is changing with tenants now actively choosing to live in the sector. In a recent survey carried out by GVA and PRSim it was found that 71% of Scots are actually content living in rented accommodation. Added to this, 82% of people believe that renting best suits their lifestyle. This is contrary to the common belief that renting is a necessary evil whilst saving for a home and to the headlines about Generation Rent and the PRS being a tenure of last resort.

It should also be pointed out that a landlord does have the ability to end tenancies using one of the 18 grounds for repossession listed in the act and the process for seeking repossession has been streamlined to make it easier for all parties.

Houses in Multiple Occupation

The removal of the section 33 notice or no-fault ground has also been highlighted as an area of major concern especially for HMO student style properties but again, we feel that this has been overstated. As an agency we understand it is critical that student HMO properties are marketed at the correct time to ensure re-letting. To ensure this we write to all our student lets early in the year and will know very quickly how many properties will require remarketing. Demand for HMOs is, if anything, higher than standard properties. In a recent survey for Spare Room it was found that there are 22 individuals chasing every room in Edinburgh. With proactive management and communication with our tenants we feel comfortable that we will continue to be able to minimise void times and ensure HMOs come onto market at the correct time to link with the academic year.

We are in the process of taking further legal advice around drawing up our tenancy agreement and might have further information relating to this and how the PRT will operate in due course.

In summary, the PRS is set to continue to expand in size while stock levels do not appear to be increasing significantly resulting in increasing competition. There is also a greater level of satisfaction among tenants living in the PRS the result of which, we believe, will be longer and more stable tenancies. Finally, the mechanisms exist in the new Act to bring a tenancy to a close thus we believe that landlords should not be overly concerned with the new legislation. We remain positive that the PRS will still offer a well-educated investor who has taken professional advice and guidance strong returns on his or her investment. If you are a landlord and would like to find out how we can help using our property management service, feel free to get in touch.

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