Heather Pearson: Generation Rent will get security from new rules

An encouraging shift in the right direction for the housing sector was announced exactly one month ago today, in the form of a new private residential tenancy ­agreement under the Private Housing (Tenancies) (Scotland) Act 2016.

Heather Pearson is a Real Estate Partner at Addleshaw Goddard.
Heather Pearson is a Real Estate Partner at Addleshaw Goddard.

It comes as part of a raft of policies being introduced by the Scottish Government to promote a new era of tenure in the private rented sector.

Buying a property and becoming a homeowner is not easily achievable, nor desired by everyone and the gap is clear to see: in March 2016, 38 per cent of the ­Scottish population were either ­living in socially rented accommodation or renting privately, according to Government ­statistics.

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However, the new private residential tenancy agreement will go a long way in promoting the private rented sector as a viable long-term housing option for many, particularly families, as current economic circumstances mean there are generations who will never afford home ownership.

The Act outlines three main aims: to enhance security for tenants, simplify the tenancy system and, according to the Government, provide appropriate safeguards for landlords, institutional investors and lenders. A prominent ­factor of the new legislation is the removal of the ‘no-fault’ grounds for termination, ­giving tenants the reassurance that unless certain specified grounds for eviction arise, the landlord will be unable to terminate their tenancy ‘on a whim’.

The intention is that tenancies will be open-ended, and will last until the occupant wishes to leave the property. The security that comes with the new regulation is an extremely positive step, and one that will be welcomed by tenants, particularly those raising children. Families who before might have been living in uncertainty, can now feel secure in the knowledge that their landlord will need to have a good reason to evict them.

Long waiting lists for social housing homes in certain ­areas of Scotland also mean that the private rented sector is the only option for many and this has influenced much of the terms of the new ­private rented tenancy agreement. The increased security this delivers will help attract a range of tenants with varying circumstances and has the potential to completely change the type of landlords we have in Scotland.

Statistics say that 80 per cent of housing in the private rented sector in Scotland is owned by parties with fewer than five properties. The Scottish Government focus is on attracting professional landlords and institutional investment to improve the quality and choice within the private rented ­sector and we are starting to see signs this is happening.

Many social housing providers already have private rented homes as part of their housing stock and have plans to grow this part of their business, alongside their social housing stock, to provide a range of housing options.

In addition, build-to-rent initiatives and bespoke private rented sector developments are emerging in the main Scottish cities. How they will adapt to some of the other aspects of the changes coming, including repair standards, energy efficiency and the potential of rent pressure zones to cap rent increases, remains to be seen. But no one would argue the importance of ensuring that the private rented sector is a sustainable and secure housing option.

The policy changes and regulation on its way is a sure sign of the Government’s commitment and ambition to improving housing in Scotland.

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It is still early days to determine how the introduction of the new private residential tenancy will play out, but for tenants, it is an extremely positive step and will undoubtedly be welcomed.

One thing it will ensure is more structure and regulation around the private rented sector – a place where 760,000 people in Scotland call home – and will undoubtedly improve the quality of living and security for long-term tenants.

Heather Pearson is a real estate partner at Addleshaw Goddard.