Philip Buchan: Rural concerns over Private Residential Tenancy rules

Philip Buchan is an Associate with Murray Beith Murray
Philip Buchan is an Associate with Murray Beith Murray
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On 1 December 2017, the provisions of the Private Housing (Tenancies) (Scotland) Act 2016 replaced the familiar assured tenancy regime with a new residential tenancy known as a Private Residential Tenancy. It is no longer possible to enter into an Assured Tenancy or more commonly a Short Assured Tenancy and the change is thought likely to have a detrimental effect in the rural rental sector.

The Act applies to new residential tenancy agreements, with existing tenancies continuing to operate under the old regime until brought to an end by the landlord or tenant serving notice to quit.

One fundamental change under the new regime is that a PRT does not have a fixed term. Therefore, a tenant wishing to move on may terminate the PRT at any time by giving 28 days’ notice.

Further, under the assured tenancy system, short assured tenancies can be terminated by a landlord at the end of the fixed term but this ground has been abolished under the new Act, meaning PRTs continue until the tenant serves notice on the landlord or the landlord can establish one of 18 grounds for repossession.

These grounds include situations where the landlord intends to live in the property or sell it, where the landlord intends to use the property for non-residential purposes, where the tenant is in rent arrears or conducting anti-social behaviour, or where there has been a breach of the tenancy agreement.

These do not include repossession for occupation by an agricultural employee, which in the past has been a ground for repossession.

The outcome is that property owners can no longer rely on the certainty that property can be let on a short-term basis, which has a bearing if there is a possibility that an owner may have to plan for the need to house a new or retiring employee.

If the property is a flat or similar within a larger divided building, a property owner may be unwilling to immediately commit to a longer-term arrangement.

The effect may be to reduce the number of investors buying property for long-term let and instead engaging in holiday letting, thus bringing about an overall reduction in rental accommodation supply in rural areas.

Following recommendations in the Smith Commission Report, the Scottish Crown Estate Bill provides a framework within which managers of Scottish Crown Estate assets must operate.

The Crown Estate is a collection of property which includes seabed out to 12 nautical miles covering 750 fish farming sites, about half of Scotland’s foreshore including moorings, ports and harbours; agricultural and forestry land; and rights to fish wild salmon and sea trout, where not disposed of to private individuals. The Bill re-names these assets the’Scottish Crown Estate’.

The Monarch owns the assets and management responsibility rests with Scottish Ministers who delegate to Crown Estate Scotland (Interim Management), a public corporation which manages the assets until new legislation sets out permanent arrangements.

The aim of the Bill is to be as inclusive as possible and opens up the possibility of councils and community bodies managing assets directly. However, there might be a need for some assets to be managed at national level.

A strategic management plan will be laid before the Scottish Parliament, setting out the contribution of the Crown Estate to the objectives, priorities and policies of the Scottish Ministers.

Managers will be required to maintain annual reports, management plans and accounts and be under a duty to maintain and seek to enhance the value of the assets under their management, taking socio-economic and environmental factors into consideration.

It will remain to be seen what effect the transfer or delegation of the management of these assets has upon the value of the assets and those who have existing agreements. The Bill is currently at stage 1 of the legislative process.

Philip Buchan is an Associate with Murray Beith Murray