1 CONSULTATION ANSWER FORM Question 1: Do you agree that the no-fault ground for a landlord to property should be excluded from thee new tenancy system? repossesss their Don t know The current SAT system works well, and the use of a fixed termm contract provides a stable framework for the operation of a tenancy which is understood by both landlord andd tenant. While most Short Assured Tenancies are initially for 6 or 12 month periods, there iss flexibility for longer periods if both parties agree. The exclusion of the no fault f ground will lead to great uncertaintyy and the probability that landlords will face greater problems in regaining possession of their property even though their requirements are legal and reasonable. The reduction and modernisation inn the number of grounds under which a landlord can gain possession is welcomed, but even if all these grounds are made mandatory, it is uncertain that they will provide a reliable and expeditious route for the landlord to regain possession. Investors are risk averse and the exclusion of the no fault ground in: will result a) Withdrawal of some private landlords from the market. b) New private investors seeking a secure income, probably to pension, being put off by the increased risk. provide a c) Reluctancee of larger investors to undertake developments in the PRS. d) Developments that do come requirements of lenders. forward failing to meet the exacting The main reason for proposing thee exclusion of the noo fault ground is to improve tenants security. However, the actual duration of tenancies is substantially longer than the t initial terms agreed for SAT, and landlords in general welcome longer tenanciess with good tenants. Tenants have no cause to feel more insecure under a system that excludes thee no fault ground than under one that t includes it. The implication that they would suggests they believe thatt the other grounds for repossession are weak and unenforceable. The problems are at the margin withh a small minority of landlords who seek to exploit their tenants and a small minority of tenants who w seek to exploit the system. The way to deal with this is not to destroy one of the mainstays of the current system, but to ensuree that the modernised system operates effectively. The route to eliminating rogue landlordss lies in the strict enforcement of current orr improvedd sanctions against them. Thee route to improving tenant security is by educating tenants about their rights (e.g. through the proposed new tenancyy agreement). The PRS P has expanded substantially since the introduction of the SAT. It has served the PRS well, and there is no justification for excluding it.
2 Question 2: Do you agree that the ability to rolll over tenancies on a monthly basis should be excluded from the new tenancy system? The roll-over arrangements underr which tenancies can c continue on a month-to-monthh basis offers flexibility to both landlord and tenant. A landlord with good tenants will welcome a formal extension of thee tenancy and in almost all cases a new tenancy will be agreed within w the initial fixed term. The roll-over covers the exceptional cases where there t are benefits to both parties in the tenancy continuing on a short-term basis. It is not strictly correct to say that the tenant t hass only one month s notice, since it is envisaged under the initial contract that the tenancy will terminate at a specific time, and the tenant will have some statutory protection should the landlord seek repossession during the roll-over period. In general, roll-over arrangements are advantageous too tenants, enabling them to stay in a property on a short-term basis, e.g. becausee a new home h has not been completed on schedule, orr a work assignment has overrun. Question 3a: Do you agreee that the new type of tenancy should have a minimum duration of six months? An initial lease length may be 6 months in order to allow the tenantt to assess the suitability of the property as the new home. Flexibility and choice is needed however and in many circumstancess shorter initial periods may suit better depending upon the requirements of all involved Question 3b: Do you agreee that the tenancy should havee no maximum period? We do not see any need for a tenancy to be subject to a maximum period, as this should be agreed between the parties to suit theirr individuall circumstances. The existing Short Assured Tenancyy (SAT) structure already allowss for longer leases but, even when currently offered, very few tenants are interested in taking leasess beyond 6 / 12 months, preferring the flexibility of shorter lease terms. The current average tenant occupation lengthh of around 18 months to 30 months indicates that a high degree of tenant security already exists - as landlordss do not evict good tenants. A more mature, professionally managed, investor backed, PRS market withh a properly functioning SAT regime r would not discourage longer term leases.
3 Question 3c: Do you agree that a tenant should be able to requestt a shorter tenancy?, however, shorter-term tenancies are lesss efficient and a therefore more costly and will result in higher rents being paid. The vast majority of tenants do not wish to have more than a 1 year lease, yet they remain in occupation on average for around 2 too 3 years. The benefit of the current PRS market is that it provides flexibility and choice for tenants and landlords. Issuess around families nott having longer tenancies revolve around landlords renting substandard properties to vulnerable tenants. poor The market needs to recognise the needs of short-term seasonal s and holiday lets or short term work contracts. Question 4a: Do you agreee that the notice period should be linked to how long the tenant has lived in the property? Landlords and government intentions for the sector are very v much aligned. We accept that where a tenant has been living in a property for a long time, it is reasonable for them to receive the additional securityy of a longer period of notice from their landlord. Landlords are happy to reward goodd tenants with longer leases andd notice periods it makes financial sense too do so. Governmen nt attemptss to protect tenants who do not abide by their obligations responsibly will ultimately damage the investment and living environment of those tenants who do behave responsibly. It is in the interest of the Landlord andd their agents to have a good relationship with a satisfied tenant. However, as already stated it is important not to automatically link a desire for longer term tenancies with security of tenure. Question 4b: Do you agreee with the four proposed noticee periods? If you do not agree with all four of thee notice periods, please tell us which ones you disagree with and why. We think that the periods of notice are acceptable on thee basis thatt where a tenant has been living in a property for a long time, it is reasonablee for the tenant to have earned the right to a longer period of notice from their landlord. We would wish to see the landlord notice periods for grounds 6 to 8 to be aligned and reduced to mirror the current AT6 notice period required for
4 breach grounds. We are also of thee view that the notices should be allowed to run in tandem with each other. We would also welcome a shift to either the use of weekss or days in required notifications to provide moree clarity and greater consistency in residential landlord and tenant law and practice. Question 5a: Do you agree that all the proposed repossession grounds should be mandatory? The detail of these 8 grounds needs to be considered very carefully; they need to be robust and would be better supported with thee retentionn of the no fault arrangement. Question 5b: Do you agree with the proposed list of new repossession grounds? Assuming mandatory means mandatory then yes but thee potential for referral to tribunal and discretionary elements creeping inn means that they may not be robust enough without the no fault notice still being in place Question 5c: Are there other repossession grounds we should include in the list? Theree is currently a perception that a tenant can leave at a the end of a lease without taking any action. This suggests a specific ground is required for abandonment. There may be a need for a specific ground for possession allowing landlords of student lets to automatically end a lease at the expiry of the fixed term. Question 6: Do you agree that landlords should be able to t recover possession of their property with a 28-day notice period in the circumstances proposed? tice should be the minimum practical, say 14 days. The T underlying need however is for the whole process of repossession in these circumstances to be simple, swift and enforceable. This will benefit not only the landlords and tenants directly involved, but in some circumstances neighbours and other parties living nearby. Question 7: Do you agree that landlords should no longer have to issue pre-tenancy notices to recover possession of theirr property?
5 Excellent plan, there needs to be agreement at the beginning of a student tenancy agreeing notice period for termination to allow appropriate marketing of property not being re-let to an existing student group of tenants Question 8: Do you agree that the notice period for all proceedings should be four weeks? We are of the view that this is inappropriate particularly on o groundss for repossession 6 and 7. We are particularly concerned about the length of time which could pass without rent being paid before possession iss achieved. The likelihood of being paid rent arrears is veryy low. Alsoo for clarity and consistency, we would prefer all notice periods to be stated in either weeks or days Question 9: Do you agree with the proposed timescales for f a tenant giving notice to a landlord to leave the property? Institutional investor, private landlords and government intentions for the sector are very much aligned. We accept the proposed timescales which are consistent with principle of a tenant earning additional securityy through extended occupation of a property. Question 10: Do you agree that a model tenancy agreement should be introduced? The housing market is geographically widely spread over Scotland and is made up of a range of different typess of construction of differing d ages let to a huge variety of type of tenant. t A model tenancy is a good idea but it needs to be flexible and offer choicee to both landlord andd tenant Question 11a: What are your views on rent levels in the private p rented sector in Scotland? In general the rate at which rents increase has been moderate in Scotland, and rental increases within the PRS have been at a similar s ratee or lower than increases in social rents andd to the underlying increase in house prices. House prices and rentals aree largely determined d by availability, and there is a social imperative to increase the housing stock so that there are homes available at affordable pricess for all who need them. Question 11b: What action, if any, should the Scottish Governmentt take on rent levels in the private rented sector in Scotland? NONE Pleasee explain your answer
6 The introductionn of any form f of rental control (and indeed the threat of possible rent control) provides a massive disincentive for investment. t only would it stifle the potential for new investment, butt it would also drive existing PRS landlords out of the market, leading to an actual reduction in the PRS housing stock. If a regulated market leads to below-market rental levels, it will bee probable that the quality of the housing stockk will deteriorate as landlords are unable to afford improvements. If a regulated market leads only too replicating market levels, or in certain circumstances to above-market rentals, then there will be b no advantage or protection for the tenant, and a raft of legislation will have been created with little point Question 11c: What rent review conditions, if any, shouldd the new tenancy system include? NONE NONE - The frequency and format of rent reviews should be agreed by landlord and tenant and incorporated into the agreement between them. Theree may be merit, however, in the model tenancy agreement recommending a default position, specifying that reviews should be annual and increases related to a benchmark such as RPI. Question 12: Overall, do you feel that the proposed new tenancy system strikes the right balance between the interests off landlords and tenants? Landlord and tenants have a common interest in a tenancy system that works efficiently and promotes investment in the PRS. P Most of the proposals for the new tenancy system will promote greater efficiency but the proposals to exclude the no fault ground and the right to extend tenancies on a monthly basis lead to t a lack of clarity and flexibility that is helpful to neither landlord nor tenant. Question 13: Do you have any (other) suggestions/comments on the new tenancy system for the private rented sector? If so, please tell us. Broadly speaking, the current system is in need of modernisation, and this is welcomed. However, fundamentally the system workss quite well, and the proposals to exclude the no fault ground and the ability for a contract to continue on a month-to-month basis, and the introductionn of any form of rent control, will lead to a less efficient market, and one which contracts as new investment stallss and landlords withdraw from the market.
7 The private rented sector is a diverse market, and the drive for fundamental change comes from two relatively small sub-sections within it: those who are victimised by their landlords, and a growing number of people who are seeking permanent rather than transitory accommodation. The answer, surely, is not to make fundamental changes to the current system, but to provide within it for the special needs of these sub-sections. As far as rogue landlords are concerned, it has already been suggested that this should be dealt with by strict enforcement of the current sanctions, and their strengthening if this is deemed necessary, and through the education of tenants, for example through the model tenancy agreement. It would not be practical to define at the outset what tenancies were permanent and what transitory, but one sub-set that is capable of quite precise definition is households with children, and there may be a case for making some special provision for households with children.