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Consultation on a New Tenancy for the Private Sector

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CURRENT ASSURED TENANCY SYSTEM

1. The tenancy system controls the legal agreement between tenant and landlord. So it is central in making the sector work well. It also sets out how tenants and landlords can assert their rights, and affects whether investment in the sector is likely to be attractive.

2. The current system in Scotland originates from the 1988 Housing (Scotland) Act, which was introduced for all new private rented tenants from 2 January 1989. This Act introduced the Assured Tenancy Regime, which covers two types of tenancy - an assured tenancy and a short assured tenancy. Below is a summary of some of the features of the current system.

Assured tenancy

3. If a property is rented from a private landlord or letting agent, it is likely to be an assured tenancy if:

  • the tenancy started after 2 January 1989, and
  • before the tenancy started, the tenant was not given an AT5 form stating it was to be a short assured tenancy, and
  • the place where the tenant lives is rented as a home, and
  • it is their only or main home.

4. A tenancy cannot be an assured tenancy if any of the following exceptions apply:

  • It was entered into or resulted from a contract made before 2 January 1989.
  • There is no rent or a rent of less than £6 a week or its monthly or yearly equivalent.
  • It is for a house that is also a shop or is licensed to sell alcohol for drinking on the premises.
  • It is for a house that is let together with more than two acres of agricultural land.
  • It is for a house that forms part of an agricultural holding and the house is occupied by the person responsible for farming the holding.
  • It is a letting by a university, central institution, or other specified educational institution for a student taking a course of study there or at another specified educational institution.
  • It is a letting for a holiday.
  • The landlord is a 'resident landlord', which broadly means that the landlord's only or main home must, immediately before the tenancy starts, and at all times during the tenancy, be in the same building as the house or rooms that the tenant is renting; and there must be a direct access, such as a doorway, between the landlord's part of the house and the tenant's part.
  • It is a letting by the Crown or a government department.
  • It is a letting by a local authority or registered social landlord.
  • The tenancy is under a shared ownership agreement - a right to occupy the house because of an agreement that does not create a tenancy; for example, because all the accommodation is shared with someone occupying it under a separate agreement. (The difference between a tenancy and some other form of agreement is not always straightforward. Even if the agreement is not called a tenancy agreement it may in fact be one; for example, if a tenant has the exclusive use of one room, possibly a bedroom, but shares all the other accommodation, a tenancy will exist.)
  • The tenancy is on a temporary basis for homeless people.

Short assured tenancy

5. A short assured tenancy is a special type of assured tenancy and the most common type of agreement in the private sector. A landlord must give a tenant a special form (called an AT5 form) before they sign their tenancy agreement or move in. The form states it is a short assured tenancy. The initial let must be for at least six months otherwise it is not a short assured tenancy. After the initial let period, the landlord has the right to reclaim possession of the property.

Tenancy roll-over arrangements

6. If neither the landlord nor tenant has given notice, the tenancy will renew itself. This will be for the same length of time, unless the tenancy agreement says it will be for a different period.

7. For example, a tenancy agreement may say 'the property is let for a period of six months and then monthly thereafter'. This means the tenancy agreement is for six months and renews itself one month at a time after that.

Security of tenure

8. All assured tenants have security of tenure, but the details depend on whether the tenant has a short assured tenancy or not.

9. During the agreed period of let, a tenant with a short assured tenancy cannot be evicted as long as they keep to all the tenancy conditions. At the end of the agreed period, the landlord has the right to apply for repossession if they wish. However, a tenant can stay on until the court grants the landlord an order for possession.

10. If a tenant has an assured tenancy (which is not a short assured tenancy), they have security of tenure even when the contractual assured tenancy has ended. They need not leave their home unless the court grants an order that allows the landlord to repossess the house. These (broadly) are the 17 grounds under which the court can grant an order:

  • Ground 1 is that the landlord needs the property for themselves, their wife or husband or civil partner for use as their principal home. The landlord will also have to satisfy the Sheriff that either the house was their only or principal home before they granted the tenancy or that they became the landlord after the tenancy started but not through buying the house in question or acquiring it in exchange for anything of value.
  • Ground 2 is that the house is subject to a heritable security (a mortgage), which was granted before the tenancy was created, and the lender - for example a bank or building society - is entitled to sell the house because of the landlord's failure to keep to the conditions of the loan.
  • Ground 3 is that the house was let for a specified period of eight months or less, having been occupied as a holiday home during the previous 12 months.
  • Ground 4 is that the house was let for a specified period of 12 months or less, having been let to students by a specified educational institution during the previous 12 months. The educational institutions concerned are specified by Scottish Ministers.
  • Ground 5 is that the house is let to a minister or full-time lay missionary in connection with their work and is required for that purpose.
  • Ground 6 is that the landlord requires possession in order to demolish or substantially reconstruct the house, or to carry out substantial improvement work on the house, and that the work can be done only if the tenant gives up possession, or (if the work could have been done if the tenant agreed either to a change in the terms of their tenancy or to accept a tenancy of only part of the house) the tenant has refused the alternative. This ground does not apply if the landlord became the landlord after the tenancy began through buying the house in question or acquiring it in exchange for anything of value. If possession is granted on this ground, the landlord must pay the tenant's reasonable expenses of removing.
  • Ground 7 is that the tenancy has been succeeded to by the new tenant under the will or intestacy (disposal of property where no valid will was left) of the original tenant. If possession is sought under this ground, proceedings must take place within 12 months of the death of the original tenant or of the date on which the landlord learned of this death. If the landlord accepts rent from a new tenant, this will not affect the landlord's right to repossess unless they agree in writing to a new rent or to a rent change in the tenancy agreement.
  • Ground 8 is that at least three months' rent is in arrears both on the date on which the notice of intention to seek possession was served and at the date of the court hearing.
  • Ground 9 is that suitable alternative accommodation is available or will be available for the tenant when repossession takes place.
  • Ground 10 is that the tenant has given Notice to Quit that has expired but he has not moved out. The landlord must seek an order for possession on this ground not later than six months after the expiry of the tenant served the Notice to Quit.
  • Ground 11 is that the tenant has persistently delayed paying rent.
  • Ground 12 is that some rent is unpaid at the start of court proceedings and when the notice of intention to take possession proceedings is served.
  • Ground 13 is that the tenant has broken or not performed any obligation of the tenancy (except payment of rent).
  • Ground 14 is that the tenant or anyone living with them has allowed or caused damage to the house or common parts of the building in which the house is situated.
  • Ground 15. The tenant, a person residing or lodging in the house with the tenant or a person visiting the house has:

(a) been convicted of -

  • using or allowing the house to be used for immoral or illegal purposes; or
  • an offence punishable by imprisonment committed in, or in the locality of, the house; or

(b) acted in an anti-social manner towards a person living, visiting or otherwise engaging in lawful activity in the locality; or

(c) pursued a course of anti-social conduct towards such a person as is mentioned in (b) above.

In this ground 'anti-social', in relation to an action or course of conduct, means causing or likely to cause alarm, distress, nuisance or annoyance, 'conduct' includes speech; a course of conduct must involve conduct on at least two occasions; and 'tenant' includes any one of joint tenants.

  • Ground 16 is that the tenant or anyone living with them has damaged the furniture or allowed it to become damaged.
  • Ground 17 is that the house was let to the tenant because they were employed by the landlord, and the tenant is no longer employed by the landlord.

11. Grounds 1 to 8 above are mandatory, which means that if they are proved the Sheriff must grant the landlord an order for possession.

12. Grounds 9 to 17 above are discretionary, which means that even if they are proved, the Sheriff will grant a landlord an order for possession only if he or she judges it reasonable to do so.

13. Grounds 1 and 2 can apply only if the landlord gave the tenant notice in writing before the start of the tenancy that possession might be recovered on this ground, unless the Sheriff judges it reasonable to set aside the requirement.

14. Grounds 3, 4 and 5 can apply only if the landlord gave the tenant notice in writing before the start of the tenancy that possession might be recovered on this ground.

Notice to Quit, Notice of Proceedings and Section 33 Notice

15. Under an assured tenancy, if a landlord wishes to repossess their property they must take the following steps:

  • Serve the tenant with a Notice to Quit.
  • Serve the tenant with a Notice of Proceedings.

16. A Notice to Quit is a written document notifying the tenant that the landlord wants to end the tenancy. The length of notice depends on how long the tenancy is for. If the tenancy lasts more than four months, the notice period must be at least 40 days; and if the tenancy lasts four months or less, the notice period must be at least 28 days.

17. The landlord must also send the tenant a Notice of Proceedings. This tells the tenant that their landlord wants to start legal proceedings to get their property back. The required length of notice before the landlord can take legal action is two weeks or two months depending on which of the 17 grounds the landlord has stated.

18. However, If the tenancy is a short assured tenancy and the landlord wants the tenant to leave simply because the tenancy has reached the end of the normal contractual period, they must issue a Section 33 Notice in place of a Notice of Proceedings.

19. If a landlord issues a Notice to Quit but does not seek to gain possession of the property, the 'contractual' assured tenancy that has been terminated will be replaced by a 'statutory' assured tenancy, which gives the tenant different rights.