We recently attended the Scottish Council of Letting Agents annual conference in Glasgow. The conference is an excellent opportunity for us to hear from policy makers within the Scottish Government to learn about future changes within the private renting sector.
There are significant changes currently being proposed by the Government which will have profound changes on the way in which landlords and agents operate. One such change is a new standard tenancy agreement that will take the place of the current Short Assured Tenancy and associated paperwork such as the AT5. The paperwork required to end a tenancy will also be replaced by a single document. The focus here is to simplify the process for all concerned and therefore these are changes we welcome.
One of the more controversial changes proposed includes removing the right for a landlord to end a tenancy where there is ‘no fault’ on the part of the tenant, unless certain conditions are met (for instance the landlord is wishing to sell or move back into a property). Landlords are strongly objecting to this particular proposal as it will make it much more difficult for them to remove ‘problem’ tenants. This clause will also have a significant effect on landlords of student properties, who will not be able to serve a notice to quit to tenants at the end of their fixed term notice. Rather, it will be for the tenants to serve notice ahead of the lease ending. As a property cannot be advertised until written notice is received from the existing tenants, the tradition of advertising properties at the beginning of each year will likely end. Agents would instead need to wait until the summer to advertise their properties, by which time many students have left St Andrews. The Scottish Association of Landlords is currently lobbying the Government to either remove this ’no fault’ clause or introduce a special clause for Student Accommodation.
A code of conduct for letting agents is also being proposed, requiring agents to register with the Government and meet a number of minimum training requirements to maintain their registration. There will be an independent housing panel, where landlords and tenants who have unresolved issues can complain to. This panel has the ability to fine the agent and demand they take the appropriate actions to resolve the complaint. We welcome such proposals as this will cut down on the number of ‘rouge’ letting agents operating within the sector and create a more level playing field amongst those that deliver a good service and meet their responsibilities as letting agents.
There are also proposals to impose rent controls. This would mean a landlord would not be able to increase rent beyond an inflationary amount during a tenancy, apart from in specific circumstances (for instance following property improvements). This is a proposal we welcome as it will spell an end to rogue landlords attracting tenants with low initial rents and then increasing them dramatically after the initial term has ended.
Rent caps were also mooted to prevent rentals from increasing at a faster rate than inflation, with rents in Aberdeen and certain parts of Edinburgh currently outpacing inflation over the past year. However, since these proposals were made evidence has been presented to the Government by various companies who have plotted rental inflation since 2006, and this shows that whilst there are numerous ‘peaks and troughs’ (Aberdeen is currently in a ‘peak’), the average level of rental inflation does auto-correct and overall rents have matched house price increase since 2006, including in Aberdeen. This is one reason (of many) that will likely see the rent control proposals to be removed from future consultations.
As a further note on the subject of rent caps, landlords of high-end student property in St Andrews have expressed concern that rent caps (were they ever to be approved) would impact the amount of rent they can charge. In our understanding this would not be the case – rent caps are designed to prevent rent increasing faster than inflation when viewed in the long-term. As rental levels for student property in St Andrews have remained consistent and largely in line with inflation since 2011, St Andrews is not included in the Scottish Government’s ‘area of concern’.
It must be stressed all these changes are still at the consultation stage and may change before being put in front of parliament later this year / in 2016. We shall endeavour to keep all of our landlords and tenants updated of any changes as they are approved.