In Scotland a tenancy agreement is often referred to as a lease. A lease provides what is legally known as a ‘real right’. This means that the lease bestows rights to the tenant that are inherent in law and are much stronger than a contract.
As a result the tenant may have stronger rights to live in the property than the owner’s right to use or sell the property. It should therefore be remembered that the tenants will have rights in addition to the ones set out in any written tenancy agreement. However, there are types of lease that provide a balance between the tenant’s right to occupy and the landlords right to repossess his property.
The tenancy agreement should clearly define the terms of the lease that the owner wishes to dictate and also comply with current legislation. It should be remembered that the landlord, by providing the property as a let, could be construed as being legally defined as a business and the tenant a consumer.
As a result any unfair terms in the lease may be struck out by a court, although all other written terms will remain in place. This will only pose a problem if you are in a dispute with your tenant which is to be resolved through the courts and you are relying on a term that could be unfair.
Private Residential Tenancy (PRT)
All residential tenancies where the property is to be the tenant’s main residence created after 1st December 2017 will be known as a Private Residential Tenancy, removing the existence of the previous Short Assured Tenancy. The new style of lease is designed to reduce the complicated paperwork involved in the previous SAT and to provide more safeguards for tenants. The concern for landlords is that the landlord can no longer evict the tenant because they want to. They need to have specific grounds as detailed in the legislation as to why they want the property back and be able to prove their position should the need arise. If the property is not going to be the tenants main address then a PRT is not appropriate. In this instance we would be happy to make the necessary arrangements and we would ask that you contact us for further information.
The Short Assured Tenancy
The beauty of a Short Assured Tenancy was that the Landlords could regain possession of the property if they wished to do so. However, the technicalities behind a Short Assured Tenancy were very complex and it was essential that they were complied with. Existing Short Assured Tenancies continue under the same terms and conditions as before but these will slowly be phased out and replaced with PRT’s
HMO’s or Houses in multiple occupation have to comply with additional legislation and are applicable where three or more unrelated people live in the same property. A special license needs to be obtained from the local council and the property needs to comply with more stringent safety legislation. The lease documentation must also comply with the council’s requirements.
There are instances where a Company may wish to procure a tenancy and install its employees. However, this removes the control from the Landlord and could make eviction complicated if the property is the employees main residence.
There would need to be a tenancy agreement between the landlord and the company who would then set up a separate agreement with the tenant. Although the company could evict when the tenant no longer works for them it would be at the discretion of the court if they would allow the eviction to proceed. In addition, you would be relying on the Company to carry out the eviction as the agreement would be between the company and the tenant.
In the event that the company goes into liquidation without evicting the tenant, the landlord would be exposed to further risk as they would not have a contract with the tenant. In light of this we always recommend that the tenants sign a PRT with the landlord but that the company acts as guarantor for the duration of the lease and most companies will agree to this when the technicalities are explained to them. If a company lease is set up the tenants should be detailed in the lease.
Holiday lets do not generally bestow occupancy rights on the tenant. However, if your tenant wants a lease shorter than 6 months it is inadvisable to sign them up on a holiday let, as if there is a dispute and the tenant wants to stay then the matter will revert to court and the courts will look at whether the tenant was actually on holiday.
If not it is likely that you may have a tenancy where the tenant accrues rights you did not intend. Holiday lets are generally for a short term but there is the option to have an off season holiday let if a short holiday let has occurred within a given time frame. The maximum length of an off season holiday let is 8 months and we would recommend legal advice if you wanted to pursue an off season let.
The above is a brief outline of current legislation and how a lease works. We would hope that you would approach us if you require any further information. However, in the event that you do not chose to do so Watt Property does not take legal responsibility for Landlords acting on the above information alone.
Please note that if any mistakes are made with the documentation and you require to repossess the property or your tenant decides to take the matter to court you may not have the legal rights you expect and may devalue your property considerably by not being able to evict your tenants.
For further information on tenancy agreements:
Call Pauline today on 0131 555 2777 to arrange a free consultation.