Tenancy Agreements
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.
Please note that by providing the property as a let it could be construed the property is part of a business and the tenant a consumer. As a result any unfair terms in the lease may be struck out by a First Tier Property Tribunal, 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 legal process and you are relying on a term that could be unfair.
Private Residential Tenancy (PRT)
All private residential tenancies, where the property is to be the tenant’s main residence, created after 1st December 2017, are known as a Private Residential Tenancy. This style of lease was 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 residence then a PRT is not appropriate. In this instance it is likely your property will be defined as a Short Term Let and will come under the legislation introduced in October 2022, requiring such properties to be licensed.
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
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.
SHORT TERM LETS….
The Civic Government (Scotland) Act 1982 (Licensing of Short-term lets) Order 2022 defines any Tenancy Agreement, which is not being used as an occupier’s main residence as a Short Term Let and the property and owner, will require to comply with the legislation brought out in this Order. Below we have covered some of these tenancies, which previously did not require a Short Term License.
Company Lets
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
Holiday Lets are generally offered on a short term basis,, where a start and end date is included in the tenancy document, and are now defined as Short Term Lets under the The Civic Government (Scotland) Act 1982 (Licensing of Short-term lets) Order 2022 and as such an application will need to be made by the owner, or their Agent, for a License prior to a property being advertised. In some areas, including Edinburgh, a Change of Use Planning Application will also be required before a License can be issued.
The Licensing of Short Term Lets also includes the renting of a room in your home, which is commonly known as an Occupancy Agreement.
Due to the ever changing nature of this industry, we would ask that you do not rely solely on this information, but welcome your call to discuss your specific query.
Call us today on 0131 555 2777 to arrange a free consultation.
