Agricultural and Rural Law specialist Colin Clark discusses the proposed changes to residential tenancies for those renting on agricultural property.
In May 2014 the Land Reform Review Group recommended changes be made to the existing rural residential tenancies system.
Since then the Scottish Government has issued two Consultation Papers. Responses to the second Consultation had to be made by 10 May 2015.
The main proposed changes are:
1. Abolishing the current rule which allows a landlord to automatically terminate a tenancy at the end of its original period, the so called “no fault” ground of repossession
2. Tenancies will not be able to roll over on a monthly basis
3. Leases must be for a minimum of six months but no maximum period. It will be possible for a tenant to request a shorter period than six months.
4. The grounds for a landlord repossessing a property will be reduced. Repossession will be permitted if a
a) landlord is selling the house,
b) mortgage lender repossesses the house
c) landlord or family member wants to move into the house
d) house is being refurbished
e) house is being changed to a business use
f) tenant has not paid the full rent for three consecutive months
g) tenant has displayed anti-social behaviour
h) tenant has breached the terms of the lease
i) tenant has abandoned the property
j) house is let to the tenant because of their employment and that employment has ceased
k) house is needed for a full time religious worker
5. Unless one of the above grounds apply, the landlord will not be able to terminate the tenancy
6. The requirement to give notices at the start of the tenancy will be abolished and the period for giving Notices to Quit by the landlord and notice of termination by the tenant will be simplified. A model style of lease is proposed as well
One argument for change is that the current Short Assured Tenancy regime is not fair to tenants, particularly families who may only have a six month lease and don’t know if it is going to be renewed. They therefore find it difficult to put down roots in an area or find appropriate schools for their children etc.
Few if any landlords want good tenants to leave their property, but in the same way as there are bad landlords there are also bad tenants and many landlords will regret if the ‘no fault’ ground for repossession is abolished.
There are lots of different types of tenants and it is important that flexibility is maintained. As with all new rules the balance of each side's interests have to be finely weighed up. Care needs to be taken that landlords do not become reluctant to let as that would reduce the number of properties available, cause scarcity and result in higher rents - which is obviously not in tenants' interests.
The responses to the second Consultation have to be assessed and then changes approved by Parliament. There is some way to go before any changes become law but rural landlords should be aware that the law will be amended and it is worth keeping an eye on the proposals and passage of legislation through Parliament.
Leasing residential property is becoming ever more complicated. Already a landlord must have electrical and gas appliances checked, smoke and carbon monoxide alarms installed. There is a minimum standard of repair, energy performance certificates must be obtained and a tenant information pack given to the tenant - in addition to the Notices which currently have to be served on the tenant, as well as the Lease itself.
To prevent the issue becoming daunting and to ensure clarity for both parties, it pays to get professional advice from the very beginning when considering leasing a property.
For more information please contact Colin via email or call 01334 653 777.