News

JULY 31, 2017 | BY Perthshire Property Services
Legal Updates for Landlords

The private rental sector will face significant changes over the next year with the introduction of the new ‘Private Residential Tenancy’ (expected to come into force at the end of this year) and the Letting Agent Regulations.  However, there are a number of other recent legal developments all landlords should be aware of.

CREATION OF THE FIRST-TIER TRIBUNAL HOUSING AND PROPERTY CHAMBER

The Housing and Property Chamber, which replaced the Private Rented Housing Panel (PRHP) and Homeowner Housing Panel (HHP), will now issue decisions on rent and repair issues and assist landlords with exercising their right of entry.

As well as taking over the functions of the PRHP, as of December 2017, the Housing and Property Chamber will also hear private rented sector housing cases including eviction actions currently raised in the Sheriff Court.

The Scottish Government consulted to seek views on how the new Chamber should operate, together with issuing draft regulations (the ‘2017 rules’). The intention is create a ‘single set of operational rules’ which will apply across Scotland.

Landlords should also note that the AT5 and AT6 forms and Tenant Information Pack have been updated to reflect the transfer of functions to the First-tier Tribunal. The updated documentation can be found on the Scottish Government website and should be used.

LETTING AGENT REGULATION ENFORCEMENT DATE ANNOUNCED

The Letting Agent Code of Practice (Scotland) Regulations 2016 will come into force on 31 January 2018.

All letting agents must comply with the Code which introduces, amongst other duties, obligations on agents to have insurance, complaints procedures and client money handling processes in place by the enforcement date. Further preparatory work is expected to be needed including agents updating their terms of business, written policies and procedures to meet the new requirements.

The introduction of the Code of Practice is the first step in a wider framework of letting agent regulation which will include mandatory letting agent registration and minimum training requirements for key individuals in a letting agency.

As of September 2018, it will be an offence for letting agents to operate without being registered.

IMMIGRATION ‘RIGHT TO RENT’ CHECKS TO BE INTRODUCED IN SCOTLAND?

The UK Government has voiced an intention to roll out the ‘Right to Rent’ scheme to Scotland. This was introduced by the Immigration Act 2014 and is currently in force across England. It places a duty on landlords to check the immigration status of prospective tenants to ensure they have right to occupy residential premises in the UK by asking them to produce identity documentation.

Landlords must refuse tenancies to those who cannot produce satisfactory evidence and breaching their duty under the scheme may mean up to five years’ imprisonment or a fine of up to £3,000.

At this stage it’s unclear how and when the scheme will be rolled out in Scotland. Landlords should keep up-to-date with developments and seek legal advice if they are in any way unclear about their duties given the potential criminal sanctions that can apply. 

SHERIFF COURT HINTS AT APPROACH TO RECOVERING RENT ARREARS WHERE LEASE DOES NOT STIPULATE RENT

The case of Iqbal v Parnez offered good guidance for landlords who wish to raise payment actions against tenants in respect of unpaid rent where the agreement (written or otherwise) does not specify the rent due.

In this case the landlord claimed payment of rent arrears from the tenant on the basis that the rent was £3,900 per quarter, albeit the lease failed to stipulate the rent! The landlord argued there was a verbal agreement whereby the tenants agreed to pay rent of £3,900 per quarter. The landlord’s secondary argument was that £3,900 was a reasonable quarterly rent, notwithstanding whether a verbal agreement with the tenants to pay rent in that sum was made.

The tenants argued that the landlord had failed to demonstrate that rent was due and reasonably quantified at £3,900 per quarter.

The court found that a landlord seeking to recover a specific sum of rent in these circumstances would require to plead details of market conditions, similar properties in the area and that he or she would have been in a position to let out the premises to another party at the level of rental claimed.

SHERIFF COURT CONFIRMS POWER TO REVIEW HOUSE IN MULTIPLE OCCUPANCY (HMO) DECISIONS BY LOCAL AUTHORITIES

In the case of SA v City of Edinburgh Council, Edinburgh Sheriff Court has reviewed the Council’s decision to refuse a HMO license renewal due to the landlord’s failure to engage in property inspection procedures.

The landlord, who was diagnosed with Asperger Syndrome in 2005, appealed the Council’s decision on the basis that he was discriminated against as a result of his disability. The landlord’s disability was central to the Court’s decision. The Court took the view that further reasonable adjustments to the Council’s renewal process would avoid discriminatory decisions being taken against landlords with a disability and ordered the Council to reconsider their refusal.

The case demonstrates that the Court will take review powers seriously and do not simply rubber stamp challengeable decisions by local authorities.

The case also provides guidance as to the extent of a local authority’s discretion when inspecting properties for HMO licensing purposes. The court firmly took the view that local authorities cannot waive their statutory duty to inspect properties when deciding whether to grant a HMO licence.