All change in the PRS

Many more of us are now living in the private rented sector (PRS). In fact, there has been a 192% increase since 1999, and 14% of all households now rent their home from a private landlord. It is therefore vital we ensure the sector can meet the needs of these households.

In 2013, the Scottish Government published its first strategy for the PRS, setting out its vision for a “sector that provides good quality homes and high management standards, inspires consumer confidence, and encourages growth through attracting increased investment”.

Measures under the Housing (Scotland) Act 2014 and the Private Housing (Tenancies) (Scotland) Act 2016 ensure good progress has been made in realising this vision.

As part of our continuing process of improvement, we are introducing a regulatory framework for those undertaking letting agency work through the 2014 Act. This will affect legal practices that carry out such work.

Rules for agents

The framework includes a mandatory registration requirement. To be admitted to the register, applicants must pass a fit-and-proper person test and all relevant personnel must have met a minimum level of training that includes a qualification and ongoing CPD. Once commenced, it will be an offence to carry out letting agency work without being registered.

The “fit and proper test” which Scottish solicitors are required to have passed in order to practise, will apply here. Alongside a relevant qualification (prescribed by regulations), key individuals within a letting business will be required to do 20 hours of training over three years on letting agency work to ensure knowledge and skills are kept up to date. In terms of CPD, existing practice requirements for solicitors will count towards the registration requirements where the CPD relates to letting agency work.

In addition, a statutory Letting Agent Code of Practice sets out the standards all letting agents must meet, with a route of redress to the First-tier Tribunal for Scotland (Housing & Property Chamber) in relation to breaches of the code.

The register is likely to start accepting applications from early in 2018 and applications must be submitted by 30 September 2018.

Case for the tribunal

Around the end of this year, most private rented sector cases will transfer from the sheriff court to the new Housing & Property Chamber. The chamber enables a less adversarial approach in comparison to the sheriff court. It aims to deliver benefits of specialism, consistency and improved access to justice for both tenants and landlords in the private sector. There is no fee for anyone taking a case to the First-tier Tribunal.

Consultation on operational procedures closed at the end of March and responses will inform our policy on the provision of publicly funded legal assistance in the chamber.

The 2014 Act has also enhanced local authorities’ powers to tackle poor conditions in the private rented sector by enabling them to make a direct application to the First-tier Tribunal where there is evidence that a landlord is not meeting the repairing standard. This ensures that unacceptable housing conditions are tackled even where a tenant feels unable, or is unwilling, to assert their rights.

Tenancies redesigned

In addition, 2017 sees the implementation of the most radical private tenancy reform since the 1980s, with the introduction of a new, open-ended private residential tenancy, replacing the assured and short assured tenancy regime.

It will offer greater security of tenure to the 760,000 people who call the private rented sector home, balanced by appropriate safeguards for landlords, lenders and investors.

It will result in a more streamlined tenancy system that is modern, straightforward, safe and secure. Tenants will have rent stability and predictability, as rents can only rise once in 12 months, and tenants must be given three months’ notice of changes to enable them to budget accordingly. Councils will also have the power to apply to ministers for a cap on rent increases in their area for up to five years where increases are causing undue hardship to tenants.

These measures build on earlier action by the Scottish Government to protect tenants’ deposits through the introduction of tenancy deposit schemes, and further clarification around the charging of premiums in relation to the grant, renewal and continuance of protected tenancies. They will help to raise standards further and create a sector that can deliver for both tenants and landlords.

Need for advice

With such significant changes coming into effect over the next year or so, it is vitally important that those operating in the sector have the right information and advice. I therefore very much value the input of the legal profession in developing and refining our implementation plans and in supporting compliance and enforcement of the legal standards expected. I am convinced that these changes will facilitate the delivery of a professional, well managed private rented sector, which is fair to both tenants and landlords and meets the needs of our people and communities.

Further information on letting agent regulation is available at mygov.scot