Briefing Note. Private Rented Sector Housing: Regulation and Landlords Responsibilities

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1 Briefing Note Private Rented Sector Housing: Regulation and Landlords Responsibilities Letting properties within the Scottish Private Rented Sector is a highly regulated activity. It is easy to fall foul of the ever increasing amount of regulation. This Note gives a brief overview of the main areas of regulation with which a Private Rented Sector landlord has to comply in Scotland. Landlord Registration Owners of properties rented to or occupied by unrelated third parties must be registered with the local authority. It is an offence to own a house let to or occupied by an unconnected third party if you are not registered. There are only limited exceptions. The maximum fine for failure to be registered when one should be registered is, now, 50,000. The relevant legislation is the Anti- Social Behaviour, etc. (Scotland) Act 2004 (as amended). Anti-Social Behaviour Notices Landlords have to manage their properties and act responsibly with regard to their tenants or occupants and assist in dealing with any anti-social behaviour. Local authorities have power to serve an Anti-Social Behaviour Notice on a landlord where the person who occupies the landlord's property or a visitor of the occupant engages in anti-social behaviour at or in the locality of the relevant property. The Notice will specify the anti-social behaviour, the action which the landlord should take and the consequences of failing to take the relevant action. Landlords have a right to request a review of a Notice. Local authorities have further rights to apply to the Sheriff for an order that no rent or other consideration should be payable or for an order transferring the management of the property to the local authority where the landlord is in breach of an Anti- Social Behaviour Notice. Full details with regard to such Notices can be found in Part 7 of the 2004 Act. The Repairing Standard Any house let for human habitation (with limited exceptions) has to meet the Repairing Standard. One of the exceptions of note is a tenancy of a house which is within land comprised in an agricultural tenancy in terms of the Agricultural Holdings (Scotland) Act 1991, a Short Limited Duration Tenancy or a Limited Duration Tenancy and that house is occupied by the tenant of the relevant lease.

2 The Repairing Standard is set out in the Housing (Scotland) Act 2006 as amended ( the 2006 Act ). A landlord must ensure a let property meets the Repairing Standard at the time of the grant of the lease and throughout the duration of the tenancy. Where a lease is for a period of at least three years and cannot be ended by either party within the initial period of three years, the 2006 Act permits a landlord to make the tenant responsible for repairs to the property in terms of the lease. However, whether or not the whole Repairing Standard obligations can be imposed on a tenant in a lease in terms of these provisions in the 2006 Act has not yet been tested in court. It is no longer necessary to issue a Repairing Standard Letter (which detailed the Repairing Standard and the tenant s rights to apply to the Private Rented Housing Panel now the Housing and Property Chamber of the First Tier Tribunal) to a tenant. However, it is recommended that a Repairing Standard Letter is sent to a tenant if the Repairing Standard obligations are being placed upon the tenant. This will give a clear indication to the tenant that they will have the obligation to maintain the property to the Repairing Standard and that the usual position does not apply. Recent additions to the Repairing Standard include the requirements for landlords to provide carbon monoxide detectors and carry out an Electrical Installation Condition Report. The Report must be carried out by an electrician who is a member of an accredited registration scheme recognized by the Scottish Government (e.g. SELECT or NICEIC). Reports must be obtained once every 5 years. Further changes to the Repairing Standard are expected including with regard to minimum energy efficiency ratings. Although not a specific requirement of the Repairing Standard or any other specific legislation or regulation, the Health and Safety Executive has issued guidance advising that all those with responsibility, including Landlords, should carry out assessments regarding the risk of Legionnaires Disease. Although the legislation in terms of which the Health and Safety executive operate relate to employer/employee relationships, it is clear from the pamphlets and guidance that they consider Landlords have a duty in respect of the possible risk of Legionnaires Disease. The duty is for the owner to carry out an assessment of the risk. Some letting agents advise a professional report is obtained in this regards (at a cost, of course, to the Landlords). Electrical Appliances, Furniture and Gas Safety The Electrical Equipment (Safety) Regulations 1994 These Regulations affect all persons who, in the course of business, let accommodation which contains electrical equipment. There is a statutory duty to ensure that only electrical equipment which satisfies the requirements of the 1994 Regulations is supplied. The Safety Requirements are as follows: All electrical equipment must be: Safe; Constructed in accordance with principles generally accepted within Member States of the EU as constituting good engineering practice in relation to safety matters; EDINBURGH Princes Exchange, 1 Earl Grey Street, Edinburgh, EH3 9EE T F DX Edinburgh 43 LP1 Edinburgh 14 GLASGOW Sutherland House, 149 St Vincent Street, Glasgow, G2 5NW T LONDON 12 Stanhope Gate, London, W1K 1AW T Turcan Connell is a Partnership of Scottish Solicitors regulated by The Law Society of Scotland.

3 Designed and constructed to ensure that it is safe when connected to the electrical supply system by providing a level of protection against electric shock; and Designed and constructed to conform with the Principal Elements of the Safety Objectives. The Safety Objectives are set out in the Guidance Notes to the Regulations and a copy can be supplied if further information is required on this point. The safety of any electrical equipment that is supplied as part of furnished accommodation that is hired or let in the course of a business is controlled by the 1994 Regulations. However equipment which is supplied as part of furnished accommodation in the course of business will not be subject to CE marking requirements provided that it has been previously supplied to an end user. CE marking is a visible declaration by the manufacturer or his authorised representative that the electrical equipment to which it relates satisfies all the provision of the 1994 Regulations. (Ref. Guidance Notes on the 1994 Regulations DTI.) Anyone who hires or lets furnished accommodation is strongly advised to seek independent legal advice as to whether they do so in the course of a business. It is recommended that all landlords meet the relevant safety requirements with landlord registration, landlords are to manage their properties and comply with housing law. Ensuring the safety of electrical equipment would be good management practice. Although there is no requirement for formal testing of equipment in terms of these Regulations, appliances as well as electrical installations have to be tested as part of the Repairing Standard (see the requirement for Electrical Installation Condition Reports to be carried out above). Furniture and Furnishings (Fire Safety) Regulations 1988 All furniture and furnishings provided by the landlord must comply with these Regulations. The Regulations mean that any furniture in the property must reach the relevant safety standard with regard to fire resistance. It is most likely that any furniture purchased before 1988 does not comply. The Regulations relate to soft furnishings such as sofas etc. This obligation on the landlord is only relevant when he is supplying the furniture. It does not apply to furniture supplied by the Tenant. Gas Safety (Installation and Use) Regulations 1998 The Gas Safety Regulations place duties on Landlords to ensure that gas equipment in a residential property is safe for use by the tenant. Only where the lease is for more than seven years (there are rules in the regulations to calculate the period) is the Landlord not responsible. Every Landlord of a lease of seven years or less must ensure that there is maintained in a safe condition: (a) any relevant gas fitting; and (b) any flue which serves any relevant gas fitting. A Landlord should ensure that each appliance and flue is checked by a Gas Safe registered contractor for safety within 12 months of being installed and at intervals of not more than 12 months since it was last checked for safety. The Landlord must obtain a gas safety certificate and provide the tenants with a copy. A record in respect of checked appliances must be made and retained for two years after the check.

4 Agricultural Holdings Leases continuing from year to year are leases for a period of less than seven years and, accordingly the landlord is responsible for the safety of gas equipment in a house on an agricultural holding under these Regulations. The landlord should comply with the Regulations whether or not the gas fittings were provided by the landlord or the tenant. The landlord will also remain responsible even if his agricultural tenant sub-lets houses or cottages. The agricultural tenant (as mid-landlord) will also have duties under the Regulations but the chain to the head landlord will still exist. Where an agricultural tenant provides one of the cottages let to him for a farm worker or allows an unconnected third party to occupy such a cottage rent free, the agricultural tenant will not be a landlord and, accordingly, will not owe any duties under these Regulations. The head landlord will, however, remain as a landlord and will be obliged to comply with the Regulations. Tenancy Deposits The Tenancy Deposit Schemes (Scotland) Regulations 2011 introduced the requirement for tenancy deposits held by landlords to be placed in a Tenancy Deposit Scheme. There are strict time limits for placing tenancy deposits in a Scheme. Information must be given to a tenant regarding the placement of a deposit in a Scheme by the landlord. The maximum penalty for failure to comply with the Regulations is the payment to the tenant of a sum equal to three times the deposit. Provision of Information and Lease Agreements to Tenants Landlords are required to provide tenants with certain information in relation to their tenancy. If a landlord has granted an assured or short assured tenancy, then, in addition to providing a written lease agreement they must also have provided the tenant with a Tenant Information Pack. It is an offence to fail to do so. The requirement to provide a Tenant Information Pack relates, solely, to assured and short assured tenancies and, accordingly, it will no longer be a requirement to provide the Pack from and after 1st December 2017 when the new Private Residential Tenancy is introduced. It remains a requirement in terms of the Private Housing (Tenancies) (Scotland) Act 2016 to provide a tenant with a written lease agreement. Information must also be provided to tenants. If landlords are using the Model Tenancy provided by the Scottish Government there are Easy Read Notes which must be provided to the tenant. If landlords are using their own lease agreement then there are Private Residential Tenancy Statutory Terms Notes which must be given to the tenant. Both sets of Notes are Scottish Government documents which can be found on their web-site. Premiums and Charges It is an offence to charge a premium as the condition of the grant or continuation of an assured or short assured tenancy, a private residential tenancy and/or a regulated/protected tenancy. Premium is defined in the Rent (Scotland) Act 1984 as amended by the Private Rented Housing (Scotland) Act The definition now includes, specifically, service and administration charges and the safest course of action is to ensure there are no additional charges payable to the landlord by the tenant but to cover any such charges in the rent. Protection from Eviction and Harassment When obtaining possession of a property, it is important to ensure that the tenant is not harassed or wrongfully evicted. Tenants are protected in terms of the Rent (Scotland) Act 1984 in this regard. Harassment is a criminal offence. The proper course of action where a tenant has breached their lease or where the landlord requires possession of a property at the end of a

5 lease is to obtain an order (from 1st December 2017) from the First Tier Tribunal (and, prior to that date, a court order) and to instruct Sheriff Officers to evict the tenants, if necessary. Tenants with Disabilities Tenants are entitled to carry out work in a let property which they consider necessary for the purpose of making a house suitable for the accommodation, welfare or employment of any disabled person who occupies or intends to occupy the house as their sole or main residence. The tenant may not carry out works without the consent of the landlord but the landlord cannot withhold consent unreasonably. A landlord may impose reasonable conditions when giving his consent. There is a right for the tenant to appeal to the First Tier Tribunal where they are aggrieved at the landlord's refusal or the conditions imposed. Further details in connection with these rights can be found in Sections 52 and 53 of the Housing (Scotland) Act 2006 (as amended). Houses in Multiple Occupation An owner of a house has to apply for a licence where he gives permission for a house to be occupied by more than two people who are not members of the same family or of one or other of two families. Where a house is occupied by someone who is a heritable owner or by such person with other members of the same family they are to be disregarded in calculating the number of qualifying people. Accordingly, if a house is occupied by three unrelated people a licence will be needed as that house will be a house in multiple occupation. However, if one of the three is the owner of the house, they are to be disregarded for the purposes of counting the number of occupants, and accordingly, the number of occupants will be deemed to be two and a licence will not be required. It should also be noted that an agent commits an offence if, without reasonable excuse they facilitate the occupation of a house as a house in multiple occupation when the owner does not hold or has not applied for a licence. Full details of the licensing provisions can be found in Part 5 of the Housing (Scotland) Act Energy Performance Certificates ( EPC ) Since 4 th January 2009 an EPC must be produced where any building is being let (subject to certain limited exceptions). An EPC is required on the grant of a new lease or on the assignation of an existing lease. An EPC lasts for ten years and should be placed in a safe place within the let property (e.g. in the electrical meter cupboard). Overcrowding The Private Rented Housing (Scotland) Act 2011 (Part 3) introduces a power for Local Authorities to serve notices on landlords with regard to statutory overcrowding. An overcrowding statutory notice can be served on a landlord setting out the steps which the landlord is required to take in connection with overcrowding in a property and/or to prevent future overcrowding. It is not clear from the legislation, however, what steps a landlord may be asked to take nor what will happen if the landlord is not entitled in terms of the lease which he has granted to take the required steps. If a landlord has granted an assured, short assured or protected tenancy then there are no specific grounds which entitle the landlord to end the tenancy due to overcrowding. However, where the lease is a Private Residential Tenancy in terms of the Private Housing (Tenancies) (Scotland) Act 2016 it is an eviction ground that an overcrowding statutory notice has been served and the First Tier Tribunal is satisfied it is reasonable to issue an eviction order on account of that fact.

6 Termination of Tenancies There are complicated and strict legal requirements in connection with terminating leases and obtaining possession of a residential let property. Notices to Quit must be correctly drawn and served against the correct date. The correct procedures must be followed before a landlord will be entitled to obtain possession. It is recommended that advice is taken on a case by case basis. Registration of Letting Agents The Scottish Government is introducing a Register of Letting Agents and it will be a requirement for all letting agents to register as of 31st January There are certain conditions with which letting agents must comply in order to be able to register including a fit and proper person test and evidence that agents have the relevant qualifications. Whilst the obligation to register is effective as of 31st January 2018, the criminal offence of carrying out letting agency work without being registered (punishable by a fine of up to 50,000 and/or up to six months in prison) will not come into effect until 30th September This gives letting agents an eight month window within which to obtain the necessary qualifications and register. This note is intended as brief overview of some of the Regulation with which landlords have to comply when letting residential properties in the Private Rented Sector. No responsibility can be taken for any action taken in reliance on this note and specialist advice should be taken in every case. Turcan Connell would be happy to provide such advice. Turcan Connell November 2017