On the 1st December 2017 the all new Private Residential Tenancy (PRT), the successor to the Short-Assured Tenancy (SAT) in Scotland, went live. The Short-Assured Tenancy had been the staple of the Scottish lettings industry since the late 1980’s. Private landlords and lettings agents alike used the SAT to create residential tenancies for decades and its terms gave both landlords and tenants a fixed term contract (not less than six months) with the provision for the tenancy to “roll on” after the fixed term expired. The tenancy could then be brought to an end by either party subject to a stipulated notice period.
However, the Short-Assured Tenancies end was confirmed when The Private Housing (Tenancies) (Scotland) Act 2016 (the 2016 Act) was passed by the Scottish Parliament on 17 March 2016.
Amongst other things the act created the new Private Residential Tenancy. The purpose of the new tenancy being “to improve security for tenants, balanced with appropriate safeguards for landlords, lenders and investors”. More detailed information on the PRT can be found here.
1LET have been creating new Private Residential Tenancies for four months now and from an administration point of view the new PRT is much easier to produce with just one single document accompanied by easy read notes. The downside is that whilst our SAT was 14 pages long the new PRT with the easy read notes comes in at a staggering 77 pages. Tenants do have the ability to e-sign the document and this factor alone has drastically reduced the time it takes from production to signing. The document can be signed by all parties from the comfort of their own home and then electronically saved. A huge improvement for all parties when compared to the old SAT. The PRT and legislation surrounding it is so new that when we meet tenants on a day to day basis when conducting viewings, the majority are unaware of the new tenancy and the fact there is no fixed term. This will change as time passes and tenants will begin to adjust to the new regime.
Although the introduction of PRT’s is a major change to the private rented sector the rental market hasn’t changed. A considerable proportion of our society still need quality rental homes and the private rented sector continues to provide these. 1LET have not seen a mass exodus of landlords from the market due to the new PRT, but what we have experienced, due to the wealth of other changes in the market place, is the retreat of the accidental landlord, who flocked to the market in 2008/2009, and the rise of the professional and portfolio landlord. These are the landlords who are committing to property as a sound investment and are building their portfolio as an alternative to savings languishing in a bank account with little to no interest. With more and more legislation, PRT’s, tax changes and rising property prices (in Edinburgh), it’s the landlords who fully commit to this investment class that reap the biggest rewards.
For further information on investing in property call Ken Bell, 1LET’s Lettings Director, for an informal chat or to arrange an appointment.