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The Full Legal Guide for Landlords in Scotland

Welcome to Unlock the Law's full legal guide for new landlords in Scotland, explaining the main rights and responsibilities to your tenants. While mainly designed for new landlords, if you are already a landlord you can still use it as a handy checklist.

Also note that this legal guide applies to landlords regardless of the location of your property in Scotland - it is based on Scots Law and will be useful whether your property is based in Glasgow, Edinburgh, Dundee, Aberdeen, Paisley, East Kilbride, Dumfries & Galloway, Inverness, Livingston, Hamilton or elsewhere).

And If you require bespoke legal advice for yourself as a landlord in Scotland at any point please contact us here today or call us on 01415529193. We only recommend the best Scottish landlord solicitors.

What will this SCottish Landlord Legal guide cover? Rights, Responsibilities, Tips & More

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Registration - Your First Step

Before you can become a landlord, the Antisocial Behaviour etc (Scotland) Act 2004 states that you must register with the local authority, for the area where your rental property is located (even if a letting agent will be taking care of your property for you).

Your local authority then checks to ensure you are a suitable person to let property. To establish that you are “fit and proper”, it takes account of any evidence that you have:

•    Committed some serious offences (including fraud, dishonesty, violence, drugs, firearms and sexual)
•    Practiced unlawful discrimination in connection to any business
•    Contravened any law relating to housing, or landlord and tenant law, and your actions (or your failure to act) in relation to any antisocial behaviour affecting a property you already let.

These checks are designed to remove bad landlords from the private letting system.

If you let your property without registering, you are committing a criminal offence and can be fined up to £50,000. You can also be banned from the register for up to 5 years and served with a notice stating that rent will not be payable on your property for a certain period.

It is not an offence to start letting your property, however, if you have submitted a valid application for registration that has not yet been processed by your local authority.

It is worth noting that you also can be fined up to £1,000 if you:

•    Give your council false or misleading information
•    Do not give all the information you are asked for
•    Do not inform your council of any changes to the information given
•    Do not tell the council when you appoint an agent to act on your behalf.

Your landlord registration will be valid for three years from the date on which your application is approved, after which it must be renewed.

Even if you have not bought a rental property, you can still apply to register. This lets you check that you will be considered fit and proper to become a registered landlord, before you invest in rental property.

To register as a landlord and/or to add properties, visit: www.landlordregistrationscotland.gov.uk

Registration of Properties

In addition to being approved yourself, you also need to register each property you plan to let. However, your property will be exempt from this registration if it is:

•    Your only or main residence (with no more than two lodgers)
•    Let under a crofting tenancy
•    Occupied under a liferent
•    Used for holiday lets only
•    Regulated by the Care Commission, in certain categories
•    Owned by a religious organisation and occupied by a leader or preacher of that faith
•    Occupied only by members of a religious order
•    Let to your family members, only
•    Held by an executor for a period of less than 6 months
•    Possessed by a heritable creditor for a period of less than 6 months
•    Owned by a person acting as an insolvency practitioner for a period of less than 6 months, unless the appointment is made by the Accountant in Bankruptcy. In that case, there is a permanent exemption from registration
•    Owned by a local authority or Registered Social Landlord.

Informing your Mortgage Lender

A step you must take early in the process, is to obtain the approval of your mortgage lender to let your property. Even if you have a so-called “buy to let” mortgage (where approval to let is inherent), your lender almost certainly will still impose conditions.

For example, lenders often will not permit you to let your property to those who are on housing benefit. Usually, you also will only be allowed to offer what is called a short assured tenancy (we look at these, in more detail, later). Finally, there sometimes can be a restriction in the length of lease, to no longer than six months.

If you do not inform your lender then almost certainly you will be in breach of your mortgage contract. This is a very serious matter; don’t take the risk.

Remember that having tenants can affect your insurance, so again take care. Check that you have adequate buildings insurance coverage and that the policy covers lettings. You may want to arrange contents insurance, yourself, if you are supplying furniture and white goods. If not, it is fairly standard to leave tenants to arrange their own contents insurance.

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Council Tax

If your property is unfurnished and unoccupied, you should be entitled to claim a council tax exemption. You can download the relevant form from your council’s website.

What Type of Lease Should you Offer?

The next step is to decide the type of lease you are prepared to offer, whether an assured tenancy or a short assured tenancy.

As noted, usually your mortgage lender will take this decision out of your hands, by restricting you to a short assured tenancy.

Ultimately, the type of agreement you choose affects both your and your tenants’ rights. The main difference between the two tenancy types is that it is easier to get back possession of your property at the end of a lease if you have a short assured tenancy.

To create a short assured tenancy, you must issue your prospective tenant with what is called an AT5 Notice. This is notification, in prescribed form, simply stating that the tenancy is a short assured tenancy. It must be given to your prospective tenant before the tenancy is created. In the case of joint tenants, each of them should receive the notice separately. A short assured tenancy must also be for a minimum period of 6 months (though again note this can be the maximum some lenders will allow).

Getting Your Property Ready – The Repairing Standard

You’re not quite ready to advertise yet.  You still have to make sure that your property meets what is called the repairing standard (introduced by the Housing (Scotland) Act 2006) and also the tolerable standard.

The repairing standard is simply a basic level of repair:

•    Your property must be wind and watertight
•    It must be fit to live in (meeting the 'tolerable standard')
•    The structure and exterior (e.g. walls and roof) must be in reasonable condition
•    Installations for the supply of water, gas, electricity, sanitation, space heating and heating water must be in a reasonable state of repair and in proper working order (including external items, like drains)
•    Fixtures, fittings or appliances that you provide (e.g. carpets, white goods and household equipment) must be in a reasonable state of repair and in proper working order
•    Any furnishings you provide must be capable of being used safely for the purpose for which they are designed
•    Your property must be fitted with suitable fire detection devices.

As a side-note, all upholstered furniture that you provide must meet fire resistance standards, under the Furniture and Furnishings (Fire Safety) Regulations 1988 (as amended). This includes sofas, beds, garden furniture and cushion fillings. Check that each item carries a permanent label, to show it meets British Standard 7177, and that it is match and flame resistant in terms of the General Project Safety Regulations 2005. As well as probably invalidating your insurances, there are severe penalties for non-compliance:

•    A fine of £5,000 per item not complying
•    Up to a six month jail term
•    Possible criminal charges in the event of death
•    Possible civil damages to your tenant.

If your property does not reach the repairing standard, you could be reported to the Private Rented Housing Panel.

Getting Your Property Ready – The Tolerable Standard

The second standard you must meet is the tolerable standard. Your property may not meet this standard if it:

•    Has a bad problem with rising or penetrating damp
•    Is not structurally stable (e.g. there is subsidence)
•    Has inadequate ventilation, natural and artificial light or heating
•    Does not have adequate thermal insulation
•    Lacks a supply of fresh water
•    Does not have a sink (with hot and cold water)
•    Lacks an indoor toilet
•    Does not have a fixed bath or shower and wash basin (with hot and cold water)
•    Does not have a good drainage and sewerage system
•    Has an electric supply that does not meet relevant safety standards
•    Has no satisfactory cooking facilities (there at least must be somewhere for tenants to install their own cooking facilities)
•    It does not have a proper entrance.

Councils have statutory powers to deal with properties that do not meet the tolerable standard.

How Do you Meet the Standards?

Most of the items covered by each standard will be obvious to the untrained eye. Simply go through your property and make a condition report; instruct improvement or remedial works, as appropriate.

The rules regarding electrical, gas and fire safety, however, are a little more complicated.

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Electrical Safety

The Housing (Scotland) Act 2014 introduced new rules on mandatory electrical testing.

The Scottish Government has finalised guidance on the Act, which, although termed “guidance”, actually is a statutory regulation that will come into force from 1st December 2015. All Scottish privately rented property covered by the Repairing Standard must comply, regardless of the tenancy type. 

Under the new rules you will need to have fixed wiring (Electrical Installation Condition Report) checks carried out at least every five years. This will apply from:

•    1st December 2015 - new tenancies entered into on or after this date (including current tenants signing a new lease)
•    1st December 2016 - for existing tenancies

The EICR must include an appliance check report (a Portable Appliance Test). PAT checks will be required on portable electrical appliances provided by you, but not those belonging to your tenant.

Anything that is not permanently connected to the electrical installation should be on the PAT report. Everything in your property that uses the electrical supply must be on either the EICR or the PAT, unless it belongs to your tenant.

You will need to ensure that your electrician is competent. Either he or she should be a member of SELECT or NICEIC, or should be able to demonstrate competence by completing the checklist in Annex A of the Scottish Government guidance.

EICRs and PATs carried out from 1st December 2015 must be documented on forms specified in the guidance in order to be acceptable under the regulations. In addition, all appliances checked must have test labels placed on them. 

Enforcement of these new mandatory electrical testing requirements will be the responsibility of the Private Rented Housing Panel. The PRHP can issue a “Repairing Standard Enforcement Order” and ultimately a rent penalty for non-compliance (a criminal offence).

The Scottish Association of Landlords (a trade body that new landlords are recommended to join) has campaigned successfully for the guidance to require that landlords need only take reasonable steps to ensure that electrical items in common areas (e.g. stairwells) are safe.

SAL also lobbied the Scottish Government regarding EICR checks carried out prior to 1 December 2015. If the checks have been carried out on (or after) 1st January 2012 by a competent electrician, they will be acceptable as at 1 December 2015 (even if they do not include a PAT check). For example, an EICR carried out on 30th November 2015 (even without PAT checks) will still be valid until the end of November 2020.

Although the new mandatory tests need only be carried out five yearly, it is advisable to have them carried out more frequently, if recommended by an electrician. In particular, PAT testing (which is not expensive) should be carried out annually. You also can make sensible visual checks, during periodic inspections of your property (e.g. for scorched electrical sockets).

Until the new regulations come into force, you still must be able to demonstrate compliance with the repairing standard at the point your tenant moves in (and then throughout his or her tenancy). As such, you still need to have an EICR check undertaken. There is, however, no requirement for PAT testing (though it is advised).

Gas Safety

You need to ensure that gas installations, appliances, fittings and flues provided for tenants, in your property, are safe.

The Gas Safety (Installation and Use) Regulations 1998 require that you must maintain a gas safety record.

A Gas Safe registered engineer should attend and check the appliances and installations (e.g. gas boilers, cookers etc.). They will issue a Landlord Gas Safety Certificate. You must keep a record of the safety check for two years and issue a copy of the certificate to your tenant before they move in (or to an existing tenant within twenty-eight days of the check being completed).

All servicing, repairs or replacement of appliances or installations must be carried out by a Gas Safe registered engineer. You are also responsible for ensuring a gas safety check is carried out within 12 months of any new installation, which you provide.

Fire Safety

Part of the Repairing Standard is that every rental property should have satisfactory provision for detecting fires and for giving warning in the event of fire or suspected fire.

The Repairing Standard sets a high benchmark for smoke and fire detection, matching the standard required for new buildings. All privately rented homes should, if at all possible, meet the standard. However, the most important thing is that there should be some provision to detect fires and that this should be in good working order.

You should either install smoke and fire detectors that meet the standard set by building regulations or be able to justify why a lesser level of protection is appropriate. Reasons why could include:

•    The proximity of an open fireplace would make a detector impracticable
•    The cost of installing detectors would be prohibitive (due to the cost of necessary structural alterations rather than the cost of the detectors themselves)
•    You intend to install detectors within a reasonable timescale as part of a programme of upgrades.
The new building standards have associated technical guidance, issued by the Building Standards Division, called the Domestic Technical Handbook. This states that there should be
•    One functioning smoke alarm in the room which is frequently used by the occupants for general daytime living purposes
•    One functioning smoke alarm in every circulation space, such as hallways and landings
•    One heat alarm in the kitchen
•    A carbon monoxide alarm.

Since 2007 all alarms must be interlinked and also mains powered. When installing a system, you are entitled to rely on the advice of a qualified electrician.

You should ensure that your property’s alarms are maintained in accordance with the manufacturer’s recommendations. It is good practice that you advise tenants to test them on a weekly basis.

Lastly, you should conduct a fire risk assessment for your property. The Scottish Fire and Rescue Service (SFRS) offer free fire safety visits comprising an assessment of fire risk within a home and the provision of advice on preventing fires, avoiding fire spread and formulating an escape plan in event of fire. Visit: www.firescotland.gov.uk

Anything Else?

Energy Performance Certificate (EPC)

Yes – nowadays you need to also obtain an Energy Performance Certificate (EPC) for your property.

You have to include its energy efficiency rating in all advertising and you must show the certificate if any prospective tenants ask to see it.

Our Unlock the Law top-tip is to check your buyer’s Home Report. If you bought your property recently, your Home Report will contain an EPC that will suffice for this purpose.

Advertising and Meeting Prospective Tenants

Now you’re ready to advertise your rental property. There are some excellent sites, such as www.s1homes.com.

Remember to include your landlord registration number in your advert, along with the efficiency rating (from the EPC).

Arrange viewings. If you already are a landlord and currently rent your property, you must give your tenants at least 24 hours written notice. Try to have viewings, if possible, at a convenient time to them.

It goes without saying that you should get references from a previous landlord and also an employer. If these are okay, arrange a moving in date with your tenant.

Moving Tenants In To Your Property

Organisation is the key to a smooth entry process.

•    Before your tenant signs the lease, give him/her the AT5
•    Have two copies signed (so you and he/she each has one)
•    Do allow your tenant the time to read through the agreement, if they wish

Remember to give them copies of the:

1.    Annual Landlord Gas Safety certificate
2.    Energy Performance Certificate (EPC)
3.    PAT test certificate (if applicable)
4.    EICR certificate.

You also have to provide your tenant with a Tenant Information Pack. This provides information about you, the property, the type of tenancy offered, your responsibilities as a landlord and a summary of relevant legislation. You must provide your tenant with the pack by the tenancy start date.

The pack must be signed and receipted by you and your tenant (unless it is sent or acknowledged by email). If you fail to provide the pack, you can be fined up to £500.

An inventory will form part of your lease. You should go through the property with your tenant and they should satisfy themselves that the inventory (including any details about the property’s condition) is accurate. You should both sign two copies (one for each of you). It is good practice to take photographs of each room (or a walk through video) to verify the condition of the furniture and carpets, taking care to photograph or video in detail any pre-existing damage.

Make sure you tell your tenant about their repairing standard rights. Tell them how to report repairs and emergencies. Finally, get meter readings for both gas and electricity, and have your tenant sign a receipt acknowledging the readings.

The Deposit

The final thing you need from your tenant is a deposit and payment of the first month’s rent. Simply put, a deposit is a sum of money which acts as a guarantee against:

•    Damage to your property
•    Cleaning bills (if your tenant leaves the property in a poor condition)
•    Bills that are left unpaid (e.g. fuel or telephone)
•    Unpaid rent.

The amount that can be charged as a deposit cannot be more than the equivalent of two months’ rent.

You must put the deposit straight into one of the approved Tenancy Deposit Schemes. You have to give it to the scheme within 30 days of the tenancy starting.

Tenancy Deposit Scheme

There are three tenancy deposit scheme providers in Scotland:

•    Letting Protection Scotland
•    MyDeposits Scotland
•    Safe Deposits Scotland

Once the deposit is registered you have to give your tenant the following information:

•    The amount of the deposit and the date you received it
•    The date it was paid into the tenancy deposit scheme
•    The address of the property to which the deposit relates
•    A statement confirming that you are registered as a landlord with the local council in which the property is located
•    The name and contact details of the tenancy deposit scheme provider used.

If you fail to do this, your tenant can apply to the Sheriff Court either during the tenancy or up to three months after it has come to an end, and the Court can order you to pay your tenant up to three times the amount of the deposit.

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After Moving In

In terms of admin, you should complete and return to your local authority a council tax form notifying it of your tenant taking occupancy. Make sure you let your tenant know that the council has their details. Let them also know what council tax band the property is so they can work out how much their bills will be.

It is also worth writing to your gas/electricity provider to advise them that the tenant has moved in, the date of moving in and also the opening readings on that

Ongoing Obligations During the Tenancy

You should periodically inspect your property, using the inventory as the basis. You should give your tenant at least 24 hours notice of any inspection.

After the inspection, you should forward to your tenant a copy of the updated condition report, along with a note of any action you require them to take.

That apart, you simply need to monitor the payments of rent, to ensure you are paid on time, and to deal with any problems/repairs that arise (to maintain ongoing legal compliance with the standards).

Ending the Tenancy - Notice to Quit & Section 33 Notice

At the end of a short assured tenancy, if you wish to recover possession, you need to issue your tenant, firstly, with a Notice to Quit and, secondly, with a Section 33 Notice.

To be valid, the Notice to Quit must:

•    Be in writing
•    Give a period of notice after which it will become effective
•    Make it clear that, even after the period of notice given has run out, you must get an order for possession from a Court before your tenant can be evicted
•    Explain that the effect of the notice is that the contractual tenancy will be brought to an end at the end of the period specified in the notice but that it will at once be replaced by a statutory assured tenancy, and that you will be able to propose new terms for the tenancy or a different rent, or both
The minimum notice periods are laid down in the Sheriff Courts (Scotland) Act 1907 (ss34-38) and are:
•    Lease for more than four months - 40 Days
•    Lease for less than four months - One third of the period of let (subject to a minimum period of 28 days).

s outlined, the Notice to Quit must be served along with a Section 33 notice, intimating recovery of possession. This latter document requires a 2 month notice period. Accordingly, for simplicity, it is best if both notices are served together at least 2 months before the end of the tenancy. Notices should be sent by recorded delivery in the first instance, failing which Sheriff Officers can be used. 

Providing the notices have been validly served, within the correct time limits, there is no defence to the action for recovery of possession of the property.

During the tenancy, if your tenant fails to adhere to the conditions of the tenancy agreement:

•    You can apply to recover possession before the end the tenancy
•    You must be satisfied that you have a ground for repossession under Schedule 5 of the Housing (Scotland) Act 1988
•    You must serve an ‘AT6 Notice’ on your tenant specifying the ground itself and details of the breach.

Your notice, in this instance, should stipulate which clause of the tenancy agreement has been breached. The most common ground is rent arrears. Grounds 1-8 are mandatory. Grounds 9-17 are discretionary, which means that you would have to persuade a Sheriff that it is reasonable that an order be granted.

For assured tenancies, the Notice to Quite should be served in conjunction with Form AT6 (which states the ground or grounds as set out in Schedule 5) that you seek possession and giving the reasons why you believe the ground or grounds apply. The length of notice period is dependent on the grounds being used. That, coupled with the Sheriff’s discretion, can make recovery under an assured tenancy more problematic.

Returning the Deposit

At the end of the tenancy you must request the return of the deposit from the Tenancy Deposit Scheme as soon as is reasonably possible. You have to state the amount you think should be returned both to yourself and your tenant.

Once the provider receives your request, they will ask the tenant whether they agree. Your tenant must write back within 30 working days to confirm either way.

If your tenant does not reply to the scheme provider, their share of the deposit will stay in the scheme and you will receive your share of the deposit.

A dispute resolution service should be offered by the scheme. It is not compulsory; you are free to negotiate with your tenant, directly. However, you are required to use dispute resolution if your tenant requests it.

If you request dispute resolution, yourself, your tenant must agree within 30 working days. If not, the deposit will be repaid in line with your your recommendation. Whatever the avenue pursued, clearly you have to prove why a deposit should be withheld.

Disputes will be determined by an independent adjudicator and during the dispute resolution process the scheme provider will hold onto the deposit until it is resolved.

Key Points - What Every Scottish Landlord Should KNow

•    Before you can become a landlord you must register with the local authority, for the area where your rental property is located.
•    You will also need to register each property you plan to let.
•    You must obtain the approval of your mortgage lender to let your property.
•    If your property is unfurnished and unoccupied, you should be entitled to claim a council tax exemption.
•    You must decide the type of lease you are prepared to offer, whether an assured tenancy or a short assured tenancy.
•    You have to make sure that your property meets the repairing standard and also the tolerable standard.
•    This includes carrying out electrical, gas and safety checks.
•    You also have to provide your tenant with a Tenant Information Pack.
•    At the end of a short assured tenancy, if you wish to recover possession, you need to issue your tenant, firstly, with a Notice to Quit and, secondly, with a Section 33 Notice.
•    At the end of the tenancy you must request the return of the deposit from the Tenancy Deposit Scheme as soon as is reasonably possible.

Stay Tuned to Unlock The Law

This area of law is under further review by the Scottish Government and further changes are likely.

For the very latest on the rules around being a landlord, make sure you check Unlock The Law regularly, or sign up to our newsletter.

Contact Expert Scottish Landlord Lawyers (Glasgow, Edinburgh, Aberdeen, Paisley & Beyond)

If you require expert advice for yourself as a landlord in Scotland, contact us today. We only recommend the best Scottish landlord solicitors (whether you're based in Glasgow, Edinburgh, Aberdeen, Paisley, Dundee, Perth or elsewhere in Scotland) - get in touch with us here or call us on 01415529193.
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Jurisdiction

Scotland

Last Updated

Wednesday, 06 January 2016

Categories

Property Law

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