The headline grabbing part of the Housing (Scotland) Act 2014, which received Royal assent on the 1st of August (the Act), is the abolition of the right to buy. Indeed, chunks of the Act deal with matters not directly relevant to the Private Rented Sector (PRS). Of most interest will be the removal of certain functions from the sheriff court and Letting Agent Registration, but there are other parts that will affect the PRS.

LANDLORD REGISTRATION

There is to be a 12mth period for Local Authorities to deal with applications for Landlord registration applications. This is to bring matters in line with other authorisation schemes such as HMOs. There is to be a deemed approval if the application is not dealt with within the 12mths, albeit Local Authorities can apply to the courts to extend this period in more complex cases.

THIRD PARTY ENFORCEMENT OF THE REPAIRING STANDARD

This will allow Local Authorities to apply directly to the PRHP where there is evidence that a landlord is not meeting the repairing standard under the Housing (Scotland) Act 2006.

ENHANCED ENFORCEMENT AREAS

To give additional discretionary powers to Local Authorities in areas with particularly poor standards in the PRS. Local Authorities will have to apply for those powers in specific geographical areas. They will be limited to 5 year periods, after which a further application would be required. The extra powers may include:

• Checks it carries out in relation to landlord registration; and
• Authority to inspect properties let by landlords.

ELECTRICAL SAFETY

Landlords will require to carry out ‘regular’ inspections for electrical safety. Currently, whilst a landlord has a duty to ensure the safety of electrical installations and equipment, there is no specific requirement to do anything on an on-going basis. This will apply to:

• Installations for the supply of electricity
• Electrical fixtures, fittings and appliances.

Testing will be required at no less than 5 yearly intervals (although there are transitional provisions for on-going tenancies) and tenants are to be provided with copies of the most recent inspection carried out.

Testing is to be carried out by ‘competent’ persons (guidance on this definition to be provided by the Scottish Government) and a record prepared by the competent person setting out findings. Landlords will have a duty to keep records for 6 years.

CARBON MONOXIDE DETECTORS

The repairing standard is to be varied to add the requirement that a property has:

“satisfactory provision for giving warning if carbon monoxide is present in a concentration hazardous to health.”.

As with smoke detectors, the when considering compliance, reference will be made to Scottish Government guidance and current building standards.

Turning to the most significant changes contained in the Act.

FIRST TIER TRIBUNAL

Certain functions of the Sheriff Court are to be transferred to a new First Tier Tribunal (the Housing Tribunal).

The majority of PRS cases are eviction cases, but there are non-eviction type cases too.

The problems identified with the current court system are associated mainly with delays, in particular

• Lack of judicial knowledge; and
• Difficulties in getting evictions through.

The procedure for the Housing Tribunal has yet to be determined and will be introduced by secondary legislation. The suggestion is that due to the specialist knowledge of the Tribunal judges, procedure will be less formal, less adversarial and intended for non-lawyers to deal with.

LETTING AGENT REGISTRATION

The Act sets out that the Scottish Ministers will set up and monitor a register of letting agents.

All persons (including companies and partnerships) involved in “letting agency work” will have to apply for registration.

“Letting Agency Work” is defined as that being:

1. Done in the course of a business;
2. In response to instructions;
3. For a private Landlord;
4. Entering into lease/occupancy agreement to enable unconnected person to use the landlord’s house as a dwelling; or
5. For the purpose of repairing, maintaining, improving, insuring or otherwise managing a house which is to be subject of a lease or occupancy arrangement.

Where applications are by non-natural persons such as companies, applications will have to identify the most senior person within their management structure as well as anyone who owns 25% or more of the particular company or is otherwise directly concerned with the control or governance of any letting agency work.  There are criminal offences for providing false information.

The Act introduces the “fit and proper person” test to the application process. Regard must be had to any convictions for fraud or dishonesty, violence, drugs, firearms or Sexual Offences. Also relevant is whether an applicant has been guilty of unlawful discrimination, or contravened Housing Law, Landlord and Tenant Law or the Law relating to debt. Also any failure to comply with the Letting Code (see below), or to use letting agent registration number, adhere to any Letting Agent Enforcement Order (see below) or pay costs due under an award of the Housing Tribunal.

Agents will become a “registered letting agent” and issued with a registration number. This number will need to appear on any documents issued to landlords and tenants or prospective landlords or tenants and property adverts. Registration will last for 3 years, after which it will need to be renewed.

If Ministers are satisfied that the applicant (and anyone who requires to be identified) is a fit and proper person, they must enter them onto the register.

If not so satisfied, they must give notice to the applicant that they are considering refusal and their reasons for doing so. In those circumstances the applicant will be given the opportunity to make written representations.

If there is a refusal, then there is a right of appeal to the Housing Tribunal.

There are similar provisions for removal of registered Letting Agents.

• The real sting in the tail is that, should you not be registered, then you are not entitled to charge for “Letting Agency Services” with a corresponding criminal offence for acting as a letting agent whilst unregistered. As well as a separate offence for using a registration number whilst unregistered.

THE LETTING CODE & LETTING AGENT ENFORCEMENT ORDER

The Act also provides for the creation of a Letting Code to set out standards of practice expected of those who will carry out ‘Letting Agency Work’, handling of client’s money and professional indemnity arrangements.

Landlords and Tenants will have the ability to apply to the Housing Tribunal to seek a determination that an agent has failed to comply with the Letting Code. Where there is a failure, the Housing Tribunal must make a Letting Agent Enforcement Order to require the agent to take steps to rectify the failure and a time period for doing so. They may also provide for compensation to be paid to the applicant. A failure to comply within the timescales laid out, can lead to a report the Scottish Ministers and criminal prosecution.

All in all this will represent another significant change in the way agents will operate in the PRS. The best guess at the moment for implementation of the parts relating to Agent registration and the Housing Tribunal is that it will be early 2016. Other parts will likely be implemented earlier than that.

Source:  ARLA