Landlords: Recent clarification on Scotland property law

Scotland has experienced a change in residential property law frameworks recently. In 2017, the First-tier Tribunal (Housing and Property Chamber) was introduced to deal with issues in the private rental sector. From rent or repair matters to right of entry disputes, the First-tier Tribunal helps landlords, estate agents and tenants resolve matters as efficiently as possible.

As a relatively new body, there has been some misunderstanding over the authority of the First-tier Tribunal, however. That is why the following two cases surrounding Private Residential Tenancy (PRT) matters have piqued our interest – because of the clarification they provide for Scottish property law.

First-tier Tribunal – How its authority currently stands

This first case was about a personal guarantee for a Private Residential Tenancy in Scotland. The First-tier Tribunal rejected the application on two grounds: it was considered ‘frivolous’ and because the body held that it didn’t have the authority to give a decision. In the eyes of the First-tier Tribunal, matters ‘arising from’ the terms of a lease aren’t within its remit to assess.

However, the Upper Tribunal disagreed. It overturned the decision, arguing that the First-tier Tribunal’s role is wider than disputes solely about the terms of tenancy agreements.

It held that the wording ‘arising from’ is wide and inclusive, so issues that have happened because of the terms of a lease are within the First-tier Tribunal’s jurisdiction. In this particular case, the guarantee was completely linked to the terms of the lease and therefore should have been considered by the body.

What does this mean for landlords, tenants and letting agents?

Landlords and tenants will need to apply to the First-tier Tribunal for decisions around a number of tenancy agreement matters. Although the First-tier Tribunal does have the authority to give a judgement, they can still appeal the result to the Upper Tribunal. We would always suggest getting legal advice for disputes to help ensure the best possible result.

Private Residential Tenancy – How agreements stand with houses of multiple occupancy

In the second case, we learned that a Private Residential Tenancy in Scotland doesn’t include houses of multiple occupancy.

The property was being let by four individuals, and one of the occupiers was disputing that she was jointly and severally liable for the rent. She had never been given a tenancy agreement, so there was no clear explanation on who was subject to the rent. Looking at the emails sent between the tenant and the landlord, it was clear she was regarded as a standalone tenant. 

Although the First-tier Tribunal agreed there was a lease in place, it clarified that it wasn’t a Private Residential Tenancy.  This type of tenancy is defined in the legislation as one where a property is let to an individual as a separate dwelling. The Upper Tribunal held that means when the tenant only has exclusive use of their own bedroom and so occupies a "communal dwelling", the Private Residential Tenancy arrangement doesn’t stand.

However, this decision seems at odds with the intention of the legislation. Both the model Private Tenancy Agreement and the guidelines issued for Landlords by the Scottish Government clearly envisage that a Private Residential Tenancy should cover situations where core facilities are shared with other tenants.

Interestingly, the Upper Tribunal did not make reference to HMOs in this decision and doesn't seem to have considered the broader context of the arrangement.

What does this mean for landlords, tenants and letting agents?

Unfortunately, this decision confuses the situation for properties with multiple occupancy. The decision is binding on the First-tier Tribunal and we understand that an appeal to the Court of Session has been tabled. We suggest that Landlords await the outcome of the Appeal. 

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at October 2019. Specific advice should be sought for specific cases. For more information see our terms and conditions