We have blogged on issues around the duties on landlords under the Tenancy Deposit Schemes (Scotland) Regulations 2011 (as amended) (the Regulations), short-term lets and what is and what is not an “only or principal home” before. In a recent appeal before the Upper Tribunal, these issues came together when a group of university students sought a penalty against their former landlord claiming that she had a duty under the Regulations to pay the deposit they paid to her into an approved tenancy deposit scheme and that she had failed to do so. It was not disputed that the deposit had not been paid into an approved scheme and, at first instance, the first-tier tribunal awarded a penalty against the landlord. The landlord successfully appealed against this decision.
A copy of the decision can be found here
https://www.scotcourts.gov.uk/media/v3qoztz2/2024ut49.pdf
When does a landlord have to pay the deposit into an approved tenancy deposit scheme?
The duty under the Regulations to pay any deposit into an approved scheme only applies to what is defined as a “relevant tenancy”. That definition requires that the landlord be a “relevant person” and that the house in question be occupied by an “unconnected person”. However, the Regulations specifically exclude any use of a house as defined by section 83(6) of the Antisocial Behaviour etc. (Scotland) Act 2004 (the 2004 Act) (which also contains the definitions of “relevant person” and “unconnected person”).
The way Section 83(6) of the 2004 Act operates is to disregard certain uses of a house for the purpose of determining whether landlord registration is required or not. For example, the use of a property for the purposes of a holiday, where there is a resident landlord and, from 1 October 2022, so is the use of a house as a short-term let. One of the conditions for a short-term let is that that the “guest” does not occupy the property or house as “their only or principal home”. This is to be contrasted with Private Residential Tenancies which require that a tenant does occupy the house as “their only or principal home”.
What does that mean for tenancies where the property is not occupied as a tenant’s only or principal home?
If a property is not the only or principal home of a tenant, then it cannot be a Private Residential Tenancy under the 2016 Act and, if additional criteria are met (for example, be for commercial consideration, there not be a resident landlord, not be a let to an immediate family member of the “host” etc), then it would arguably fall to be treated as a Short-term Let. If a tenancy is a Short-term Let, then not only does a landlord not require to register as a landlord in terms of the 2004 Act (they would need a Short-term Let licence), the rules regarding protecting deposits do not apply either.
What did the Upper Tribunal say about how you establish whether a house is the only or principal home of a tenant?
Whilst the Upper Tribunal made it clear that “habitual residence” was not required, where that was not the case and someone had other potential residence(s) (such as suggested in this case), the test was to look at whether:
“the person concerned had such a real, tangible and substantial connection with the house in question that it, rather than any other place of residence, can properly be described as having been his only or principal home during the relevant period”.
How you go about this is to analyse the nature and extent of the personal ties of each (and every) occupant to the particular house and any other accommodation that they occupy (in this case the student’s parent’s houses). The Upper Tribunal then went on to make a list (not exhaustive) of the type of enquiries that should be made:
“Questions such as where the respondents are registered to vote, where they receive important official post (such as personal bank statements, official and university communications), where the majority of their possessions are kept, registration with the local authority for any purpose, where they are registered with a doctor or dentist, what periods of absence from the accommodation there have been and for what reasons, their connections with other accommodation which they might occupy, comparison between their ties and connections to different accommodations and so on may all be relevant.“
Ultimately if there is a dispute like in this case, that task falls to the tribunals and they will require to determine what weight should be given to each factor identified and upon which evidence is led so that they can determine for each and every occupant, what was their principal home.
What did the first-tier tribunal get wrong?
In this case, there was, as the Upper Tribunal put it “very little fact finding done by the FTS in this case and therefore the appeal on this ground must succeed”. In short, the first-tier tribunal had made a determination that the house in question was the only or principal home of all the occupants despite not having a proper basis in evidence for doing so. The case was remitted back to a differently constituted first-tier tribunal to consider the whole case “afresh”.
As we have blogged previously, we now operate 2 separate licensing systems for more traditional landlords and for short-term lets. Each has its own rules in relation to deposits, tenancy documentation as well as various criminal penalties for non-compliance, meaning a potential “minefield” for the unwary landlord. This all means that great care should be taken over the selection of tenants.
If you require any further information or advice, please contact us or watch our blogs for further updates.
