Becoming a landlord has a lot more legal responsibilities than most people think. There is more complexity required than just collecting rent and finding tenants. A landlord has a legal responsibility to keep the properties compliant and within the Repairing Standard. If these requirements are ignored the repercussions for a landlord can be serious, resulting in the loss of the right to operate as a landlord, large fines and in extreme cases custodial sentences.
Landlord registration:
Registering as a landlord is the first legal requirement in Scotland. In Scotland each individual landlord or organisation needs to register with their local council. If they own properties in more than one local authority area, they must register separately with each local authority.
People who have to register: Any individual or company who owns and lets out a residential property must register on https://www.landlordregistrationscotland.gov.uk
There are some exemptions so you can check if you are required to register via Landlord Registration Scotland.
Process of application: The registration process is quite simple. You just apply online via the website and pay a small fee. You may need to provide copies of your compliance documents to complete the registration process. You can be fined for late applications so do be vigilant about this.
Test for fit and proper: The council needs to make sure the applicants are “Fit and Proper” and are capable of being landlords. They do a series of checks, checking criminal records, compliance history and what condition the property is in.
Tenancy agreements
There are specific types of tenancy agreements by the Scottish Tenancy Law. The Private Residential Tenancy (PRT) applies for most private rentals if the private rental started on or after December 1, 2017. There are a number of things that need to be included in the agreement, such as the amount of rent and payment schedule the tenant needs to adhere to. The tenancy length and notice periods and the responsibilities of both the tenant and landlord also need to be included in this agreement.
Repossession rules:
All grounds for repossession are now discretionary. The main rule of thumb is that if there is a tenancy breach, the tenants require a 28 day notice period. If there is no tenancy breach, it is classed as a “no fault eviction” and the PRT is over six months long an 84 days’ notice is required for the tenant. You need to allow service dates, so always speak to a letting agency or Scottish Association of Landlords before serving notice on a tenant to ensure you do not make any errors which could invalidate your notice.
Historically Short Assured Tenancy Agreements and Assured Tenancy Agreements were more commonly used prior to 1st Dec 2017, however there are proposed housing bills going through Parliament to transition these tenancies to PRT’s.
Condition and repairs for the property:
All private residential landlords must comply with the Repairing Standard, this is outlined in the Housing (Scotland) Act 2006. A well structured property, plumbing and heating systems that are working properly, correct wiring and electrical appliances, carbon monoxide and fire safety measures are all included in this standard. The property must be wind and water tight and in a fit state for human habitation.
Inventory:
Taking a detailed written inventory with photographs is required before a tenant moves in and is designed to protect the tenants’ deposit, and the landlord’s property. The more details you have on this report, the less likely you are to have a deposit dispute at the end of the tenancy.
Maintenance that is ongoing:
Legally landlords need to carry out important repairs as soon as possible. If they fail to maintain the property this can lead to substandard accommodation and for serious offenders, penalties can be imposed.
Safety certificates:
This is a mandatory requirement for compliance in Scotland.
Gas safety certificate:
A Gas Safe registered engineer is required to do annual checks, to check all gas appliances and flues. When the Gas Safety is completed, the tenants must receive a copy of the certificate.
(EICR) Electrical Installation Condition Report:
An EICR is only required every 3-5 years. It ensures that fixed wiring electrical installations are safe for use.
(PAT Test) Portable Appliance Testing:
Pat testing is recommended to be carried out annually. A PAT test makes sure that portable electrical appliances provided by the landlord are safe.
Fire safety:
Smoke alarms in a property must be interlinked and installed in every hallway, living room and landing. In every kitchen heat alarms are required and carbon monoxide detectors must be installed near fuel burning appliances.
(EPC) Energy Performance Certificate:
In Scotland it is legal for all rental properties to have an EPC Certificate. This rates the property efficiency from A to G, with A being most efficient and G being least efficient. An EPC must be available for tenants to view before agreeing to rent. It needs to be renewed after serious property upgrades and every 10 years.
Legionella certificate:
The legionella certificate should be carried out by a fit and proper person which could be the landlord. It needs to be renewed every 2 years unless there is a fundamental change to the water system, water supply or how the water is used.
Lead Testing:
From March 2024 it is a legal requirement that all properties built prior to 1970 must have a lead test carried out. If lead is found Scottish Water will replace the pipework from the mains supply to the toby, and the landlord is responsible for replacing the pipework from the toby to their property. There are some exemptions to this in communally owned buildings.
Protection from deposit:
The government has three approved tenancy deposit schemes. The tenant’s deposit must be protected in at least one of them. The three schemes are, (LPS) Letting Protection Service Scotland, Safe Deposit Scotland (SDS) and MyDeposits Scotland. A deposit must be lodged within 30 days of the tenancy beginning. If it is not lodged in time the penalties could be up to three times the deposit amount.
(HMO) Licencing for Houses in Multiple Occupation:
A property is considered to be an HMO if you rent your property to three or more unrelated tenants. Local councils regulate HMO Licences which require annual inspections, an increased level of landlord accountability and compliance with fire safety and space standards. If you operate an unlicensed HMO this can result in serious fines and legal action.
First-tier Tribunal:
If there are any landlord or tenant disputes which cannot be amicably resolved together or with mediation, either party can apply to the FTT for resolution.
Tax implications:
Landlords must comply with HMRC regulations and income from property letting is taxable. The key considerations include Rental Income Tax, this is done annually via a Self Assessment tax return. Allowable expenses, some costs can be deducted from taxable income such as repairs, insurance and letting agent fees can all be deducted. Landlords who are living abroad must follow the Non-Resident Landlord Scheme.
Rent increases:
A landlord can increase the rent once every 12 months via a Rent Increase Notice. If the tenant is unhappy with the proposed rent increases they can apply to the Rent Valuation order who will assess the rents and ensure the increase is fair and within market value. If they deem it unfair they can propose rent caps.
Ask for help:
The Scottish Association of Landlords (SAL) can help provide updates and support to help landlords understand the rules. Letting agencies can also help streamline compliance. By understanding the legal requirements this can ensure the properties are safe and can protect their investments and improve the overall condition of properties in Scotland.
