10 years in the Private Rental Sector
In our latest monthly newsletter we have a look at the last 10 years and discuss just some of the significant changes, additions and unforeseen challenges that we have seen experienced within the Private Rental Sector.
Tenancy Deposit Schemes (Effective 2012)
It was at the start of the 2010’s that a closer look and a more robust regulatory framework within the Private Rental Sector was put in place, and in a similar timeline to the Tenant Fee ban, the industry welcomed the introduction of Tenancy Deposit Schemes. This saw the end of landlords and letting agents having the opportunity of holding onto deposits throughout the duration of a lease. Instead there was a requirement to transfer them to a government approved scheme, of which there is currently 3 options available in Scotland – SafeDeposits Scotland, MyDeposit Scotland and The Letting Protection Service Scotland.
Whilst this was a significant change introduced to the industry, it was typically seen as a positive move. The majority of Letting Agents invested and improved other areas of their service delivery as a result, such as improved photographic inventory’s and detailed end of tenancy reports becoming the norm. This as a result complimented the deposit schemes service and tenants enjoyed greater transparency with clear evidence for deductions being proposed. The scheme also allowed tenants to challenge deductions and provide reasons and evidence for this. If no agreement could be reached between the tenant and landlord then an independent adjudicator would be assigned to assess all information submitted and provide a ruling on where the deposit should be returned, rather than it simply being at the mercy of the landlords or agents sole discretion, which was sadly quite often taken advantage of for a bias outcome. Ultimately a tenant could feel the final experience of their tenancy was conducted fairly and timeously.
Tenant Fee’s Abolished (Effective 2012)
It has in fact been illegal since 1984 (The Rent (Scotland) Act 1984), for Letting Agents to charge tenant’s costs over and above their rent. These were referred to as premiums, but as argued by many, including Shelter Scotland, it was said that the terms of the ‘premiums’ allowed ambiguity and as such the Scottish Government assessed and introduced The Private Rented Housing (Scotland) Act 2011.
In summary it was clarified that a premium “includes any fine or other sum and any other pecuniary consideration, in addition to rent, and includes any service or administration fee or charge”. In the following November of 2012, the ruling was enforced - no Letting Agent could charge any ‘fees’ and the tenant was only responsible for covering their rent and deposit. As a result the majority of agents in the sector had to remove fees typically charged to tenants at that time, which could include charges such as an ‘application fee’ at the beginning of a tenancy, ‘reference fees’ and even an ‘end of tenancy’ fee for processing a deposit return, amongst others where opportunity allowed.
What followed over the next couple of years were consistent higher rent increases across Scotland. Many agents claimed that this was as a direct result of the abolishment of tenant fees, however Shelter Scotland conducted research and reported there was no conclusive evidence of this – “the independent analysis found that other market pressures were far more likely to have contributed to rising rent in the private rented sector.” Whilst this is likely to have played a part, it can be noted there was at the very least, an above average increase in the level of rents across 2012-2013 than had been experienced in the recent years to that point. It must of course be balanced by the fact the industry has enjoyed consistent and significant rent increase over the last 10 years in general.
