Tenant law changes in Scotland produces problematic unintended consequences

Tenant law changes in Scotland produces problematic unintended consequences

Changes to law in Scotland to improve tenants’ rights are welcome but have produced some problematic unintended consequences which England and Wales should note before implementing their version of the law according to leading property management company Apropos by DJ Alexander. The firm has welcomed the changes contained in the Private Residential Tenant Agreement legislation which came into force on 1st December 2017 but has found that there have been some unusual effects on the market which should be looked at prior to England and Wales establishing their own version of the legislation.

David Alexander, joint managing director of Apropos by DJ Alexander, said: “As part of the legislation it became illegal for agents and landlords to withhold any deposits other than the refundable deposits. All other money must be refunded immediately the tenant requests it. It is standard to ask for a holding deposit when a tenant likes a property as this enables the agent or landlord to withdraw the property from the market while various checks are carried out prior to the tenant moving in.”

“However, Apropos has found some tenants placing a deposit on several properties with several agents and then simply withdrawing interest in all but one after a few weeks and asking for their deposits back resulting in lost revenue for the landlord and agent, and considerable administrative issues due to the need to re-market one or more properties.”

David continued: “I don’t believe that tenants are deliberately taking an interest in multiple properties for any reason other than they are looking at a specific area, see a further property, and keep their interest in the original property live until they have secured a better place. The result, however, is that many properties are being taken off the market for a few weeks, then bounced back on once the holding deposit is withdrawn. Obviously, this causes more work but of greater concern is that it loses income on the property.”

“A further unforeseen circumstance of the legislation is that previously all tenancies began on the day the tenant moved in and ended on that date when they left. This could be any date in the month. The new legislation allows a tenant the chance to choose when they leave with the result that the majority are now picking the end of the month to coincide with payday. This means that, instead of a steady flow of departures and arrivals throughout the month, we have a deluge at the end of each month. There can be many things to do in terms of maintenance and administration to process these changeovers and this bulging of demand over a short period is causing something of a headache for ourselves and other property management companies.”

David concluded: “This is not a plea to feel sorry for property management companies and landlords. The legislation was overdue and is welcome, but these unforeseen circumstances could have been avoided with some forethought into how the law is drawn up and implemented. I would urge those tasked with developing the English and Welsh versions of this legislation to look at the way in which it has operated in Scotland and to adapt a more efficient model in the new law which does not result in these issues arising.”