Thu 05 Dec 2019

Leasing Options - Don’t Let PRTs get you Tied up in knots

It is a common feature of some farming enterprises that a worker will reside on the farm in accommodation provided to them by their employer. Otherwise how else is a dairyman meant to carry out checks of the cattle and be available at short notice during calving?

Also known as "tied accommodation", these houses are given back to the employer at the end of the worker's employment (however that may be terminated). What happens when a former employee does not wish to remove from the house, despite the fact he is no longer an employee?

How these arrangements are documented is crucial in determining whether a right of occupancy exists, as well as the correct procedure to follow to ensure that the occupancy arrangement is brought to an end in law.

For the purposes of this note, we are focusing on tied accommodation which is formally leased to the employee, and not a form of service occupancy arrangement. Whether the arrangement falls within the former or the latter depends much on the wording of the employment contract, but as a general rule of thumb, if more than a nominal rent is being paid by the employee to reside then this is indicative of a lease.

Where the occupancy is in the form of a lease, then any arrangement which was entered into post 1 December 2017 will technically be a Private Residential Tenancy, governed by the Private Housing (Tenancies) (Scotland) Act 2016 (2016 Act). This requires, amongst other things, for the employer to be a registered landlord with the Local Authority, any security deposits to be held in an approved scheme and for the house to meet certain safety standards (Gas Safety, Water Supply, Energy Performance Certificate etc).

Furthermore, should the worker's employment be terminated then the lease will require to be brought to an end in accordance with the terms of the 2016 Act, which will require the service of a suitable notice of termination. If the former employee does not wish to remove from the house then an eviction order must be sought from the First Tier Tribunal. Provided the arrangement was properly constituted then the Tribunal must grant the order.

For employees that took on a lease prior to December 2017 then other historic arrangements will most probably apply.

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