Tue 13 Feb 2018

Tenancy Agreements for Student Accommodation in Scotland

The new Private Residential Tenancy ("PRT") regime was introduced in Scotland on 1 December 2017.  Prior to its introduction there was concern amongst investors that the additional rights it confers on occupiers might prove harmful from an investment perspective.  Key concerns included additional security of tenure tenants are to enjoy and the possibility of rent controls being introduced in property hotspots.

In general terms however the PRT regime has not proven to be harmful.  From the student accommodation sector's perspective one of the key reasons for this has been the exemption secured for certain student accommodation providers/assets.  This exemption applies in the following circumstances:-

  • where tenancies are either granted by a university or a "other educational establishment"; or
  • tenancies where the following two criteria are satisfied:-
  • the let is of the whole or part of a building, planning permission for the construction, conversion or change of use of which was given on the basis that the let property would be used predominantly for housing students; and
  • the landlord is an "institutional provider of student accommodation".

For these purposes the landlord is such an institutional provider if:-

  • it lets or is entitled to let other properties in the same building or complex as the let property;
  • the let property and the other properties together include at least thirty bedrooms; and
  • the landlord uses or intends to use the other properties predominantly for the purpose of housing students.

Where the exemption does apply there was initially a lack of clarity around the nature of the tenancy documentation which requires to be used and in particular the extent to which the old "short assured tenancy" regime and other rules relating to residential tenancies might apply to new lettings.  Thinking and practice have now started to evolve on such matters.  Accordingly for those student accommodation providers who meet the qualifying criteria referred to above, it might be useful to note that:-

  • exempt lettings will not be short assured tenancies - they will simply be contractual leases;
  • the old tenant information pack rules do not apply to either PRTs or to contractual tenancies;
  • pre-existing rules regarding deposits continue to apply to PRTs and also to contractual tenancies; and
  • the electronic completion of leases is still possible in the case of contractual tenancies however it is no longer necessary to include the service of an AT5 or supply of a Tenant Information Pack within this process.

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