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Legislation update for Scotland – February 2022


Couldn't join us live for our  Legal and Compliance update for the Property Sector in Scotland with Propertymarks Policy Manager, Daryl Mcintosh?

Here's a summary of the updates Daryl covered.  For the full overview, including answers to the audience's questions and to watch the webinar recording On Demand via the link below.

Watch the webinar On Demand

 

Headlines

Daryl has kindly shared his notes from today's webinar below. Click to expand each headline for the full detail.

Smoke alarms

From the 1st February 2022, all properties must meet the relevant safety requirements for fire.

The facts

Every home must have:

  • one smoke alarm in the living room or the room you use most
  • one smoke alarm in every hallway or landing
  • one heat alarm in the kitchen

All smoke and heat alarms should be mounted on the ceiling and be interlinked

The Scottish Government averaged the cost at £220 per household

Before electricians and hardware suppliers realised there was a sudden surge for them.

Help with costs

Older and disabled homeowners on low incomes can get help with costs

Care and repair service – £500,000 initially with a further to extend this support beyond 1 February 2022

Fife Kingdom Housing association had £16,000 set aside for 87 households – this has now been used.

Biggest concerns are insurance risks, no enforcement or intention to enforce

It may be something flagged on the Home Report and the purchasers solicitor could look at negotiating this.

Relevant legislation: The Housing (Scotland) Act 1987 (Tolerable Standard) (Extension of Criteria) Amendment Order 2021

Short-term lets legislation approved

Local authorities to set up licensing schemes.

The legislation was developed in response to concerns raised by residents and communities about the impact of short-term let properties on their local communities, including noise, antisocial behaviour and the impact on the supply of housing in some areas.

All short-term let properties will require a licence to ensure they are safe and the people providing them are suitable, under legislation approved by the Scottish Parliament.

Local authorities will be required to establish a short-term lets licensing scheme by 1 October 2022. Existing hosts and operators will have until 1 April 2023 to apply for a licence and all short term lets to have a licence by July 2024.

The cost of establishing and administering a licensing scheme are estimated to be between £214 and £436 for a three-year licence which will be covered from fees set by local authorities.

Land and Buildings Transaction Tax

The Land and Buildings Transaction Tax - Additional Dwelling Supplement: A call for evidence and views

The Scottish Government committed to a review of the ADS in the 2021-22 Programme for Government.

A call for evidence and views is the first stage of that review. They will be researching a number of key themes including:

  • The length of time available to purchase a new main residence before or after the sale of a previous main residence
  • The application of the ADS in certain circumstances, for example:
    • Two or more people buying a property together
    • Transactions involving local authorities, housing co-operatives or other approaches providing housing that is intended to be affordable
    • Whether there are issues in relation to the ADS affecting different parts of Scotland which should be considered.

The call for evidence does not seek views on whether or not the ADS should remain in place.

The ADS is an important element of LBTT and the Scottish Government intends for it to continue on.

Anti-Money Laundering

New guidance for Anti-Money Laundering for Estate Agency business is coming

Letting Agency Business are going to start carrying out inspections and investigations.

Letting Agency Business register will be looking at those who have registered but who didn't need to (those with rents over the 10,000 euro monthly rent) – that may change.

Banks have been guilty of encouraging agencies to register and telling them that it is the only way they will be offered a pooled client account. Based on this HMRC are engaging with these banks and UK finance to basically tell them to stop saying that.

It’s easy to check if Estate Agent Businesses (EAB) haven't registered,  as there is a spreadsheet issued regularly by HMRC.

Standardised fines now £5000 every 3 months for those EAB's not registered. Capped at £100,000.

Minimum Energy Efficiency Standards

 

At present there are no minimum energy efficiency standards for properties in Scotland – other than for Registered Social Landlords (RSL) Undoubtedly it is going to come as it will be the Scottish Governments intention.

Minimum standards, cost capping and exemption register does not exist at the moment.

Heat in Buildings Strategy was launched October 2021 it's looking likely the regulations will come in 2025.

These will require all private rented sector properties to reach a minimum standard equivalent to EPC C, where technically feasible and cost-effective, at change of tenancy, with a backstop of 2028 for all remaining existing properties.

Regulating the owner occupied sector also to be introduced in 2025 this will ensure that from 2025 onwards,  all private housing must achieve minimum standards equivalent to EPC C at respective trigger points.

Where technically feasible and cost-effective to do so – with backstops of 2028 (for the private rented sector) and by 2033 (for owner occupiers).

A question has been asked for definition on this.

Last week Patrick Harvie said ‘We have established a new Green Heat Finance Taskforce which will recommend ways the Scottish Government and private sector can collaborate to scale up investment’. But it seems the detail is sparse as a question asked and yet to be answered

Dean Lockhart To ask the Scottish Government when the Green Heat Finance Taskforce was created; how many people it employs, and what its annual budget.

Intended changes to the PRS

Coronavirus (Recovery and Reform) (Scotland) Bill has introduced to the Scottish Parliament

All grounds for possession to remain discretionary – position to remain as it is, introduced by the temporary measures.

Private Renting Tenancy remains discretionary

Short Assured Tenancy and Assured, repealing ground 8 completely – 3 months rent arrears

Leaves you with 11 and 12 – some rent due and late payments

Section 33 remains discretionary as well.

Some of the questions they have to address is how lenders are going to look at these proposals for now and future lending. These were not the terms when lenders proposed lending over the property and like wise not the conditions when a landlord become a landlord. It is all going to be based on reasonableness and up to the judgement of the tribunal on what they consider reasonable.

What is perhaps disconcerting is the number of First-Tier Tribunal applications being referred to the Upper Tribunal, which is on a point of law, has increased 14% annually

The Bill also proposes that Pre Action Protocols on the grounds of rent arrears become permanent.

A concern here is they may have been workable during the Covid regulations as there was financial support available and agents and landlords could direct tenants towards the financial support available.

The grant funding stopped for new applications at the end of the year.

Notice periods

We are still at 3 or 6 months depending on the grounds being used and we await confirmation about any changes.

The provisions end on the 31st March, however there is a provision for extension for another 6 months