30 May 2019

Continuing or extending existing Short-assured tenancies

Following on from my blog in October 2017, before the Private Housing (Scotland) Act 2016 (2016 Act) came into force, some doubt was expressed as to the effect of the transitional provisions dealing with existing Short-assured tenancies would apply. As a result, along with commencement orders, additional savings provisions were made to preserve the existing rule regarding continuing Short-assured tenancies or at least to provide reassurance that this was the case. The reason for these orders arose from the amendment made by the 2016 Act to section 32(3) of the Housing (Scotland) Act 1988 (the 1988 Act) which set out the rules on how short-assured tenancies could be continued to preserve the landlord’s automatic right to recover possession at the end of the contractual term (now mischaracterised as the “no fault ground”). These rules were that the new contractual term must:

  • come into being at the ish of an existing Short-assured tenancy;
  • relate to the same or substantially the same premises; and
  • the landlord and the tenant are the same as before.

The relevant savings provisions can be found in The Private Housing (Tenancies)(Scotland) Act 2016 (Commencement No.3, Amendment, Saving Provision and Revocation) Regulations 2017, in particular, Regulation 6. The effect of this regulation is to continue the application of section 32(3) and section 12 of the 1988 Act to Short-assured tenancies that were already in existence as at 1 December 2017 – as if section 32(3) had never been amended and without the addition of section 12(1A) to the 1988 Act. Some parties have expressed doubt as to the full extent of Regulation 6 and questioned whether it can apply to more than one contractual extension (ie created by a new agreement) of such an existing Short-assured tenancy after 1 December 2017.

To explain. Traditionally there were 3 possible ways a Short-assured tenancy could be extended. These were:

  • By the operation of Tacit Relocation;
  • By operation of the lease itself (eg a month to month rolling term that took effect after the initial term had expired); and
  • By way of a new contractual tenancy created by way of a new contract.

The amendment to section 32(3) of the 1988 Act had no effect on continuations under 1) and 2) above as the existing tenancy continues or is prolonged and, irrespective of the amendments, these tenancies will remain as Short-assured tenancies after 1 December 2017 – potentially indefinitely.

The real question that was raised has always centred around 3). That is, further contractual extensions to an existing Short-assured tenancy entered into after 1 December 2017. The Scottish Government answered that by the savings provisions mentioned above and the effect of those savings provisions is that, as long as the agreed contractual extension fulfils the requirements of section 32(3) of the 1988 Act (as it was and stated above), then the continuing tenancy will remain a Short-assured tenancy and that such a tenancy can be extended on more than one occasion. That is because of the effect of section 32(3)(b) on such continued tenancies is also preserved by the savings provisions.

In practice that means the new continued tenancy must take effect from the ish date or the day immediately following it. For example, if the ish date was 21 May 2019, the extended contractual term would have to take effect from either 21 May 2019 (the same day the old tenancy ends) or 22 May 2019 (immediately after the end of the old tenancy). That is of course assuming that the premises are the same (or substantially the same) and there is the same landlord and tenant.

If these conditions are not met, then irrespective of the terms of the savings provisions, any tenancy would not remain as a Short-assured tenancy and would, by default be a Private Residential Tenancy under the 2016 Act.

If you require any further information or advice on applications, please contact Rory Cowan