Following lobbying and sector feedback, Purpose Built Student Accommodation (PBSA) is to be excluded from the remit of the Private Housing (Tenancies) (Scotland) Bill.
The Scottish Government published their response to the Infrastructure and Capital Investment Committee Stage 1 Report on the Private Housing (Tenancies) (Scotland) Bill last week and it contains the following statement:
'The Scottish Government has concluded that such accommodation [Purpose Built Student Accommodation] is not part of the mainstream private rental sector and should not be treated as such for the purposes of the Bill. Therefore, it will bring forward an amendment that will have the effect of exempting PBSA premises from the Bill in the same way as applies already to accommodation provided by Higher and Further Education Institutions. Among other things, this will ensure that PBSA can continue to provide accommodation for students through nomination agreements.'
The Bill seeks to replace existing short assured tenancy and assured tenancies in Scotland with a single new tenancy, called a private residential tenancy. The Scottish Government thinks that this new tenancy model will provide appropriate safeguards for landlords and investors while providing tenants with protection against excessive rent increases.
Of particular concern to a number of developers and operators of student accommodation was the removal of the 'no-fault'-possession route for landlords as well as the introduction of Rent Pressure Zones. PBSA providers need confidence about recovering possession at the end of the tenancy and regularly enter into leases, the duration of which coincides with student term times.
The certainty introduced by the proposed amendment will restore investor confidence and allay concerns about growth in this sector. Many of the lending institutions involved in the Purpose Built Student Accommodation sector were concerned about the impact inclusion in the Bill was going to have on their customers in terms of cash flow forecasts and rental income streams.
Exclusion of the PBSA sector from the Bill definitely seems like a sensible way forward and one which will continue to help this sector to thrive. The next stage of consideration of the draft Bill has now commenced with an initial Stage 2 discussion scheduled for Wednesday 10 February and the final Stage 3 debate due to take place in mid-March. The Bill must be passed before dissolution of the Scottish Parliament on 23 March or it will fall.
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.