KNOWLEDGE

The Coronavirus (Scotland) (No.2) Bill - changes for the student accommodation sector

Morton Fraser Partner Jonathan Seddon
Author
Jonathan Seddon
Partner
Morton Fraser Legal Director Sandra Hunter
Author
Sandra Hunter
Legal Director
Morton Fraser_ David Stewart
Author
David Stewart
Partner
PUBLISHED:
25 May 2020
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category:
Blog

The Coronavirus (Scotland) (No.2) Bill has been passed by the Scottish Parliament. It complements and supplements the Coronavirus Act 2020 passed by the UK Parliament on 25 March 2020 and the Coronavirus (Scotland) Act 2020 passed by the Scottish Parliament on 1 April 2020. The Bill contains a variety of measures designed to further respond to the issues being faced by both individuals and businesses in Scotland during the current Coronavirus pandemic. 

Of particular interest to the commercial property sector, and in particular to those involved with student accommodation, is the proposed changes to notice periods under certain student lets.

While students living in the mainstream private residential sectors have been able to end their tenancies early by giving their landlord 28 days' notice under the Private Housing (Tenancies) (Scotland) Act 2016 (the 2016 Act), this has not been the case for some students living in purpose built student accommodation.

In order to address this, the Bill provides that students in certain types of student accommodation (those which can't be private residential tenancies under the 2016 Act, for example student accommodation provided by further education institutions and lettings within qualifying purpose built student accommodation developments) whose tenancy was entered into and who have occupied the property before the Act comes into force can terminate their lease by giving their landlord 7 days' notice. All other students of such tenancies will be able to terminate their lease by giving their landlord 28 days' notice.

The provisions are designed (i) to ensure that students who are currently tied into a lease but who are not occupying (due to a reason relating to coronavirus) can terminate their tenancy; and (ii) to give reassurance to those seeking accommodation for the next academic year that should the uncertainty about the operation of universities continue, they will be able to terminate their tenancy on reasonable notice. Whilst under the current circumstances it is difficult for students to be under a continuing obligation to pay rent in return for a tenancy which they are not using, the impact of these measures on landlords in this sector is likely to be significant. In relation to the 28 days' notice period for the next academic year there is a question around timing of service of such notice: whether it can be served prior to the entry date under the relevant lease or whether it can only be served after the relevant entry date.  Technically a notice to terminate a lease can only be served after the relevant lease has started and accordingly students may have to wait until their entry date for the next academic year before they can serve notice to terminate, however, that doesn't seem to sit well with the intention of this legislation.

Although the Scottish Government has given some support to private residential landlords through the introduction of a Private Rented Sector Landlord Covid-19 Loan Scheme, the scheme only supports landlords who are not classified as businesses and who have five or fewer properties to rent. The scheme will therefore be of no assistance to many of the larger landlords in the PBSA sector.

Landlords in various sectors are now looking for support with one option being a type of furlough scheme for unpaid rent. This rent support scheme, which is modelled on a similar plan introduced in Denmark, would see a proportion of a business's property costs covered by the Government. It remains to be seen whether this, or any other support for landlords in the various struggling sectors, will be introduced by the UK and Scottish Governments. 

The measures will come into force on the day after the Bill receives Royal Assent, which is expected sometime next week. The intention is that the measures will expire on 30 September 2020 although the Scottish Government may, by regulation, extend this for a further two periods of six months. The Scottish Government must review the measures every two months and where a measure is no longer necessary the Scottish Ministers may bring it to an end. There is therefore no certainty as to how long these measures will be in place for.

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