Mortgage lenders in the Scottish buy-to-let sector will need to update their lending documentation and servicing processes in preparation for a new regime for private rented housing in Scotland.

At present, lenders’ terms and conditions commonly require that borrowers of BTL mortgages enter into tenancies in the form of a ‘short assured tenancy’ if the property is a private house in Scotland. These requirements will need to be updated ahead of the legislation coming into force this December. Once commenced, all new tenancies of private housing in Scotland will have to be created as private residential tenancies.

The existing types of tenancy for private rented housing in Scotland are due to be replaced at the end of this year with a
new form, the Scottish Private Residential Tenancy (SPRT). Introduced by the Private Housing (Tenancies) (Scotland) Act 2016, this modernised form of tenancy rebalances the rights and responsibilities of landlord and tenants, with enhanced protection for tenants, and will have a notable impact on the buy-to-let sector in Scotland.