Holiday lettings sit outwith the standard regulatory framework of the private rented sector. A holiday let is excluded from constituting assured tenancies and will be excluded from the new Private Residential tenancy when it takes effect in December 2017.
There is no requirement for such landlords to register or pay over a deposit to a Tenancy Deposit Scheme. Nonetheless, the safety and repairing standards applicable to the private rented sector apply to holiday lets.
The Scottish Courts recently considered holiday lets in the case of St. Andrews Forest Lodges Ltd. v Jeremy & Iona Grieve at Dundee. In this case, the Pursuers purchased a holiday park from the Defenders. The Defenders only home was a property in the park. It was agreed that the Defenders would purchase this property from the Pursuers and continue to live there.
Until the sale completed, the Pursuers agreed that the Defenders could remain in the property so long as they paid a monthly fee. The details of this agreement were laid out in a ‘Holiday Let Agreement’.
The sale did not proceed. The Defenders refused to vacate the property and the Pursuers raised a court action to recover possession arguing that the Defenders had no right to occupy. The Pursuers maintained that the agreement between the parties was a holiday let and therefore exempt under the Housing (Scotland) Act 1988 from being an assured tenancy. It was the Pursuers’ position that neither party had ever intended for the agreement between the parties to represent an assured tenancy.
The court took a different view finding that despite parties calling the written agreement a ‘Holiday Let Agreement’ – it was not a holiday let. The Defenders were clearly not on holiday and the property was their only home. Accordingly, the exception did not apply. The tenancy created was an assured tenancy and the Tenants could enjoy the protection of security of tenure afforded to them under the 1988 Act.
Given the exemptions that apply to landlords in connection with registration and deposits it is important that landlords of holiday lets ensure they are offering short-terms lets for holiday purposes. Courts will look behind the agreement to ascertain the true factual position ensuring properties are genuinely let for the purpose of conferring “on the tenant the right to occupy the house for a holiday”. Landlords not genuinely letting for holiday purposes could find themselves in a situation where the lease they have created is not exempt from the above requirements., thereby facing the consequences of failing to register and potential claims against them for up to 3 x the tenancy deposit for failure to lodge in a scheme.
For further information on tenancies and tenancy law, contact a member of our private rented sector team.