In March we reported on the Coronavirus (Recovery and Reform) (Scotland) Bill which was before the Scottish Parliament at that time. On 28 June, the Bill was passed. Many temporary changes introduced to address the challenges of Covid-19 have now been made permanent.
Discretionary grounds for eviction
A significant and controversial change relates to private residential tenancy law - all grounds for eviction for all private rented sector tenancies are now discretionary. Previously, certain grounds were mandatory which meant that if a landlord had followed the correct procedure, they could be certain of recovering possession. Former mandatory grounds included a landlord's intention to sell, refurbish or live in the property.
It is no longer possible to be awarded a court order automatically upon following the correct procedure. A landlord seeking to evict a tenant must now – in every case - persuade the Housing and Property Chamber of the First-Tier Tribunal ("the Tribunal") that it would be reasonable to grant an eviction order.
Where possession is sought due to rent arrears, the Tribunal's consideration of reasonableness will take account of the extent to which the landlord has complied with the pre-action protocol.
Pre-action protocol
Another change made permanent is the requirement to follow a pre-action protocol – directing tenants with rent arrears to help/information and making reasonable efforts to agree a payment plan - before seeking an eviction order.
Such protocols already exist in the social rented sector and the Scottish Government's aim is to put private rented sector tenants on a more equal footing with tenants in the social rented sector.
What do the changes mean in practice?
The Tribunal deals with a variety of housing and property matters, with private rented tenancy issues being the biggest type by far – 80% of cases in the year 1 April 2020 - 31 March 2021.
Before the pandemic, most private tenancy cases were dealt with at an initial case management discussion with a single legal member and without the need for a further hearing to consider evidence.
Since the previously mandatory grounds of eviction became discretionary under the temporary changes introduced during the pandemic (now made permanent), the procedure has involved an additional step. Where a landlord has served the prescribed notice to leave on their tenant on or after 7 April 2020, applications have been referred to a two-person tribunal, comprising a legal member and an ordinary member with housing expertise, to consider the question of reasonableness.
An analysis of tribunal cases conducted by the Scottish Association of Landlords shows that in 2021, of 423 competent eviction applications (where the landlord had followed the correct procedures) 418 were granted and only 5 were refused on reasonableness grounds.
Effect on the residential tenancy market
15% of Scotland's homes (340,000) are in the private rented sector and concerns have been raised about the effect the changes will have on this market.
For some landlords, mandatory grounds gave confidence that possession could be recovered in specific circumstances. The concern is that without landlords having this confidence, housing stock may disappear from the rented sector (with landlords choosing to sell or offering holiday lets instead).
A related concern – for both landlords and lenders with security over rental properties - is devaluation of rental property when there is uncertainty around the ability to repossess property if a tenancy agreement is breached.
Watch this space
The move towards discretionary eviction grounds means that landlords cannot be certain possession will be recovered in any case and if so, how long that might take. How the Tribunal will be resourced and manage its increased workload remains to be seen, and time will tell what the impact is on landlords and tenants.
If you have any queries on this or other rural business matters, please contact Ros James (details below or your usual Brodies contact.
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