Routemap to Recovery - Private Residential Tenancies

Coronavirus Update

Since April 2020 Scottish private residential landlords have been dealing with temporary legislative changes to the process of terminating their private residential tenancy agreements. The changes were brought about by the introduction of the Coronavirus (Scotland) Acts of 2020.

In brief, the key changes were as follows:

• The introduction of longer notice periods making it harder for landlords to recover possession of their property from a tenant;
• The departure from mandatory eviction grounds to a blanket discretionary examination of all eviction grounds based on reasonableness; and
• The imposition of compulsory “pre-action” requirements on landlords seeking recovery of their property based on the grounds of rental arrears.

Further legislation amended and extended the temporary measures whilst discontinuing others. Where once we thought the temporary changes may have expired earlier they have instead been kept in place. There is every possibility that the changes will be with us for a longer period than previously envisaged.

Tenancy Termination – Extended Notice Periods

In order to bring a private tenancy to an end either party must serve notice on the other party specifying the date by which the party giving the notice would expect the property to be vacated. Where a landlord serves such a notice they may have to state certain grounds for the tenant’s eviction in the notice (see below).

One of the most controversial changes brought in by the temporary legislation would be the extension of the minimum notice periods that landlords must provide their tenants before being able to take action to evict their tenants with the First Tier Tribunal for Scotland.

For notices served on or after 3 October 2020 the current notice periods are as follows:

• Termination of a Short Assured Tenancy (non-grounds basis) = 6 months
• Termination of an Assured Tenancy or Short Assured Tenancy on a grounds basis = 6 months– in all cases but for;
• Where the landlord wishes to move back into the property = 3 months
• Where the landlord can provide suitable alternative accommodation = 2 months
• Where the tenant is causing anti-social behaviour or is convicted in connection with the let property = 28 days
• Termination of a Private Residential Tenancy = 6 months – in all cases but for;
• Where the landlord is no longer registered with local authority, no longer has an HMO licence or they/ their family want to live in the property= 3 months
• Where the tenant no longer occupies let property, has engaged in antisocial or criminal behaviour in relation to the let property (or has associated with persons who have done so at the let property) = 28 days

Prior to the extension typically landlords could expect to end their private residential tenancy within 2 weeks to 3 months. Now in the majority of cases including where the landlord seeks recovery of possession on the grounds of rental arrears, landlords must now wait 6 months from service of notice before taking any action to recover their let property.

The Reasonableness Test

If a private residential landlord wants to terminate a private residential tenancy or an assured tenancy then they must provide a specific reason or “ground(s)” for doing so. For example, if the tenant is in arrears over 3 consecutive months. If the lease is short assured then no specific reason or ground is required.

Before the introduction of the temporary legislation rules were in place to make the granting of tribunal orders for eviction mandatory where the cited ground for eviction could be established. This included where the tenant was in significant rental arrears.

Whilst the 2020 Act is in force there are no longer mandatory grounds. All evictions are subject to a “reasonableness test” and tribunal eviction orders are to be granted on a discretionary basis. That includes where the landlord has a Short Assured Tenancy (where no specified grounds are required for eviction). The certainty of evictions has therefore been removed.

Rent Arrears Evictions – The Pre-action Requirements

In addition to extending notice periods and making applications for eviction harder, a second raft of legislation brought about the introduction of “pre-action requirements” for private landlords seeking to evict tenants on the grounds of rental arrears to comply with.

Before a landlord can apply to the tribunal for orders evicting their tenant they must now be able to demonstrate:

2. That they have provided the tenant with clear information relating to:
   • the terms of the tenancy agreement
   • the amount of rent for which the tenant is in arrears
   • the tenant’s rights in relation to proceedings for possession of a house and
   • how the tenant may access information/advice on financial/debt management
3. That the they have made reasonable efforts to agree a payment plan with the tenant; and
4. That they have given reasonable consideration to:
5. any steps taken by the tenant which may affect the ability of the tenant to make payment to the landlord of the rent for which the tenant is in arrears within a reasonable time
6. the extent to which the tenant has complied with the terms of any agreed plan
7. any changes to the tenant’s circumstances which are likely to impact on the extent to which the tenant complies with the terms of an agreed plan.

The Coronavirus (Extension and Expiry) (Scotland) Act 2021

The original Coronavirus Act proposed that the temporary changes would end (at the very latest) by 30 September 2021. However Scottish ministers have introduced legislation that extends the expiry date to 31 March 2022. This was achieved through the Coronavirus (Extension and Expiry) (Scotland) Act 2021. What is concerning is that the Act gives Scottish ministers a power to extend the date of expiry further to 30 September 2022. There is nothing to say that all aspects of the temporary changes will be scrapped beyond that date. It remains to be seen however.

Conclusion

Whilst there are plenty of cases to be made for keeping the extended notice periods in place (such as reduced pressure on public services and to supress a rise in homelessness), it remains debateable if the current extensions strike a fair balance between landlords and tenants. There are of course many landlords who depend on their rental income who are now facing greater lengths of time without return on their let property or where the sale of private property is being held up as a result of sitting tenants. The financial effects of the changes can be crippling.

Scottish ministers are to review the effectiveness of the temporary measures regularly. If they are deemed no longer necessary they can be removed earlier than 31 March 2022. However based on the current covid climate it is doubtful that the measures will be removed before then. In that cases it is hoped Scottish ministers would consider an alternative to early outright removal and implement a reduction of the default 6 month extension to a lesser period. Otherwise with the extensions in place as they are, landlords will continue to face pressures in the private letting market.

If you are a landlord who is looking to end their private tenancy or a letting agent who manages properties for landlord clients, our debt recovery department would be delighted to assist you during this difficult period. Please don’t hesitate to get in touch with them.

Should you have any questions on any of the articles in this series please contact:

Eilidh MacEwan by email: emacewan@gilsongray.co.uk or by phone: 0131 285 1809 / 07376 192 463. 

Steven Jansch by email: sjansch@gilsongray.co.uk or by phone: 0131 516 5361 / 07841 920 100. 

Craig Darling by email: cdarling@gilsongray.co.uk or by phone: 0141 530 2044/07841 920 467

The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray