Fiona Watson, a Partner with East Lothian based law firm, Paris Steele, provides an update on the private rented sector in Scotland.
In our last article we looked at the emergency legislative changes which had been introduced following the global COVID-19 pandemic and subsequent UK lockdown. The Scottish Government passed emergency legislation to protect tenants during the outbreak, and the Coronavirus (Scotland) Act 2020 protects tenants in Scotland from eviction action for a period of up to six months. This legislation remains in force until 30 September 2020, with the Scottish Ministers having the power to extend for further periods up to 30 September 2021. Whilst the lockdown restrictions are easing, at the time of writing we are yet to hear whether or not there is to be an extension to the legislation beyond September. This is certainly proving challenging for many landlords, with the increased notice periods preventing them from taking any swift action to repossess properties where there are issues such as rent arrears.
On 9 July 2020, the First-tier Tribunal for Scotland, Housing and Property Chamber recommenced business, and Case Management Discussions and Hearings which had previously been postponed due to the lockdown have been rescheduled and are taking place by way of tele-conference. This allows parties to participate by dialling in remotely. At the time of writing, the Tribunal is considering the resumption of oral hearings but this will undoubtedly take longer to recommence due to the health risks associated with having face to face proceedings, and the risk assessment required for the various venues used by the Tribunal for such hearings. Scottish Government guidance will certainly shape how any progression can be made towards face to face hearings taking place again. However, at the very least, remote hearings are now taking place in order to prevent an increasing backlog of cases.
For those tenants who find themselves in financial difficulty (and who are eligible), they can claim Universal Credit which includes support for housing costs. On 5 May 2020, the Scottish Government also launched a short-term emergency loan scheme to provide assistance to landlords. The scheme provides an interest-free loan to landlords who have up to five rental properties, and it aims to fund lost rental income. Whilst it is designed to take the financial pressure off landlords in the short-term where tenants are having difficulty paying their rent, this is of course required to be repaid in the future, and the scheme also expects that landlords should still engage with their tenants to try and assist them and signpost them as far as possible. Landlords are also encouraged to speak with their lenders regarding taking a mortgage payment holiday, where the lender allows.
The Scottish Government’s position remains that they do not expect any landlord to evict a tenant because they have suffered financial hardship due to COVID-19 and that they expect landlords to be flexible with tenants facing financial hardship and signpost them to the financial support available. However, it is clear that many landlords will be concerned at how things will pan out in the future, particularly if there is a second spike and further national or localised lockdowns, as well as concerns regarding the end of the Government’s furlough scheme on 31 October, and how that will impact on tenants who may find themselves being made redundant thereafter.
It is clear that communication between landlords and tenants remains key. If a tenant is having difficulties in meeting their rental obligations, landlords should engage with them to ascertain what their financial position is, and what they can afford. If a landlord does require to serve formal notice on a tenant, they should obtain legal advice to ensure that they are complying with the current legislative requirements.