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Cost of Living & Protecting Tenants
My Article in March provided some good news for private landlords. Unfortunately, it looks like 2022 is going to finish up making things a little more difficult for them…again.
In September 2022, Nicola Sturgeon announced the Scottish Government’s intention to introduce emergency legislation in response to the “cost of living crisis”. The Cost of Living (Tenant Protection) (Scotland) Bill 2022 has been fast-tracked through the Scottish Parliament and has now been passed. The Bill’s intention is clear: to protect tenants, whilst putting safeguards in place for landlords.
Many landlords have complained that the Scottish Government have introduced this Bill without consultation with those who represent them and without proper consideration of the protective measures already in place for tenants. Is this the final nail in the coffin and will this push many landlords out of the rental market? Only time will tell.
What does the 2022 Bill do and what does it mean for landlords?
The Bill can be broken down into three distinct parts:
1)The introduction of a rent cap.
Whilst the measures are in force, landlords will not be able to increase rent for existing tenancies, other than in line with the cap, which is currently set at 0%. The Bill provides that the Scottish Government can vary the rate of the rent cap, should they feel it is necessary or appropriate to do so
2) A Moratorium on Evictions.
Similar to what the emergency legislation did during the Coronavirus Pandemic, the Bill places restrictions on the enforcement of Eviction Orders. This means that landlords can still serve Notices to Leave and obtain the Orders for Eviction, but unless the grounds used fall within a defined list (the aforementioned safeguards), the Order cannot be enforced.
The Restrictions will remain in place until the earlier of:
- 6 months from the date the Order for Eviction is granted; or
- The expiry of the legislation on 31st March 2023 (although this can be extended by the Scottish Government)
The safeguards include grounds such as criminal behaviour; the tenant no longer resides in the let property; and that the let property is to be sold by a lender. In addition, new grounds have been introduced, including:
- Intent to sell the let property to alleviate financial hardship;
- Intent to live in the let property to alleviate financial hardship; and
- Substantial rent arrears
It appears that landlords will have to incur further expenses in proving financial hardship, including the cost of instructing an independent financial advisor to produce a letter of advice. Furthermore, the Tribunal can only find that the ‘substantial rent arrears’ ground applies if the arrears equate to, or exceeds 6 months at the point the Notice to Leave is issued.
3. Increased damages for unlawful eviction
In an effort to discourage landlords from taking matters into their own hands and carrying out what is known as an “unlawful eviction”, the Bill increases the Damages that can be awarded against the landlord to a maximum of 36 months’ worth of rent. The Tribunal will have the discretion to determine how much, depending on the circumstances of the particular case.
It is great news for tenants, but is it fair that these protections are at the cost of the landlord? The cost of living crisis has an effect on everyone, including landlords. Is it fair to force landlords to endure 6 months of non-payment before steps can be taken, particularly given the effect increased mortgage rates will have on their own monthly outgoings?
This has been an evolving environment and our lawyers have had to keep a constant eye on the legislation to ensure that we can properly advise our landlord clients. It looks like the law in this area will continue to evolve in the coming months, so we will just have to wait and see how things progress.
If you would like more information about our Landlord-Tenant services, please do not hesitate to contact Aaron Doran in our Litigation Department on 01224 332400. We will always aim to provide clear and understandable advice, taking account of the economic factors and risks involved in any litigation.
