- 3 Sep 2020
Pre-action requirements which landlords should comply with for seeking repossession for rent arrears
Landlords should engage positively with tenants who are having difficulties paying rent to work together to manage arrears as far as reasonably possible. The private rented sector (PRS) tenant resource can help your tenants by signposting them to a range of financial support and advice.
New measures to support landlords to work with tenants who are struggling to pay their rent came into force on 30 September 2020 through The Rent Arrears Pre-Action Requirements (Coronavirus) (Scotland) Regulations 2020.
To help landlords understand what steps to take to support tenants in rent arrears to sustain the tenancy (which can be used regardless when the rent arrears occurred), the pre-action guidance is a useful resource and toolkit, which includes access to template letters.
Landlords who have issued a notice to leave to a tenant on or after 7 April 2020 and who subsequently make an application to the First-tier Tribunal for Scotland (Housing and Property Chamber) to repossess the property due to rent arrears, which occurred all or in part after 26 May 2020, will be asked by the Tribunal to demonstrate how they have complied with the pre-action requirements.
At the current time, the Tribunal has discretion to take all factors into account when determining whether it is reasonable to grant repossession of a let property.
Evicting a tenant
We have been clear that no landlord should evict a tenant because they have suffered financial hardship due to COVID-19 and we expect landlords to be flexible with tenants facing financial hardship and signpost them to the sources of financial support available.
The Scottish Government has passed emergency legislation to protect renters in Scotland during the COVID-19 outbreak. The Coronavirus (Scotland) Act 2020 protects tenants in Scotland from any eviction action for up to 6 months. This applies to both the private and social rented housing sectors and ensures the position is absolutely clear for all landlords and tenants in Scotland.
This legislation temporarily extends the amount of notice landlords must give when ending a tenancy. In most cases landlords will now need to give tenants 6 months' notice, unless they are ending the tenancy for particular reasons, including antisocial and criminal behavior by the tenant, or where the landlord or their family need to move into the property where the notice period is 3 months.
The legislation also temporarily makes all grounds for eviction in the private rented sector discretionary, ensuring that the Tribunal will be able to use discretion and take all factors relating to the impact of COVID-19 has had on both the landlord and tenant into account before deciding whether to issue an eviction order or not.
The new law applies in cases where a landlord serves notice on their tenant on or after 7 April 2020. Where a landlord has served notice on their tenant before 7 April 2020, the changes in the new law do not apply.
Tenant hardship loan fund
The Scottish Government has established a £10M Tenant Hardship Loan Fund as part of the range of support and interventions to help tenants who are struggling with rent because of changes to their finances and/or employment during the pandemic.
Eligible tenants can use the loan to clear rent arrears (a maximum of 9 months of agreed rent) from 1 January 2020. Tenants can also borrow up to 3 months of future rent payments as part of the 9 month total.
The loan provides an additional short-term offer that supports tenants to manage rent arrears and help them to come back into paying their rent. Loan repayments will be deferred for 6 months as standard and repaid over a 5 year period. This recognises the continuing uncertainty around the impacts of the pandemic.
The loan will not be an appropriate choice for every tenant and before applying for the loan, tenants should seek further advice about non-repayable financial support that they may be eligible for. Before being awarded a loan, applicants will need to pass an affordability check and a credit check.
Any formal action to end a tenancy on these grounds that has already been started will also need to be withdrawn. To avoid delays in offering the loan to eligible tenants, landlords and letting agents are asked to provide the requested information as soon as possible. Find out more about the loan and how tenants can apply on the loan portal.
The Scottish Government landlords short-term emergency loan scheme
The loan scheme opened for applications on 5 May 2020. The interest-free loan is available to landlords who have five or fewer rental properties and will fund lost rental income from a single property. It is designed to take the pressure off landlords, in the short-term, if their tenants are having difficulty making rent payments. Landlords should still engage with their tenants as detailed above.
For further information on the loan, including the application form, please see the PRS Landlord (non-business) COVID-19 Loan Support page.
Enquiries can be sent to the Scottish Government at PRSLandlordCovid19Loan@gov.scot.
The Tenant Hardship Loan Fund and the Private Rent Sector Landlord (non-business) COVID-19 Loan Scheme, both of which offer interest-free loans, remain open for applications.
We have published further guidance on moving home (sales and rental) during COVID-19 for more information.