Publication - Research and analysis

Second Consultation on a New Tenancy for the Private Sector: Analysis of Consultation Responses

Published: 3 Aug 2015
ISBN:
9781785445477

This report presents an analysis of responses to the Scottish Government's second public consultation on a proposed New Tenancy for the Private Sector. The consultation sought stakeholder views on proposals which had been further developed and in some cases amended following an initial consultation held in 2014.

Second Consultation on a New Tenancy for the Private Sector: Analysis of Consultation Responses
Length of tenancy and Notice to Leave

Length of tenancy and Notice to Leave

The first six consultation questions covered the length of tenancies and arrangements for leaving a tenancy, the Notice to Leave.

Length of tenancy

The proposal is to introduce a statutory Scottish Private Rented Tenancy (SPRT) for all PRS lets. For the first six months of a tenancy a tenant would be unable to give notice and a landlord would be unable to regain possession of the property unless the specified circumstances arose of the tenant being at fault or the landlord's mortgage lender intending to sell because the landlord had broken their loan conditions.

Although the standard would be for a six-month initial period, a tenant and landlord could agree a longer initial period. Alternatively, where the tenant has requested it and the landlord agrees, a shorter initial period could be agreed.

After the initial period had expired, the tenancy would continue indefinitely. Both the tenant and landlord would then be able to give notice to end the tenancy at any time, with the required notice periods.

Question 1a: Do you agree there should be an initial tenancy period during which tenants and landlords would be unable to give notice unless one of the specified circumstances existed?

Summary Findings

The majority of respondents (86%) disagreed with there being an initial tenancy period during which tenants and landlords would be unable to give notice unless certain specified circumstances existed. Those disagreeing included those supporting the Living Rent petition. However, the majority of standard respondents (77%) and those supporting the SAL form-based and the letting agent campaigns agreed.

The most frequently made point overall - and put forward by those supporting the Living Rent petition - was that there should no initial period during which a tenant cannot leave and that tenants should be able to serve notice at any time. The most frequently raised comment from those agreeing with the proposal, including the SAL form-based campaign, was that the six-month period would be long enough to justify the resources required, in terms of both time and money, to set up a tenancy and lead to a reasonable rental income.

Responses by respondent type are set out in Table 2 below. Please note that the percentages set out in the tables below may not always sum to 100% due to rounding.

Table 2: Question 1a - responses by respondent type

Type of respondent

Yes

No

Mixed view

Don't know

TOTAL

Advice, Information & Ombudsman Services

4

1

1

0

6

Campaign Body or Group

3

4

0

2

9

Industry Body

9

1

0

1

11

Landlord

30

8

1

2

41

Legal Body or Firm

4

0

0

1

5

Letting Agent and/or Property Management

32

3

1

0

36

Local Authority

14

1

2

0

17

Tenant and/or Resident Group

2

1

0

0

3

Union or Political Party

3

1

0

0

4

Other

2

1

2

5

Total Organisations

(103)

(21)

(5)

(8)

(137)

Individuals

144

35

1

4

0

Total (excl. campaigns)

247

56

6

12

321

Percentage (excl. campaigns)

77%

17%

2%

4%

100%

Living Rent petition

0

2127

0

0

2127

SAL form-based campaign

65

0

0

0

65

Letting Agent campaign

25

0

0

0

25

TOTAL

337

2183

6

12

2538

% of those answering the question

13%

86%

0%

0%

100%

The majority of respondents (86% of those answering the question) disagreed, including those who supported the Living Rent petition. However, the majority of standard respondents (77% of those answering) and those supporting the SAL form-based campaign and the letting agent campaign were in agreement. The majority of all types of standard respondent agreed, with the exception of campaign body respondents.

The most frequently made point overall - and suggested by those supporting the Living Rent petition - was that there should be no initial period during which a tenant cannot leave and that tenants should be able to serve notice at any time.

The standard respondents who disagreed were most likely to suggest the approach lacks flexibility and/or that a no-fault repossession ground should be included. Individual and landlord respondents were amongst those raising these issues. A number of respondents, including landlords and letting agents, expressed particular concerns about the impact on the student market and suggested there is a need to be able to enter into fixed-term leases that end at the expiry of the agreed period.

An alternative view was that there is no need for an initial tenancy period and tenancies should simply be indefinite with either party able to end the tenancy according to the relevant provisions and within the specified notice periods. Some advice service and campaign bodies were amongst those taking this view.

Those who agreed with the proposal sometimes pointed to it being clear and straightforward, as offering some security to tenants, or noted that it will be well-understood because it reflects current practice under the Short Assured Tenancy (SAT) regime. The most frequently made comment by those who agreed was that the six-month tenancy would be long enough to justify the resources required, in terms of both time and money, to set up a tenancy and lead to a reasonable rental income.

Some of those agreeing with the proposal commented on the circumstances under which a landlord or lender should be able to regain possession during the initial tenancy term. This was also a frequently raised issue, particularly among industry bodies, landlords, letting agents and individual respondents. Specific suggestions tended to refer to the proposed grounds for repossession and to grounds 2, 6, 7, 8 or 9 in particular. Conversely, a small number of respondents (including industry body, legal body and individual respondents) identified the grounds under which a landlord should not be able to seek repossession during the initial tenancy period; suggestions included grounds 1, 3, 5 and 11.

Other comments made by those agreeing with the proposals highlighted the importance of tenants and landlords being able to agree to shorter or longer tenancies at the outset. Advice service, campaign body, landlord, union and individual respondents were amongst those raising this issue.

Question 1b: Do you agree that after the initial period, a tenant or landlord may serve notice at any time with the relevant notice periods?

Summary Findings

There was strong support for the proposal that, after the initial period, a tenant or landlord would be able to serve notice at any time with the relevant notice periods. A substantial majority of respondents (91%) agreed, including the majority of standard responses and those supporting the SAL form-based and the letting agent campaigns. Further comments tended to be limited, often focusing on the approach offering flexibility and/or clarity.

Responses by respondent type are set out in Table 3 below.

Table 3: Question 1b - responses by respondent type

Type of respondent

Yes

No

Mixed view

Don't know

TOTAL

Advice, Information & Ombudsman Services

5

1

0

0

6

Campaign Body or Group

6

1

0

1

8

Industry Body

10

0

0

1

11

Landlord

33

6

0

2

41

Legal Body or Firm

4

0

0

1

5

Letting Agent and/or Property Management

34

1

1

0

36

Local Authority

17

0

0

0

17

Tenant and/or Resident Group

3

0

0

0

3

Union or Political Party

4

0

0

0

4

Other

4

0

0

0

4

Total Organisations

(120)

(9)

(1)

(5)

(135)

Individuals

157

14

0

6

177

Total (excl. campaigns)

277

23

1

11

312

Percentage (excl. campaigns)

89%

7%

0%

4%

100%

SAL form-based campaign

65

0

0

0

65

Letting Agent campaign

25

0

0

0

25

TOTAL

367

23

1

11

402

% of those answering the question

91%

6%

0%

3%

100%

There was strong support for this proposal, with a substantial majority of all respondents (91% of those answering this question) in agreement. The majority of standard respondents of all types agreed, as did those supporting the SAL form-based campaign and the letting agent campaign.

Many of those agreeing with this proposal made limited comments; these often focused on the approach offering flexibility and/or clarity. Further comments included that the current process of serving notices is complicated and confusing for both tenants and landlords and that the proposed approach should help reduce the administrative burden for landlords.

Those who disagreed or did not know at this question sometimes referred back to their disagreement with the initial tenancy period; these respondents were disagreeing with only being able to serve notice after the initial period rather than the on-going arrangements once that period had expired. Others preferred an option where the tenancy agreement would terminate automatically at the end of the initial period without the requirement for a notice to be served by either party. As at Question 1a, particular reference was made to the student market.

A number of those who disagreed or did not know also referenced their disagreement with there not being a no-fault ground for ending a tenancy.

Notice to Leave

The proposal is that instead of two separate notices (Notice to Quit and Notice of Proceedings) only one notice would be required (Notice to Leave). The content of the Notice to Leave would be set out in secondary legislation rather than in the forthcoming Bill. This would allow stakeholders to be consulted during its development.

Question 2: Do you agree that Notice to Quit and Notice of Proceedings should be combined into one Notice to Leave?

Summary Findings

There was strong support (95%) for the proposal to combine the two separate notices into one Notice to Leave. Further comments tended to be limited and focused on the proposed change offering a simpler and easier to understand alternative to the current arrangements.

Responses by respondent type are set out in Table 4 below.

Table 4: Question 2 - responses by respondent type

Type of respondent

Yes

No

Mixed view

Don't know

TOTAL

Advice, Information & Ombudsman Services

5

0

0

1

6

Campaign Body or Group

7

1

0

1

9

Industry Body

11

0

0

0

11

Landlord

39

1

0

1

41

Legal Body or Firm

5

0

0

0

5

Letting Agent and/or Property Management

37

0

0

0

37

Local Authority

17

0

0

0

17

Tenant and/or Resident Group

1

2

0

0

3

Union or Political Party

3

0

0

0

3

Other

3

1

0

0

4

Total Organisations

(128)

(5)

(0)

(3)

(136)

Individuals

169

6

0

6

181

Total (excl. campaigns)

297

11

0

9

317

Percentage (excl. campaigns)

94%

3%

0%

3%

100%

SAL form-based campaign

65

0

0

0

65

Letting Agent campaign

25

0

0

0

25

TOTAL

387

11

0

9

407

% of those answering the question

95%

3%

0%

2%

100%

There was strong support for this proposal, with 95% of those who answered the question agreeing that the Notice to Quit and Notice of Proceedings should be combined into one Notice to Leave. The majority of standard respondents of all types agreed, as did those supporting the SAL form-based campaign and the letting agent campaign.

As at the previous question, those agreeing tended to make only limited further comments that focused on the proposed change offering a simpler and easier to understand alternative to the current arrangements. There was also a call for the Notice to Leave to be written in straightforward and easy to understand language and to be as user-friendly as possible. Other points raised by those agreeing with the proposal included that the Notice could include some form of pre-action requirements of the kind which apply in the social rented sector; this was suggested with particular reference to rent arrears.

The concerns of those disagreeing with the proposal or who did not know included that the change could erode rights of tenants and undermine the ability of landlords and tenants to negotiate and reach a mutually acceptable solution.

Notice periods from landlord to tenant

The first consultation proposed there would be four notice periods from landlord to tenant. The revised proposal is for two notice periods as follows:

  • Six months or less in the property = 28 days' notice (four weeks).
  • More than six months = 84 days' notice (12 weeks).

Question 3: Do you agree with the proposed notice periods a landlord should give a tenant?

Summary Findings

The clear majority (95%) disagreed with the proposed notice periods. Those who disagreed often suggested alternatives. These were many and varied, although there were three most frequently made suggestions. These were that:

1. Tenants should receive a minimum of 12 weeks' notice. This was the most frequently made suggestion overall and was made by those supporting the Living Rent petition amongst others. Other respondents suggested an eight week minimum.

2. There should be three notice periods. A specific suggestion was: up to six months - four weeks; six to 24 months - eight weeks; and over 24 months - 12 weeks. This was the second most frequently made suggestion and was raised by those supporting the SAL form-based campaign amongst others.

3. The longer notice period should be reduced to eight weeks. This was the third most frequently made suggestion and was raised by a number of standard respondents.

Those agreeing with the proposed notice periods sometimes noted their agreement with the issues discussed in the consultation paper, including that the first consultation's proposal for four notice periods may have been overly complicated and/or that the 16-week notice period may have been too long.

Responses by respondent type are set out in Table 5 below.

Table 5: Question 3 - responses by respondent type

Type of respondent

Yes

No

Mixed view

Don't know

TOTAL

Advice, Information & Ombudsman Services

1

5

0

0

6

Campaign Body or Group

1

6

0

1

8

Industry Body

4

6

0

1

11

Landlord

11

26

0

3

40

Legal Body or Firm

2

2

0

1

5

Letting Agent and/or Property Management

8

27

0

1

36

Local Authority

12

3

0

1

16

Tenant and/or Resident Group

3

0

0

0

3

Union or Political Party

3

1

0

0

4

Other

1

1

1

1

4

Total Organisations

(46)

(77)

(1)

(9)

(133)

Individuals

42

131

1

4

178

Total (excl. campaigns)

88

208

2

13

311

Percentage (excl. campaigns)

28%

67%

1%

4%

100%

Living Rent petition

0

2127

0

0

2127

SAL form-based campaign

0

65

0

0

65

Letting Agent campaign

25

0

0

0

25

TOTAL

113

2400

2

13

2528

% of those answering the question

4%

95%

0%

1%

100%

The substantial majority of respondents (95% of those answering this question) disagreed with the proposed notice periods, including the majority of standard respondents (67% of those answering) and those supporting the Living Rent petition and the SAL form-based campaign. However, the majority of local authority, tenant group and union respondents agreed as did those supporting the letting agent campaign. Legal body and 'other' respondents were evenly divided.

Those who disagreed with the proposal made both general points and specific alternative suggestions. In terms of the general points, the comments included that the shortest notice period would give tenants insufficient time to find alternative accommodation; advice services and campaign bodies were those most likely to raise this issue. A number of respondents raised a similar issue to some of those who had agreed - namely that notice periods should be the same for landlords and tenants. Landlord, letting agent and individual respondents were most likely to make this comment.

Alternatives to the current proposals were many and varied, although there were three most frequently made suggestions. These were that:

  • Tenants should receive a minimum of 12 weeks' notice. This was suggested by those supporting the Living Rent petition, along with some campaign body, advice service and individual respondents. This was the most frequently made suggestion by some degree being suggested by around 85% of those commenting at this question. A small number of other respondents - also including some campaign body and advice service respondents - suggested that an 8 week minimum should be considered.
  • There should be three notice periods. A specific suggestion was: up to six months - four weeks; six to 24 months - eight weeks; and over 24 months - 12 weeks. This was the next most frequently made suggestion, with industry body, landlord, letting agent and individual respondents most likely to propose this alternative, along with those supporting the SAL form-based campaign. This group equated to around 4% of those commenting at this question.
  • The longer notice period should be reduced to eight weeks. This was also a frequently suggested option, with a number of landlords, letting agents and individual respondents of this view. This group equated to around 1% of those commenting at this question.

Other suggested alternatives included that there should be four notice periods (as proposed in the first consultation) or that the shorter notice period should be reduced under certain circumstances (for example, if repossession is being sought using the proposed Grounds 7 or 8). Under such circumstances, a small number of respondents suggested a 14-day notice period should apply.

Some respondents also commented on tenant notice periods, with those supporting the Living Rent petition amongst those suggesting that landlords need only receive four weeks' notice.

Those agreeing with the proposed notice periods sometimes noted their agreement with the issues discussed in the consultation paper, including that the first consultation's proposal for four notice periods may have been overly complicated and/or that the 16-week notice period may have been too long. Some respondents suggested that the 12-week notice period offers even an established tenant sufficient time to find alternative accommodation.

Accelerated notice period for rent arrears

An accelerated process for rent arrears cases is proposed. If a tenant has failed to pay any amount of rent lawfully due for a period of two consecutive months, then before taking any repossession action, the landlord would have to send the tenant a Notice to Leave saying they have fallen into rent arrears. If the tenant fails to pay the rent lawfully due by the end of the following month, repossession may be sought at the First-tier Tribunal. If, after three consecutive months, the tenant is still in rent arrears, further notice will not be required. Instead, a landlord would be able to immediately refer the case to the First-tier Tribunal. The amount of rent arrears would determine whether the mandatory or discretionary repossession ground would apply.

Question 4a: Do you agree that a landlord may serve a Notice to Leave when a tenant has been in rent arrears for two consecutive months?

Summary Findings

The majority of respondents (86%) disagreed with a landlord being able to serve a Notice to Leave when a tenant has been in rent arrears for two consecutive months. Those disagreeing included those supporting the Living Rent petition. However, the majority of standard respondents (77%) and those supporting the SAL form-based and the letting agent campaigns agreed with the proposal.

The period and/or extent of the rent arrears was the most frequently raised issue amongst those disagreeing with the proposal. Those supporting the Living Rent petition suggested that tenants should always receive a minimum of 12 weeks' notice of eviction, including in rent arrears-related cases.

The most frequently given reasons for supporting the proposal were that it represents a fair compromise between offering security to tenants and giving confidence to landlords and that it is important of offer landlords sufficient safeguards to encourage them to remain in the market.

Both amongst those agreeing or disagreeing with the proposal, some respondents sought clarification about how the provision would work in practice. Specific queries included whether a landlord could serve a Notice to Leave as soon as the second months' rent fell due but was not fully paid or would need to wait until the end of the rental period.

Responses by respondent type are set out in Table 6 below.

Table 6: Question 4a - responses by respondent type

Type of respondent

Yes

No

Mixed view

Don't know

TOTAL

Advice, Information & Ombudsman Services

5

2

0

0

7

Campaign Body or Group

3

4

0

2

9

Industry Body

8

0

0

1

9

Landlord

37

2

0

2

41

Legal Body or Firm

3

0

0

1

4

Letting Agent and/or Property Management

34

1

1

0

36

Local Authority

15

1

0

1

17

Tenant and/or Resident Group

1

2

0

0

3

Union or Political Party

1

1

0

1

3

Other

3

1

0

0

4

Total Organisations

(110)

(14)

(1)

(8)

(133)

Individuals

132

43

1

7

183

Total (excl. campaigns)

242

57

2

15

316

Percentage (excl. campaigns)

77%

18%

1%

5%

100%

Living Rent petition

0

2127

0

0

2127

SAL form-based campaign

65

0

0

0

65

Letting Agent campaign

25

0

0

0

25

TOTAL

332

2184

2

15

2533

% of those answering the question

13%

86%

0%

1%

100%

The majority of respondents (86% of those answering this question) disagreed; this group included those supporting the Living Rent petition. However, the majority of standard respondents (77% of those answering) and those supporting the SAL form-based campaign and the letting agent campaign agreed with the proposal. Campaign body and tenant groups were the only types of standard respondents within which the majority disagreed, while union respondents were evenly divided.

The most frequently made comment at this question was that tenants should always receive a minimum of 12 weeks' notice of eviction, including in rent arrears-related cases. Those supporting the Living Rent petition were amongst making this suggestion.

The period and/or extent of the rent arrears was also an issue raised frequently by others who disagreed with the proposal. A concern of some standard respondents, including some advice service and campaign body respondents, was that tenants could be required to leave their tenancy because only a small amount of their rent had not been paid. There were also concerns about the impact on tenants who develop arrears because of delays in processing benefits. Some of those raising these concerns were amongst those preferring what they understood as the proposal from the first consultation, namely that a tenant would need to be a full three months in arrears. There was also disagreement with there being circumstances under which it would be mandatory for the First-tier Tribunal to grant an arrears-related possession order. Advice service and campaign body respondents were amongst those taking this view.

An alternative position, put forward by some of those disagreeing as well as some of those agreeing was that the two-month period is too long. This was most likely to be raised by landlord, letting agent or individual respondents and was also the view of those supporting the letting agent campaign. Those supporting the letting agent campaign suggested that mandatory possession should be granted if the tenant is two months in arrears.

Both amongst those agreeing or disagreeing with the proposal, a significant number of respondents, sought clarification about how the provision would work in practice. Industry body, landlord, letting agent and individual respondents were most likely to have queries, along with those supporting the SAL form-based campaign. Specific queries included whether a landlord could serve a Notice to Leave as soon as the second months' rent fell due but was not fully paid or would need to wait until the end of the rental period? It was suggested that it should be possible to serve the Notice as soon as some of a second month's rent is outstanding. This query was the most frequently made comment amongst those supporting the proposal.

Other comments made by those supporting the proposal - and raised by a broad range of types of respondent - included that it represents a fair compromise between offering security to tenants and giving confidence to landlords. The importance of offering landlords sufficient safeguards to encourage them to remain in the market was also raised by a range of those agreeing with the proposal.

Question 4b: Do you agree that when a tenant has reached three consecutive months of rent arrears, a landlord should be able to refer a case to the First-tier Tribunal?

Summary Findings

The majority of respondents (76%) agreed that a landlord should be able to refer a case to the First-tier Tribunal when a tenant has reached three consecutive months of rent arrears.

Those who agreed with the proposal sometimes noted the importance of landlords being able to rely on a secure and steady income stream. A number of respondents made their agreement conditional on it being possible to issue the Notice to Leave as soon as the second month's rent falls due with the referral to the First-tier Tribunal being possible as soon as the third month's rent falls due.

Those who disagreed sometimes suggested that the First-tier Tribunal should always be able to exercise an element of discretion and particularly in cases where the amount of the arrears is relatively low. Others who disagreed were concerned that taking a case to the First-tier Tribunal would take too long and could result in landlords suffering significant financial losses.

Responses by respondent type are set out in Table 7 below.

Table 7: Question 4b - responses by respondent type

Type of respondent

Yes

No

Mixed view

Don't know

TOTAL

Advice, Information & Ombudsman Services

4

3

0

0

7

Campaign Body or Group

8

1

0

0

9

Industry Body

8

1

1

0

10

Landlord

29

9

0

3

41

Legal Body or Firm

3

1

0

1

5

Letting Agent and/or Property Management

27

9

0

0

36

Local Authority

16

0

0

1

17

Tenant and/or Resident Group

3

0

0

0

3

Union or Political Party

3

0

0

1

4

Other

3

1

0

0

4

Total Organisations

(104)

(25)

(1)

(6)

(136)

Individuals

115

56

1

7

179

Total (excl. campaigns)

219

81

2

13

315

Percentage (excl. campaigns)

70%

26%

1%

4%

100%

SAL form-based campaign

65

0

0

0

65

Letting Agent campaign

25

0

0

0

25

TOTAL

309

81

2

13

405

% of those answering the question

76%

20%

0%

3%

100%

The majority of respondents (76% of those answering this question) agreed with the proposal, including the majority of standard respondents (70% of those answering) and those supporting the SAL form-based campaign and the letting agent campaign. The majority of each type of respondent supported the proposal.

Further comments made at this question reflected many of the same themes as covered at Question 4a above. Those who agreed with the proposal frequently noted the importance of landlords being able to rely on a secure and steady income stream, including to cover possible mortgage repayments on their property. A number of respondents (including industry body, landlord, letting agent and individual respondents and those supporting the SAL form-based campaign) made their agreement conditional on it being possible to issue the Notice to Leave as soon as the second month's rent falls due, with the referral to the First-tier Tribunal being possible as soon as the third month falls due. This was the most frequently raised issue by those agreeing with this proposal. Other issues raised by those who supported the proposal included that it will be important for the First-tier Tribunal to operate efficiently and impartially, and this will require it to be adequately resourced.

The importance of the First-tier Tribunal being able to exercise an element of discretion was raised by a small number of respondents, including some advice service and campaign bodies. Similar issues were raised by a number of those who disagreed with the proposal. Some of these respondents also restated their view that the First-tier Tribunal should be able to exercise discretion, particularly in cases where the amount of the arrears is relatively low.

Others who disagreed were concerned that the process would take too long and result in landlords suffering significant financial losses. Those taking this view, who included landlord, letting agent and individual respondents, sometimes suggested that landlords should be able to make a referral to the First-tier Tribunal once the tenant has been in arrears for one or two months or if all the arrears have not been paid at the end of the Notice to Leave.


Contact

Email: Hannah Davidson