Rent arrears: How to sustain tenancies in the private rented sector Natasha Miller Letting Agent Plus Development Officer e: lettingagentplus@shelter.org.uk t: 0344 515 2492

Workshop topics Key differences between the new and old private tenancy regimes in Scotland The initial findings of the ‘Letting Agent Plus’ pilot Recommendations for improving tenancy sustainability in the private rented sector

Introduction of the PRT The Private Housing (Tenancies) (Scotland) Act 2016 introduced the PRT to Scotland in December 2017 No new short assured or assured tenancies on or after 1st December 2017 Existing private tenancies (short assured, assured and regulated) will continue unless brought to an end by the landlord or tenant

Differences between the PRT & SAT No end date – tenancies will continue indefinitely Different notice periods for landlord and tenant Only one rent increase in any 12 months period (which can be challenged at the FTT if not market rent) No pre-tenancy notices required (no AT5 form) Only one notice required to leave or end the tenancy (‘notice to leave’ form) Modernised eviction grounds (18 in total)

Ending a PRT Landlords and tenants can end a tenancy by ‘mutual consent’ Tenants - 28 full days notice, in writing to end the tenancy Landlords - 28 full days’ notice in writing if a tenant has been in the tenancy for under six months or the reason for eviction relates to their conduct, otherwise it is 84 days (3 months)

Ending a PRT (ctd) For joint tenancies, all tenants must agree to end the tenancy and they must all sign the notice to leave form Notice periods should start 2 days after the notice is sent (a 28 day notice period is really 30 days for example) Notice should be given “freely and without coercion” by a tenant Attempts to pressurise, threaten or persuade a tenant to give notice could amount to illegal eviction a tenant which is a criminal matter. As with assured and SATs, a landlord cannot legally evict a tenant from the tenancy property until an order for eviction is obtained from the FTT

Ending a PRT (ctd) Landlord process to evict: 1) serve a ‘notice to leave’ form containing: - at least one of the 18 grounds for eviction - the correct amount of notice to the tenant(s) - the day on which the landlord expects to be entitled to apply to the FTT for an eviction order if tenant remains 2) obtain an order for eviction from the FTT (where a tenant doesn’t leave at the expiry of the notice period) **Wrongful termination orders – if a tenant believes they were misled into leaving the property, they can apply to the FTT for a wrongful termination order and compensation amounting to no more than the value of 6 months’ rent**

Grounds for Eviction Discretionary Grounds Landlord’s family member intends to live in the property Tenant no longer needs supported accommodation Tenant has breached a term of the tenancy agreement Tenant has engaged in relevant antisocial behaviour Tenant has associated in the let property with someone who has a criminal conviction or is antisocial Landlord has had their registration refused or revoked Landlord’s HMO licence has been revoked An overcrowding statutory notice has been served on the landlord Mandatory Grounds Landlord intends to sell the property Let property to be sold by lender Landlord intends to refurbish the property Landlord intends to live in the property Landlord intends to use the property for non-residential purposes Let property is required for a religious worker Tenant is no longer occupying the property Tenant has a relevant criminal conviction

Grounds for Eviction Mandatory or Discretionary 8) The tenant has stopped being, or has failed to become, an employee Mandatory to grant an eviction order if: the landlord applies within 12 months of the tenant no longer being an employee or the tenant never became an employee and the landlord applies within 12 months of the tenancy starting date Discretionary: If landlord seeks to recover possession over 12 months after the tenant ceased to be an employee or, the tenancy start date (in cases where the tenant did not become an employee) 12) Tenant is in rent arrears over 3 consecutive months Mandatory to grant an eviction order if: Rent arrears of 3 consecutive months or more Still owes at least 1 month’s rent by the day of the tribunal hearing Arrears not due to a delay or failure in payment of a relevant benefit Discretionary: Less than 1 month’s rent or no longer in arrears by the date of the tribunal hearing Reasonable in the circumstances to issue an eviction order -

Rent Arrears Grounds for Eviction: Old regime Section 33 – the ‘no fault’ eviction ground To terminate a short assured tenancy under section 33 of the Housing (Scotland) Act 1988, 4 conditions must be satisfied: 1) SAT must have reached its expiry date (ish). 2) Tacit relocation must not be operating (this means that a notice to quit must have been correctly served) 3) No new contract must have been entered into 4) The landlord must have given a section 33 notice to the tenant saying that s/he requires possession of the property

Rent Arrears Grounds for Eviction: Old regime (ctd) Mandatory Ground 8: three months' rent arrears 3 months rent arrears both at the time the section 19 notice is served, and at the date of the court hearing Discretionary Ground 11: persistent delay in paying rent Persistently delayed paying rent Ground 12: some rent unpaid Rent is unpaid both on the day when the section 19 notice was issued, and on the day when possession proceedings commenced

Rent Arrears Grounds for Eviction: Key differences PRT Assured 3 consecutive months of arrears 3 full months of arrears owed Discretionary if there has been a benefit payment delay No provision for application of discretion in cases of a benefit payment delay 1 months’ worth of arrears still owed at hearing to satisfy mandatory ground for eviction Discretionary ground for eviction only if 3 full months of arrears not owed at time of hearing A PRT tenant has better protection against eviction for rent arrears than a SAT tenant However, the mandatory ground for evicting a PRT tenant with arrears is easier to satisfy than for an assured tenant

The Housing & Property Chamber of the First Tier Tribunal for Scotland Most PRS cases moved to the FTT from 1st December 2017 Less adversarial No cost to raise an action Simplified process and proceedings Cases adjudicated by panels of specialists in private sector issues Volume of applications higher than anticipated (delays)… Opportunity to identify and resolve cause of arrears?

Letting Agent Plus Project Background 15% of households live in the PRS in Scotland Increasing numbers looking to the sector as a long term housing option More tenants with one off or ongoing support needs Letting agents often find it difficult to help tenants get the right support to access or sustain tenancies Social landlords perceived to have better access to essential advice services Capacity and limited resources

Letting Agent Plus Project Barriers to accessing/sustaining tenancies in the PRS Perceived tenant risk Deposit guarantee schemes Benefit caps and the roll out of UC Competition Prejudices

Letting Agent Plus Project Aims and Objectives Develop a letting agent plus service Identify barriers and come up with workable solutions No additional costs to agents’ businesses Develop a LAP ‘how to’ guide for the sector

Letting Agent Plus Project How we seek to overcome barriers Education – training courses for agents Knowledge – sharing of best practice & resources Relationships – improve advisory networks (ensure advice and support is prompt, consistent & effective to build trust and confidence)

Letting Agent Plus Project What we can offer letting agents Immediate access to advice Free training Improved referral routes ‘Letting Agent Plus’ logo Opportunity to influence the whole PRS in Scotland

Letting Agent Plus Project Case Study: Proactive intervention can prevent homelessness Repeated late and/or non- payment of rent Referral to LAP project for help with long term sustainability of tenancy Income maximisation officer helped to resolve UC issues Budgeting & income maximisation advice/training Liaised throughout with agent Sustainable repayment plan

Letting Agent Plus Project Findings so far… Early intervention best Realistic repayment plans more effective Regular updates, positive working relationships and key contacts instil trust and confidence in service Tokenistic advice and/or help to avert a crisis situation only often not enough

Over to you! Discussion How many PRS tenants seek money and debt advice in comparison to social housing tenants? Do PRS tenants usually only seek help at crisis stage & why? Examples of positive/negative experiences of dealing with private landlords and/or agents Top tips for getting the best outcome for your PRS clients

Changes in Private Rented Sector: What you need to know Natasha Miller Letting Agent Plus Development Officer e: lettingagentplus@shelter.org.uk t: 0344 515 2492