The rental market will be ‘irreparably damaged’ by proposed new laws in Scotland that extend pandemic protections for tenants, landlord campaigners have warned.
The new laws are currently only being proposed in Scotland, but experts say the rest of Britain will be watching the changes closely, particularly if landlords are barred from repossessing homes for rent arrears.
The proposed changes relate to the Coronavirus (Recovery and Reform) Bill (Scotland) and relate to the circumstances in which a property owner can take possession of their property.
Changes were initially implemented during the pandemic as a temporary and emergency measure to protect tenants in exceptional circumstances – but would become permanent with the change in law.
Proposed changes to the law could prevent landlords from repossessing their property
There are several proposals that have activists for landlords worried.
These include that owners no longer have to automatically repossess a property if they want to sell it.
For example, an owner may need to sell a property to fund their retirement.
It used to be mandatory, meaning that if such a case went to court and a landlord could prove they were selling the property, the court would automatically rule in favor of the landlord and ask the tenant to leave.
However, according to plans, this mandatory ground will now become discretionary, leaving a homeowner potentially more exposed financially.
A Scottish government spokesman insisted that giving the court discretion does not prevent a landlord from taking action if necessary or if they have good reason.
There is also the issue of rent arrears, and under the new proposals there is no guarantee that a landlord would get their property back if a tenant fell behind with their rent.
Previously, once a landlord could prove three or more consecutive months of rent arrears, eviction would have been warranted.
Under these latest plans, no evictions will be guaranteed, regardless of the circumstances or grounds. Everything will be discretionary.
The bill proposes that a court can still grant an eviction if it deems reasonable, including when late payment or non-payment of rent is the reason the landlord is seeking an eviction. But campaigners have questioned what is considered reasonable.
The plans are from the Scottish Government and it is John Swinney’s MSP Bill. He is the Deputy Prime Minister and also the Cabinet Secretary for Covid Recovery.
Campaigners argue the changes could devalue rental properties and make them a more illiquid type of investment – and therefore less attractive to landlords. This may mean that some investors may exit the market altogether.
Scottish Land & Estates, the Scottish Landlords Association and NFU Scotland said the changes could lead to the loss of thousands of homes from the rental market as landlords sell.
They claimed that the proposed changes to the law would impact all types of landlords – whether they own a single property or multiple homes that they rent out – and could cause a substantial loss in property value when an owner could not recover vacant possession.
A tenant could have been in arrears and allowed to stay in a property under the proposed changes
Rental body Propertymark has suggested that although the bill is in its first stage, it is likely to pass.
Daryl Mcintosh, an Edinburgh-based Propertymark manager, added: “Generally an owner will have a reason to get their property back and once they have proven their reasons they should be entitled to get it back.”
“It is unclear what – if any – evidence the Scottish Government is analyzing to consider removing mandatory grounds for possession.
‘Abuse of temporary arrangements to satisfy a long-term policy objective seems like an underhanded tactic and the intention to make all grounds for possession permanently discretionary simply underscores the Scottish Government’s willful and continued disregard for the value of the sector private rental.
He concluded: “Other nations are watching these ongoing reforms in Scotland and may consider adopting them.”
A Scottish Government spokesperson said: ‘It simply means that a court can take into account all of the circumstances of landlords and tenants in relation to a case before reaching a decision,’ he said.
And he added: ‘Good landlords recognize the merits of keeping tenants in their homes whenever possible, so adding final court oversight will support responsible management, acknowledge the financial and other pressures that tenants may face and will help prevent homelessness.
“Over the past 20 years there have been a series of necessary changes in the private rental sector aimed at improving quality and accountability and, although stakeholders have regularly predicted that such changes will lead to a reduction in supply of private rental housing, the private rental sector more than doubled during this period.
“Our policies continue to seek improvements in the sector to ensure that tenants are treated fairly and can access good quality properties and we will continue to seek views.”