News

Scottish Government Second Consultation on a New Tenancy for the Private Sector

Rather than encourage new investment and increased tenant choice, in the Second Consultation the Scottish Government (SG) have focused (almost entirely) on removing landlord options in an effort to increase tenant occupancy rights and challenge "unscrupulous landlords". Just as austerity will not lead to economic growth (ref: Nicola Sturgeon – leaders’ debate), tying landlords hands and focusing on a small minority of landlords who need to get with the programme (and could almost certainly be challenged by existing regs) are unlikely to lead to improved outcomes for tenants when all factors are considered.

As well as the SG's proposal to remove "no-fault" (a term conveniently created for the first consultation as far as I can work out), the consultation also outlined the SG's commitment to deliver increased Private Rented Sector (PRS) "growth and investment". Here is how the Council of Mortgage Lenders (126 members + 95% of UK mortgages) responded when asked if the no-fault ground for landlord repossession should be removed:

”No. Having entered into a contract to let their property for a fixed period it does not seem right that a landlord could only bring this to an end by having to use a mandatory ground for possession. We believe that landlords need to have confidence in their ability to end a tenancy when they need to do so otherwise this may discourage future investment in the sector”.

It is therefore far from obvious how replacing no-fault with new mandatory (and discretionary) repossession grounds and setting up a Tribunal will assist growth and investment. If the hope is that new institutional investment will somehow fill the gap, it will be a very long wait.

Removal of no-fault also raises significant questions about properties let to students (or in fact anybody making any longer term plans). In the second consultation the SG have reiterated their commitment to removing no-fault, but have not provided any answers regarding how to give a specified date of entry to new student tenants (very important when starting a new academic year) and at the same time provide extended occupancy rights to the current tenants (who may of course not necessarily be students). Clearly, it would be impossible to do both, and given that the SG also advise in the second consultation that they are “not seeking any further views” on the no-fault proposal, many landlords and agents who let (often extensively) to students will regard this decision as both unreasonable and premature. It may also suggest unhelpful pressure by strong campaign and political voices to remove no-fault regardless of the impracticalities.

The most alarming aspect of the proposals however is their ability to encourage landlords to become increasingly risk averse and therefore push the PRS up-market. Given the urgent need to provide more good quality accommodation for lower income households, the current proposals may in reality lead to reduced tenant choice, significantly increased repossession complexity and some alarming holes emerging in the day to day management of private tenancies in Scotland.

Everyone recognises that creating a modern, progressive and vibrant PRS is an extremely demanding task and will take time. Better to stay on the drawing board than introduce new legislation that will not actually deliver these goals.

 

Ewan Foreman

MD - 1LET

 

Picture courtesy of Dyslexia Consultation