Whilst we support a number of the Scottish Government's recommendations, our submission highlights the potential pitfalls and unintended consequences of some of the proposals.
Building a better rental sector in Scotland
Propertymark hosted three sessions with members and the Scottish Government on aspects of the Draft Rented Sector Strategy consultation.
Possessions process
Some of the Strategy’s most profound policies involve changes to the possessions process – some of which we consider are likely to cause practical difficulties for agents and landlords. The Strategy suggests that pre-action requirements on rent arrears brought in during the COVID-19 pandemic should be made permanent. Propertymark questioned the benefit of such a measure in the absence of continued financial support targeted at tenants in arrears and suggests that the requirements represent simply a “tick-box exercise” formalising actions that would have been undertaken irrespective of a requirement to do so as agents engage with tenants to manage and limit the build-up of arrears.
Joint tenancies
The Scottish Government’s proposals on ending joint tenancies are more concerning and could leave not only landlords but remaining tenants in financial difficulty. Our response points out that the suggestion to enable any joint tenant to end their interest in a private residential tenancy (PRT) without the agreement of other tenants could leave those remaining liable for the whole rent, perhaps even without prior knowledge. We suggest that a new procedure is created at the First-Tier Tribunal (FTT) entitled ‘Joint Tenant to be Released’ under which the FTT would have the discretion to end a joint tenant’s interest in a PRT, taking into account the financial affordability of remaining tenants to sustain the tenancy.
Seeking possession
In a further effort to bolster the security of tenure for tenants, the Strategy seeks views on the introduction of a ‘winter eviction’ ban. This could see restrictions on serving notices, prevention of expiry of notices and/or preventing the commencement of eviction proceedings following the expiry of notice during the ‘winter period’. Local Authorities have a duty to house anyone deemed at risk of homelessness which is not dependent on the time of year, and as such we do not consider the protections outlined in the Strategy to be necessary. There are legitimate reasons as to why landlords require possession of their property that are not limited to particular times of the year and varying a landlord’s right to seek possession would appear unworkable.
Rent controls
The Strategy also outlines a plan to introduce a national system of rent control by 2025. Propertymark argues that implementation of rent controls can only be detrimental to the sector in the long-term and does not address the root issue that demand for private rented property currently outstrips supply. We highlight that Rent Pressure Zones have been untested and questions why further legislation is being drafted when existing mechanisms are in place to promote affordability where it might be needed.
This strategy proposes fundamental and far-reaching changes that are tenant-centred and in some cases lack the data-led evidence that they are completely necessary. By considering tenants in isolation, policymakers are showing little regard for the legal rights of landlords and their letting agents.
The Local Government, Housing and Planning Committee has just published its scrutiny of the Coronavirus (Recovery and Reform) (Scotland) Bill in which it too leans favourably towards tenants despite hearing warnings directly from landlords that permanent changes to the possessions process would place too much financial risk on them and force more to sell up.
The sector is already under huge strain and desperately in need of more investment, not less, so we urge the Scottish Government to carefully balance its reforms to ensure any interventions to achieve short-term objectives do not lead to market failure in the long run.
