Landlord Rights under Scotland’s PRT Regime: Navigating the challenges of Rent Arrears and Reasonableness

Scotland’s Private Residential Tenancy (PRT) framework presents landlords with significant challenges when facing a tenant who stops paying rent. Recent decisions from the Upper Tribunal for Scotland offer important guidance on how the First-tier Tribunal for Scotland (FTT) should approach the complex issue of “reasonableness” in rent arrears eviction cases.

Since the Private Housing (Tenancies) (Scotland)  Act 2016 and through the various Covid measures which followed it, there has been a significant strengthening of the protections for private residential tenants adding a significant additional layer of complexity for landlords navigating these challenges.

When tenants stop paying full rent

A recent case illustrates the challenge. A tenant, initially paying the full rent of £675 per month, subsequently requested a reduction in rent due to changed circumstances. When the landlord refused, the tenant reduced payments anyway, resulting in persistent rent shortfalls. Following the tenant’s failure to vacate the property after receiving a notice to leave due to rent arrears, the landlord applied to the FTT for an eviction order.

What is reasonable?

The FTT, in its initial decision, focused heavily on the potential impact of eviction on the tenant and their children, citing the risk of homelessness and disruption to their education. The FTT downplayed the impact on the landlord, suggesting that refusing the eviction order would have “no meaningful impact.” They also noted the landlord’s failure to pursue separate legal action for the rent arrears as significant. The FTT concluded that granting the eviction order was not reasonable.

A win for landlords in the upper tribunal

However, the Upper Tribunal overturned this decision on appeal. Sheriff Reid found that the FTT’s conclusions regarding the landlord’s financial position and the impact of lost rental income lacked supporting evidence. He emphasised that the loss of rental income does constitute a “meaningful impact.” The FTT was wrong to make assumptions about the landlord’s financial situation without evidence.  Furthermore, the Upper Tribunal clarified that there is no legal principle stipulating that eviction is strictly a “last resort consequently, the Upper Tribunal allowed the appeal, quashed the FTT’s decision, and granted the eviction order.

Key takeaways for landlords

This case highlights the challenges inherent in balancing the interests of landlords and tenants. In presenting a case to the FTT it is a welcome reminder of several points:-

• Evidence-based decisions: Tribunals must base their assessments of reasonableness on evidence and not assumptions.
• Meaningful impact: The loss of rental income is a meaningful impact on a landlord’s financial position.
• No “last resort” rule: Eviction is not necessarily a “last resort” and is a legitimate course of action for a landlord to pursue in appropriate circumstances.

Of course, what this means for a landlord facing a tenant in arrears is that it’s very important to take steps to act reasonably in dealing with rent arrears. Landlords must comply with the pre-action requirements before raising an action to evict on the ground of rent arrears. Regular contact and engagement with tenants is important and will often lead to payments being made. Proposals to clear rent arrears should be considered and tenant’s given an opportunity to make payments. The FTT will consider the extent to which a landlord has complied with the pre -action requirements in determining whether it is reasonable to evict.

In other words, a landlord should make sure to be able to demonstrate that they have acted reasonably as this will help in demonstrating to the FTT that it is reasonable to grant an eviction order if that becomes necessary.

How we can help

At Anderson Strathern, we specialise in assisting landlords in navigating the intricacies of private residential tenancies, particularly concerning rent arrears and possession recovery. Our team provides practical real-world advice on landlord rights and the available solutions. If you are facing unpaid rent or considering eviction, our experienced solicitors offer expert guidance to effectively manage these challenging situations and navigate the FTT process. We are committed to helping you resolve matters and safeguard your property.

If you require further advice on any of the areas highlighted in this article, please contact Frasier Napier at fraser.napier@andersonstrathern.co.uk or Edward Gratwick at edward.gratwick@andersonstrathern.co.uk.