Pre-action protocols and seeking repossession of private rented housing on rent arrears grounds

Managing rent arrears

Landlords should aim to be flexible in their approach to helping tenants facing financial difficulties. Where rent arrears arise, dialogue and negotiation between landlord and tenant is required, and engaging with tenants at the earliest opportunity is essential to managing the situation to avoid the need for eviction action.

When a tenant falls in to arrears, the landlord, or their letting agent, should contact the tenant as quickly as possible to discuss the issue and offer support. It is helpful for the landlord to provide information to the tenant on the financial support that may be available to them as soon as arrears occur.

Landlords should consider what steps they can take to help the tenant manage arrears and move back into the payment of rent. This could include:

• signposting tenants to the If you can't pay your rent - mygov.scot.  which includes relevant information and advice about financial support available for tenants
• making a temporary agreement not to seek possession action whilst the tenant seeks support e.g. through an application for Universal Credit
• considering whether all or part of the arrears could be written off
• agreeing that payment of arrears can be deferred until a later date
• if a tenant is on Universal Credit, a landlord can apply for a Managed Payment to Landlord (MPL), using the new Apply for a Direct Rent Payment online service to request direct payments of rent or rent arrears (or both)

Adjustment in payment arrangements that may help a tenant in the short-term could include taking payment in a way that reflects the tenant’s circumstance such as moving to:

• more frequent/smaller payments
• partial payments of rent with agreed dates for the short-fall to be made up
• cash/cheque rather than direct transfer

Effective signposting by the landlord can be really helpful to tenants particularly where they may not have faced financial difficulties that impact on their ability to pay rent before. Landlords, or their agent, are in a unique position to help as they have an existing relationship with the tenant and early contact may prevent more acute problems developing in the future. For example, signposting tenants to:

Universal Credit, which can include a housing element, which helps towards qualifying housing costs, including rent. This element replaces what was known as “housing benefit”. Supportive action to signpost can help prevent a delay in the payment of Universal Credit that can result in rent arrears building up

• The Scottish Welfare Fund helps families and people in Scotland who are on low incomes through Crisis Grants and Community Care Grants. These grants, though they do not cover rent payments, can be given to cover the costs of an emergency, or your circumstances have changed, eg. leaving care
• Tenants who get Housing Benefit or Universal Credit, but still can't afford their housing costs, may be eligible for a Discretionary Housing Payment
• Agencies that can provide money advice and welfare benefit checks and other financial support information. This includes advice from specialist providers such as Shelter Scotland, local Citizens Advice Bureaux and Money Advice Service

The point at which a landlord takes the decision to seek repossession of a property will vary between landlords and circumstances. However, the basic principle that underpins the approaches set out in this guidance is that landlords, and tenants must do all that they can to resolve the arrears before landlords take action to evict.

1. Bankruptcy

Under the Bankruptcy (Scotland) Act 2016 (as amended) (“the 2016 Act”), a landlord cannot generally recover rent arrears through court action once a tenant has been sequestrated. Diligence and sequestration are legal processes for the recovery of unpaid or overdue debts. This is an Introduction to sequestration, in case of interest.

The decision around whether to stop eviction proceedings that are ongoing when sequestration proceedings begin is a matter for the landlord. Landlords should be aware, however, that payment of arrears to a landlord by an insolvent debtor may run the risk that the courts would find this an unfair preference to one creditor over all creditors under section 99 of the 2016 Act. As such other creditors could challenge the payment of arrears.

In cases where a tenant is sequestrated before the landlord starts eviction proceedings, the landlord should consider not taking, or threatening, action to evict if the arrears are not paid. Attempting to collect rent arrears in this way could lead to challenge by other creditors, also a sheriff might not consider eviction reasonable in these circumstances.

Landlords can seek to recover as much as possible of the arrears through the sequestration process and write off the remainder of the arrears at the point of sequestration, treating this as a debt no longer due. Whilst rent is technically still due to the landlord, legally the debt is irrecoverable. Nonetheless, it is still possible for the landlord to seek recovery of the property on the basis of rent arrears, including the period during which the rent was not paid prior to the sequestration. The landlord should follow the pre-action protocols prior to commencing eviction proceedings.

Where a court sequestrates a tenant after court proceedings to repossess a property have begun the landlord should have already met the pre-action protocols.

2. The effect of bankruptcy on non-payment of rent as a ground for eviction

Separate to the issue of rent arrears, the landlord would still be entitled to pursue recovery of their property itself on the basis of the tenant’s failure to comply with their obligations in terms of rent payments. Again, separate to the fact that the landlord cannot pursue rent arrears due pre-sequestration, the rent still remained lawfully due and this non-payment could be a basis upon which to seek eviction. In addition, any non-payment post-dating the sequestration award would be relevant to the ground of recovery.

The pre-action protocols will form part of the process for the landlord to follow before applying for an eviction notice, regardless of when the rent arrears were incurred.

Where a court sequestrates a tenant after proceedings to repossess a property have begun, and if the landlord wishes to continue to pursue eviction action, the decision around whether eviction is reasonable is one for the Tribunal.

Citizens Advice Bureaux also covers debt advice, which is a complex area, and an overview can be found at Help with debt

3. Pre-action protocols

Private landlord pre-action protocols should be complied with when seeking to end a private residential tenancy, an assured or short assured tenancy due to rent arrears where all, or part of the arrears, occurred on or after 27 May 2020 (the date when the Coronavirus (Scotland) (No. 2) Act 2020 came into force).

4. Provision of clear information

The pre-actions set out in the Regulations consist of action in three areas.

The first is landlords giving tenants clear information.

 The provision by the landlord to the tenant of clear information relating to:

      (a) the terms of the tenancy agreement

      (b) the amount of rent for which the tenant is in arrears

      (c) the tenant’s rights in relation to proceedings for possession of a house (including the pre-action protocols set out in this regulation and the need for an order to be granted by the tribunal)

      (d) how the tenant may access information and advice on financial support and debt management

To support meeting this action landlords should make sure that tenants are given information as follows:

(a)  The terms of the tenancy agreement

This would have been provided at the start of the tenancy and the provision of this information when the landlord is considering repossession of the property is a reminder of the current, agreed terms of the tenancy.

(b) the amount of rent for which the tenant is in arrears

This information is to advise the tenant about the amount of rent the landlord considers is due under the tenancy agreement. The information provided should show the total amount of outstanding rent owed and should provide tenants with a breakdown of the total figure, the date the rent was due and the date of any payments made, so that they can clearly understand how the arrears have accumulated.

If a landlord is receiving the housing payment element of Universal Credit (“housing benefit”) direct, the landlord should include the amount housing payment element covers. Landlords should agree with tenants how much they need to pay towards their rent, and when, over and above any housing payment entitlement. The tenant may also qualify for a ‘discretionary housing payment’ (DHP), and is extra money from the local council to help when the rent is higher than the housing benefit, and it might be useful to pass this to your tenant too: help if on a low-income and struggling with living costs.

(c) The tenant’s rights

The landlord must inform the tenant of the steps that landlords must take to meet the pre-action protocols and the intention of these pre-action protocols is to prevent eviction, as far as possible. The landlord must ensure that the tenant is aware that the process could result in them being evicted but this is a last resort.

The landlord must ensure that the tenant is aware of the process for ending a tenancy (which will depend on the type of tenancy) and that this could result in them being evicted. The landlord must inform the tenant of the steps that they, as a landlord, must undertake to meet the pre-action protocols – please see the tenants' rights information section.

(d) Access information and advice

Provision of the Scottish Government and partners’ information and sources of support for tenants in the private rented sector will give tenants information that supports this action. Where landlords do not have the tenants’ email, this should be printed and posted to the tenants. This information should be provided to tenants at the earliest opportunity and certainly before the landlord initiates any action to repossess the property.

The tenant should always be offered an opportunity to dispute the amount the landlord considers is due if they feel it does not accurately reflect their understanding of the amount due under the tenancy agreement.

Tenants may be entitled to financial support, accessing this will help tenants to pay their rent and it will benefit landlords to support tenants with the process of applying for support if tenants ask for help. In all cases, landlords can sign-post tenants to their local Citizens Advice Bureaux for information and help on this issue.

Landlords should make sure that they only give tenants details of free and independent sources of debt help and advice

Landlords should make reasonable efforts to provide the tenants with the required information. The way in which a landlord communicates with a tenant is not set out in the pre-action protocols - it could be face to face, in writing, by email, telephone or by text message.

Landlords should take account of tenants’ preferences on how they wish to be contacted but should consider a range of methods and seek to make sure that the information reaches the tenant. A single unsuccessful attempt to communicate with tenants is unlikely to be enough for landlords to show that they have made reasonable efforts to provide tenants with the information required.

Tenants have varying needs in terms of communication and landlords and, where applicable their agents, should try to make sure information is in a format that they can understand. Not all tenants will have English as a first language and some tenants may have literacy problems, visual impairments or learning difficulties. Where landlords know that tenants have particular needs they should take account of any information they have about the tenant’s circumstances that could affect their ability or willingness to engage.

If it is known that a tenant has a support worker and the tenant is happy for the landlord to talk about matters with the support worker, then it may be helpful to engage with the tenant’s support network. If the tenant has access to additional support, for example for translation, advocacy or general support, the landlord should make every effort to work within the scope of the tenant’s preferred arrangements.

Landlords should take particular care if tenants are under 18 or are particularly vulnerable. In cases where tenants are vulnerable, landlords (as described below) should, at an early stage, consider whether tenants have the mental capacity to understand their position. The Mental Health (Care and Treatment) (Scotland) Act 2003 gives anyone with a mental disorder a right to get support from an independent advocate (a representative who can help express views and make informed decisions). Mental disorder includes autism, dementia and learning disabilities. An easy-read version of the 2003 Act is available online.

Independent advocacy organisations work within local authority areas. Landlords can signpost tenants to the Scottish Independent Advocacy Alliance (SIAA) which has a directory of independent advocacy organisations in Scotland. More information can be found on the SIAA website.

Landlords may become aware of a tenant who may need some assistance or help. The Adults with Incapacity (Scotland) Act 2000 may be of some help in these cases. A short guide on the Adults with Incapacity (Scotland) Act 2000 is available to read and landlords may find it helpful to signpost tenants to this information. Landlords may also find it helpful to signpost tenants to the following sources of information:

• the Office of the Public Guardian (Scotland), for general advice and guidance. Phone 01324 678 300 – Monday to Friday, 9am to 5pm
• the Age Scotland Helpline on 0800 12 44 222 for advice on power of attorney
• Citizens Advice Scotland's Advice guide, for guidance on managing affairs for someone else
• the Mental Welfare Commission for Scotland website, for information on welfare matters

If tenants require information on setting up a Power of Attorney then landlords can direct them to the Scottish Government website for further information. All Power of Attorneys must be registered with the Office of the Public Guardian in Scotland before they can act on someone else’s behalf.

Where tenants lack capacity, have, an independent advocate and/ or an appointed power of attorney; landlords should include them in all communications with the tenant. This would be good practice for all landlords, regardless of whether they are required to do it.

Landlords may become aware that the tenant might benefit from a safe and supportive help, and Breathing Space provides a listening ear, and can offer advice and information.

Landlords may become aware that a tenant could be experiencing or even perpetrating domestic abuse, which could include financial abuse. Domestic abuse is controlling, coercive, threatening, degrading and/or violent behaviour (including sexual violence) perpetrated by a partner or an ex-partner. To be able to do the right thing it’s important to know where to get support and advice. The Scottish Domestic Abuse and Forced Marriage Helpline on 0800 027 1234 is available 24/7 with support available for victims, professionals and concerned others seeking information advice. The Scottish Women’s Rights Centre provides free and confidential legal advice to women. Most commonly domestic abuse is perpetrated by men against women, but men can also be victims of domestic abuse and it can happen in same sex relationships too, help can be found at Safer Scotland. Read more information and resources on domestic abuse.

Landlords will wish to bear in mind that, should they decide to progress eviction action, the steps they have taken to give tenants information will form part of the consideration of compliance with the pre-actions. Landlords may, therefore, want to record brief details of steps taken to communicate, including a note of the date(s) and the method used.

5. Reasonable efforts to agree a payment plan

The second action in the Regulations is for landlords to make reasonable efforts to agree with the tenant a reasonable plan to make payments.

“The making by the landlord of reasonable efforts to agree with the tenant a reasonable plan to make payments to the landlord of:

(a) future payments of rent, and

(b) the rent for which the tenant is in arrears.”

The legislation does not set out a definition of reasonable efforts and this will be dependent on the circumstances of each case. The Tribunal currently has discretion in determining whether to grant an eviction notice on the grounds of rent arrears and will consider the level of compliance with the pre-actions as part of that decision.

There may be occasions when landlords, or their letting agent, make every effort to engage with a tenant but the tenant fails to respond or is not willing to engage. In this case landlords should record the details of the steps they take and keep copies of all correspondence as part of the information that could be taken into account by the Tribunal in considering compliance with the pre-action protocols.

Landlords should work with tenants to reach agreement on repayment of any arrears and the development of a reasonable payment plan that is acceptable to both parties.

Landlords should be aware that discussion on arrears and payment plans may be challenging for tenants as they may feel vulnerable and concerned about the possible loss of their home. Landlords should seek to be as supportive as they can and take steps to help tenants to prepare for discussions e.g.tenant resource by providing information on what is to be discussed in advance.

To support this, landlords should:

• make prompt and reasonable attempts to contact tenants to talk about any arrears as soon as they occur, signposting to relevant sources of financial or other support
• encourage tenants to provide relevant information on their financial circumstances
• if not already done so, encourage them to seek help from an appropriate support or debt advice agency
• consider affordability, taking into account the personal and financial circumstances of the tenant, in developing any payment plan with the tenant
• take account of the need to consider future payments of rent when developing any payment plan with the tenant, in order to reduce the accrual of further arrears
• consider what a reasonable timeframe for repayment will be taking account of the tenants’ circumstances
• discuss any payment plan with the tenant to ensure that they understand what is proposed
• allow the tenant time to consider and seek input or advice on any proposed payment plan
• confirm that the tenant agrees to the payment plan
• provide the tenant with a copy of any agreed payment plan

The aim is to develop a payment plan which is affordable and sustainable for the tenant, and therefore reasonable. The approach should take account of the tenant’s income and expenditure where this is known.

Tenants are not obliged to provide their landlord with information on their financial position but landlords should emphasise that it can help create a more reasonable payment plan. It may be helpful for landlords to:

• ask tenants to be open and honest about their financial circumstances
• be clear about how they will use the information that the tenant provides, and it is important that any data is kept safe and not sharing it with any other person/organisation without permission to do so
• explain to tenants that the information is helpful in ensuring any payment plan is sustainable and affordable.

Where a tenant proposes a payment plan that would be affordable and sustainable for them, the landlord should give due consideration to agreeing the proposal. If a landlord considers the proposed plan is unreasonable and cannot be accepted then they should advise the tenants of the reasons for this in writing.

The terms of any payment plan must be clear to tenants and they should be advised of what the plan takes into account, such as:

• future rent payments
• repayment of the total amount of arrears due as advised by the landlord
• where appropriate, the account taken of any housing benefit and/or arrears of housing benefit that it has been decided will be paid
• where appropriate, the account taken of income or changing work patterns that are considered in developing the plan
• where appropriate, the account taken of any arrears which have been written off or reduction in rent rates and the time period for which this applies
• tenant's ongoing liability for other bills or debts and any write-off of arrears owed

The approach to engaging on the development of a payment plan will depend upon the circumstances of each case. Whatever approach is adopted, tenants must be engaged and supported through the process and should be able to influence the development of the plan.

The duration of any payment plan will depend on a range of factors including the level of arrears, the tenant’s financial circumstances and the affordability for tenants. It is more likely that a tenant will be able to meet the terms of the payment plan if a realistic timescale is agreed that makes the amounts to be paid affordable on an ongoing basis. Landlords should take account of this when determining the duration of any payment plan.

Where a payment plan cannot be agreed, landlords should satisfy themselves that they have made all reasonable efforts to try to resolve this and be able to demonstrate actions taken.

It will be for the tenant to decide whether to approach any person or organisation for advice or support on developing a payment plan but landlords can help by providing sign-posting and allowing tenants reasonable time to seek input if that is what they wish to do.

To help facilitate dialogue between tenants and landlords around rent difficulties, the following schemes have launched mediation services:

• SafeDeposits Scotland  This service covers rent arrears only, it is free, and can be instigated by either the tenant or the landlord. 

• PRS Mediation: This service covers disputes related to rent arrears or other issues that have arisen during a tenancy. Parts of the process are free, and currently costs that do apply are limited to £200 inc VAT.  This service is delivered by the Property Redress Scheme, a government authorised consumer redress scheme for the private rented sector, part of the Hamilton Fraser group of companies which also includes My Deposits Scotland

The aim of both services is to help avoid tenants being evicted by ensuring that landlords can recover some or all of the rent arrears over time. If there is no resolution the documentation from the resolution can be used as evidence under the pre-action protocol.

Shelter Scotland’s Letting Agent Plus developed along with letting agents, which provides a checklist of reasonable steps that a letting agent (or, equally, a landlord) can take to ensure tenancy sustainment. This includes referral of the tenant to different organisations using the referral forms provided. Crucially this work sets out ways of helping tenants access support that are considered reasonable by the private rented sector itself.

Citizens Advice Scotland, If you can’t pay your bills , is another resource, and local Citizens Advice Bureaux will have trained debt advisors.

To assist landlords, a series of template letters are downloadable under supporting files. The focus is to let tenants know where they can get financial help and other support; as well as to work towards a payment plan to address the arrears. It also refers to SafeDeposits Scotland’s resolution service, as the tenant may be more comfortable working with an independent intermediary, as well as Shelter Scotland and Citizens Advice Scotland.

If the landlord wishes to engage with the tenant directly, an income and expenditure spreadsheet template has been included, which is to help to work towards a payment plan. Again within this, the tenant is offered the opportunity to work with SafeDeposits Scotland’s resolution service, as the tenant may be more comfortable working with an independent intermediary, as well as Shelter Scotland and Citizens Advice Scotland.

6. Reasonable consideration to steps the tenant is taking

The third action is for the landlord to give reasonable consideration to the steps that the tenants have taken.

The reasonable consideration by the landlord can include —

(a) any steps being taken by the tenant which may affect the ability of the tenant to make payment to the landlord of the rent for which the tenant is in arrears within a reasonable time

(b) the extent to which the tenant has complied with the terms of any plan agreed to

(c) any changes to the tenant’s circumstances which are likely to impact on the extent to which the tenant complies with the terms of an agreed plan