Coronavirus (COVID-19) Tenant Grant Fund: guidance for local authorities

Information in this document is provided by the Scottish Government, in conjunction with the Convention of Scottish Local Authorities (CoSLA), to all Scottish local authorities.  This Guidance is a live document, and updated versions will be provided to local authorities as and when required.

Important information

• Each local authority has been awarded an allocation, based on the distribution agreement between CoSLA and Scottish Government– to be used this financial year, ending 31 March 2022. There will be no further allocations.
• Any grant award to a landlord should be a one-off award, and only cover a period of under 12 months.  Otherwise it could be classed as an annual payment, and would have tax implications for the tenant. In practice, any award would be based on the actual period when the rent arrears occurred, which in most cases will be a less than 12 months.
• The grant is to help prevent homelessness and sustain tenancies by directly reducing, alleviating or paying off rent arrears altogether, where a tenant is in either the social or private sector, and has faced difficulties due to Coronavirus.  The period the grant covers is between 23 March 2020 and 9 August 2021.  Any arrears accrued before 23 March 2020, and after 9 August 2021, cannot be covered by this grant.

​​​​​​​Background

On 23 June the Deputy First Minister announced the Scottish Government’s intention to launch a £10m grant fund later in the year to support private and social rented tenants who have incurred rent arrears as a direct result of the Covid-19 pandemic.

The £10m fund will enable local authorities to respond in a discretionary and flexible way in order to assist tenants struggling with rent arrears who are at risk of homelessness as quickly, and efficiently as possible.  Through this fund, the Scottish Government will provide a one-off grant to each local authority in Scotland. Details of the allocations for individual local authorities, and the broad parameters for distributing this funding, are set out in this guidance.  

The document sets out guidance for local authorities regarding the basis on which allocations from the Tenant Grant Fund are made to local authorities and sets out high level parameters which local authorities should take into account when using this funding to support tenants. 

This Guidance has no statutory basis. It is not intended to constitute and should not be interpreted as legal advice on the contractual arrangements necessary for a local authority to pay a grant to a landlord. Local authorities should obtain their own independent legal advice on any correspondence or contractual documents passing between them and a landlord or tenant.

This document has been developed by the Scottish Government in conjunction with COSLA, the Association of Local Authority Chief Housing Officers (ALACHO) and both social and private housing stakeholders.

1. Purpose of the funding

The purpose of the Tenant Grant Fund is to mitigate the short to medium term financial challenges being experienced by tenants adversely impacted by restrictions and regulations introduced since March 2020, to control the spread of COVID-19. 

This fund enables local authorities to prevent homelessness and sustain tenancies by directly reducing, alleviating or paying off rent arrears altogether where a tenant is in either in the social or private rented sectors, and has faced difficulties due to Coronavirus.  Local authorities have discretion, as to payment in individual cases and should consider whether the payment is necessary or justified action to avoid the tenant becoming homeless. This recognises the experience that local authorities have in supporting people in a housing crisis, and will help identify where funding would be most effectively provided. 

The main focus of the grant funding is to support those most at risk of homelessness, in circumstances where tenancies can be saved through such intervention. By contributing to the payment of rent arrears, this funding may also assist the landlord and tenant in reaching a repayment agreement as part of the pre-action requirements process. 

The grant may be particularly supportive to tenants in the private rented sector, given private landlords may have lower ability to manage sustained rent arrears in the longer term and the greater risk of homelessness these tenants may face.

The grant fund is flexible, enabling local authorities to exercise a large degree of discretion in administering it, as part of a broader holistic homelessness prevention approach.  It can be used alongside other existing tools and financial support such as Discretionary Housing Payments (DHPs), benefits checks etc., and it can cover a proportion, or all, of a tenant’s rent arrears. It can also be used where other solutions aren’t available and local authorities will be best placed to identify priority cases, to ensure the fund is targeted at those who need it most.

The grant fund could assist landlords and tenants in reaching a repayment plan, possibly as part of the pre-action requirements.  So, as a further option that could be explored, where it has not been possible to agree a reasonable and sustainable repayment plan, the grant fund could assist the tenant and landlord to come to a reasonable arrears repayment plan.  For example, this could include a proportion of the arrears being paid off by the grant fund, alongside the landlord reducing the amount of arrears owed, (if it is able to do so, without causing undue difficulty) and providing income maximisation support to the tenant resulting in a more manageable level of debt to repay. However, there could be private landlords who are also facing financial difficulty as a consequence of the pandemic and may be unable to contribute to a reduction of the debt, and the local authority could take this into account.  Where the landlord is a social landlord, they must make reasonable efforts to provide the tenant with advice and assistance regarding grants.

This non-statutory guidance supports local authorities in making decisions on how they should distribute this funding, while recognising the variability within and across local housing systems will demand differing approaches.

2. How grants will be provided

Local authorities will be responsible for distributing grants to tenants based on the allocation they receive from the £10m discretionary funding pot.

Allocation of funds to local authorities

We have worked closely with COSLA to agree a methodology for determining individual allocations to local authorities.  COSLA Leaders’ Group agreed that the allocation of the £10m to local authorities through the Tenants Grant Fund was to be paid on the basis of 50% homelessness and 50% Discretionary Housing Payment (Other).  Further details on the methodology is as below:

• ‘homelessness’ element uses the current homelessness GAE funding allocation methodology across local authorities for the delivery of local authority homelessness services, which is based on the average numbers of applications to local authorities under the homeless persons legislation that were assessed as homeless or threatened with homelessness (both intentional and unintentional), over the three years 2017/18 to 2019/20. This excludes any data for the more recent year 2020/21, to maintain consistency with the time periods of data used in the current homelessness GAE allocation methodology.
• ‘DHP (Other)’ element is a fixed amount that is given to Local Authorities, to spend at their discretion, between DHP Core, Local Housing Allowance, and Benefit Cap mitigation.

Notification of each local authorities allocation from the £10m Tenant Grant Fund was provided via a letter issued to Chief Executives, Heads of Housing and Heads of Finance on 10 September 2021, and we ask that local authorities continue to adhere to the conditions of the grant as set out in the letter.

3. Who is eligible

Local authorities can use this funding to provide direct financial support to tenants via landlords in their area as long as it is specifically for the purposes of paying rent arrears arising from the impact of the COVID-19 pandemic, to help prevent homelessness.  Local authorities should ensure that the following applies:

The grant fund is used specifically to help repay rent arrears that have arisen due to the Coronavirus pandemic between 23 March 2020 and 9 August 2021; Arrears before 23 March 2020 cannot be covered; Arrears after 9 August 2021 (based on the Scottish Government’s current strategic framework) can only be covered in exceptional circumstances, where the local authority is satisfied that arrears relate to continued impact of the pandemic restrictions. The grant should be paid directly to the landlord in order to avoid any implications for a tenant who is in receipt of other forms of financial support and on the strict condition that the landlord credits the tenant’s rent account with that amount. Landlords must demonstrate that they are complying with the pre-action requirements for rent arrears and agree not to progress a repossession on the basis of Covid related rent arrears where a grant is paid and the tenant meets all future agreed rent and repayment obligations; The grant should be targeted at vulnerable individuals/households who would become homelessness or do not have alternative sources of support;

What local authorities should take into account when determining who to fund

First and foremost, local authority decisions on where they should direct their funding allocations must be based on their knowledge of the local rental market and understanding of the impacts of COVID-19 regulations and restrictions on tenants within their area.  Local authorities have discretion in determining who is most vulnerable.

Limits to the funding available through this scheme will inevitably require local authorities to prioritise which tenants should receive support and therefore local knowledge will be vital in determining where the funding can most effectively be deployed.

This grant covers any arrears accrued within the time frame indicated above in order to target Covid-related arrears.  However, local authorities should still make enquiries, as to any relevant circumstances.

As an example, where the local authority find that full housing costs had been paid directly to the tenant but they did not then pay their rent, and the local authority may consider whether it would be beneficial to help the tenants to better manage their finances. 

Local authorities can use discretion to review cases where, though the pre-action requirements have been followed, a notice of proceedings or a notice to leave has already been served prior to any grant funding release.  In these situations, if the landlord was willing to suspend or withdraw this notice in return for a payment from the Fund, the tenancy could be sustained. However, the local authority may wish to see evidence of the notice being suspended or withdrawn prior to making payment.

Further key considerations - which local authorities should pay close attention to in deciding whether a Tenant Grant Fund payment is appropriate - are set out on page 9 of this guidance.

How tenants will receive funding

There is no standard application process that a tenant must go through.  Instead, local authorities will use their discretion to decide how to administer the grant. A grant may be appropriate in individual circumstances to help sustain a tenancy to prevent eviction and homelessness or it may be appropriate in order to support a tenancy being brought to an end without the tenant being responsible for rent arrears.  Any grant award will be paid directly to the landlord.

The following potential – but not exclusive - pathways have been identified in relation to a tenant receiving grant support:

• A tenant presents with financial related housing difficulties and is at risk of homelessness, or is referred by a third sector organisation or housing advice organisation.
• On receiving a section 11 notification from a private landlord of intent to evict, or direct contact from a landlord or letting agent concerned about a tenant in rent arrears, a local authority may wish to explore whether the grant could prevent eviction.
• Following presentation for support by a tenant – the local authority should evaluate the situation and consider if pre-action requirements have already been followed.  If they have not, consideration should be given to all existing sources of funding available (i.e. Discretionary Housing Payments etc); other support such as income maximisation checks and supporting dialogue between the tenant and landlord to come to a suitable arrangement.
• Similarly, where the landlord or letting agent contacts the local authority regarding a tenant in rent arrears, the local authority should evaluate the situation and consider if pre-action requirements have already been followed and whether the tenant is engaging with the landlord.  Again, consideration should be given to all existing sources of funding available (i.e. Discretionary Housing Payments etc), income maximisation checks and encouraging dialogue between the tenant and landlord to come to a suitable arrangement.  Early intervention by a local authority, as an independent third party, particularly where a private tenant is not engaging may help to restart dialogue and identify a resolution.

The following potential – but not exclusive – actions that could be taken - have been identified in relation to supporting tenants:

• If it is clear to a local authority that payment of Covid related rent arrears would enable the tenant to remain in their tenancy and therefore, prevent eviction and homelessness, and no other support is available, awarding a grant would be a suitable solution.
• The amount offered will depend on the individual tenant’s circumstances (for example, if the landlord has agreed reductions in rent, then that should be taken into consideration).  Any grant award to a landlord should be a one-off award, and only cover a period of under 12 months.  
• Both the landlord and the tenant should be advised that a grant payment to reduce or clear rent arrears should be seen as a ‘fresh start’, meaning past Covid-related arrears (accrued within the applicable timeframe) paid off by the grant, will no longer be considered as a ground for future eviction action.
• To support local authorities in engaging with landlords and tenants on grant payments made, a toolkit of correspondence has been provided in Annex A.
• Depending on the individual circumstances of the case, local authorities may wish to ask landlords to write off a proportion of the rent arrears (if the landlord are able to do so, without causing undue difficulty, or undue impacts on other tenants), in return for the remainder of the debt being covered by a grant.

To support local authorities in engaging with landlords and tenants on grant payments made, a toolkit of correspondence has been provided in Annex A.

Local authorities are required to make enquires to satisfy themselves of the validity of a tenant’s financial and housing situation and that they are working with their landlord to resolve the position. They should consider what supporting information is requested and required to determine eligibility for a grant.  Some households may have irregular employed income, for example - many low income households may be working in the ‘gig economy’, and this should be taken into consideration.

Local authorities should also be engaging with landlords to be assured that the relevant pre-action requirements have been followed. Local authorities should seek confirmation of previous rental payments and arrears claimed for by the landlord, and that those arrears relate to financial difficulties caused by Covid-19.  It is crucial that a landlord is willing to work closely with the local authority and the tenant to sustain the tenancy.

As local authorities will be aware, private landlords must also register with local authorities, where they have let properties, and details can be found at Scottish Landlord Register, or with your local private rented sector team.  Some local authorities have developed local processes for checking with the Landlord Registration team.  It is a criminal offence to rent out a property without having made a valid application for registration.

Given local authorities’ responsibilities for managing public funds, it is up to each local authority to ensure that procedures for administering the grants are suitably robust, including due diligence to mitigate against fraud and for audit purposes.  This should include giving due regard to the principles for effective fraud control and having appropriate control mechanisms in place.

We will not hold local authorities financially liable for payments associated with fraud and error. The exception to this would be circumstances where a local authority is found to be in material breach of the relevant UK Government fraud control guidance. Local authorities should ensure that a landlord’s claims are verified with the tenant.

Role of Pre-Action Protocol Requirements

The pre-action requirements provide an important tool for supporting landlords and tenants to ensure they have explored all options for managing the repayment of rent arrears before taking action in court to repossess a property. They are intended to encourage dialogue between the tenant and landlord and provide evidence of the steps landlords have taken to support their tenant to pay their rent and ensure that eviction action is a last resort.

In summary, the pre-action requirements for social and private landlords are to:

i. Provide the tenant with clear information relating to: the terms of the tenancy agreement, the amount of rent for which the tenant is in arrears; the tenant’s rights in relation to proceedings for possession of a house (including the pre-action requirements); and how the tenant may access information and advice on financial support and debt management.

ii. Social landlords must also make reasonable efforts to provide the tenant with advice and assistance on the tenant's eligibility to receive benefits, loans and make reasonable efforts to provide the tenant with advice and assistance regarding grants and provide the tenant with information about sources of advice and assistance in relation to management of debt.

iii. Make reasonable efforts to agree a reasonable plan with the tenant to make payments to the landlord of: future payments of rent; and the rent for which the tenant is in arrears.

iv. Give reasonable consideration to: any steps being taken by the tenant which may affect their ability to make payment to the landlord of the rent for which the tenant is in arrears within a reasonable time; the extent to which the tenant has complied with the terms of any agreed plan; and 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

Specific guidance has been provided to support private and social landlords to understand and comply with the pre-action requirements. It is expected that in order for a grant to be paid, landlords must have undertaken all the steps required in the pre-action requirements.

Where a landlord has not fully complied, they should be required to do so and further support should be offered to both landlord and tenant in order to reach an agreement. If agreement would be possible on the basis of rent reductions or the writing off of some rent, the grant may form a part in facilitating this agreement alongside other prevention approaches (i.e. benefit entitlement and income maximisation checks).

Ongoing proceedings for eviction or repayment of rent arrears

Where a private landlord has an ongoing application to the First-tier Tribunal for Scotland (Housing and Property Chamber) (the “Tribunal) and is applying for consideration for a grant award, they could request for the Tribunal to sist (pause) the application until the outcome of the grant is decided. This will be a matter for the Tribunal to consider.

Should a grant award be made, the private landlord should withdraw any ongoing application with the Tribunal, as the rent arrears which were the subject of eviction or repayment proceedings would be reduced or repaid in full. Adjourning proceedings would allow time to determine whether the arrears can be paid off in full by the grant or, if arrears are only reduced, it may allow time to determine if a sustainable repayment plan can be agreed for the remainder of the arrears.  An obligation on the private landlord to seek an immediate adjournment of eviction proceedings and debt recovery proceedings is included within the “in principle” offer of grant (see Letter [4] in Annex A).  Should the landlord accept this, they would be expected to notify the Tribunal IMMEDIATELY, so that proceedings are not progressed following payment of the grant.

Should a grant be paid, the tenant should also be notified via letter that this has happened, so that they are aware that their rent arrears have either been reduced or paid off altogether.  They will also be advised to show this letter to the Tribunal.  Wording in Letter [7] of Annex A, points this out to the tenant and the landlord, and notes that copies of these letter should be sent to the Tribunal. This is to act as a safeguard, in case the landlord has not notified the Tribunal.

In relation to social housing tenancies, the landlord would have worked extensively with their tenant through the pre-action requirements, and eviction action is always the last resort.  Social tenants and landlords may similarly wish to share the above letters with the Sheriff Court, at the appropriate points.

Key considerations Though the local authority has discretion over who gets an award, there are some specific conditions which must be followed: Any award must be paid to the landlord directly, and cannot be paid to the tenant, as this may affect their benefits entitlement. The landlord must be a local authority, a Registered Social Landlord, or registered on the Scottish Landlord Register – if a private landlord, is not so registered they must have at least made a valid application to the Scottish Landlord Register. Some local authorities have developed local processes for checking with the Landlord Registration team for private landlords.  It is recognised that unfortunately, some private landlords might not be registered, and this of course calls into question whether the landlord is complying with other aspects of tenancy and housing law, and whether in fact it is possible to work with the private landlord to sustain the tenancy and address wider non-compliance issues.  Similarly, where there is no tenancy agreement in the prescribed formats – please see - Renting a home - Citizens Advice Scotland – this would also indicate non-compliance. Both social and private landlords would already be using the existing pre-action requirements, to signpost tenants to get support.  The landlord may have already agreed to a rent rebate and/or a repayment plan – which has now broken down. For the private rented sector, the Tribunal has discretion in eviction cases, and will be looking for evidence of compliance with the pre-action requirements, as part of its decision-making process. The local authority may wish to maximise support to the tenant and tenancy by: Also working with the tenant to maximise their income though benefit checks etc. or referral to a third party organisation, such as Citizens Advice Scotland, or Shelter Scotland. Though one team might lead the administration of this grant process, they may wish to involve colleagues from other teams, especially around income maximisation. Where the tenant is a Registered Social Landlord (RSL) tenant, the RSL may have already tried to work with their tenant, and have satisfied themselves that every other support route has been explored with the tenant. This would ensure maximisation of funding and also has the potential of acting as a ‘pre application check’. Assisting the tenant and landlord to come to a (further) sustainable and reasonable arrears repayment plan.  For example, this could include a proportion of the arrears being paid off by the grant fund, alongside the landlord reducing the amount of arrears owed (if it is able to do so, without causing undue difficulty), and the local authority, or others, providing income maximisation support to the tenant resulting in a more manageable level of debt to repay. The local authority may decide that a Tenant Grant Fund payment would not be suitable on grounds that the tenancy cannot be saved for a variety of reasons, such as the tenant’s inability to pay rent even after an award has been made for Covid-related arrears. In those circumstances, the local authority is still well placed to support the tenant and may also wish to support the landlord. For example the PRS Landlord Covid-19 Loan Support Fund is available for private landlords who wish to work with their tenant to sustain a tenancy. Local authorities will be best placed to serve the needs of their communities. For example, the tenant may not have English as their first language and authorities may have access to, or wish to use, translation services. Where the local authority determines that a grant award is not suitable, it may wish to maximise support to the tenant and tenancy by: providing further assistance from the homelessness team, financial inclusion or equivalent team; Citizens Advice Scotland; or Shelter Scotland. considering the implementation of a review process for the refusal of grant applications, or adapting a standard review processes already in place, for this purpose.

4. Monitoring and reporting requirements

Local authorities are asked to provide a brief report to the Scottish Ministers setting out:

i. the number and level of grants issued and how much grant was paid (broken down by tenure e.g. private, local authority or RSL tenant);

ii. how many of these grants paid off the rent arrears in full or partially; and

iii. how many tenancies were sustained – at that time - as a direct result of the grant being paid.  As a suggestion, and providing that there are no GDPR issues, you may wish to check a sample of tenancies in say 6, 12 or 18 months.  Should you record these details, it would be useful if this could be included in the monitoring report.

These high level reports should be submitted to the Scottish Ministers on the following dates:

• 31 December 2021, and
• 31 March 2022.

Please submit your reports to tenantgrantfund@gov.scot.

If you have any queries regarding this guidance, or how to administer the fund, please contact us at: tenantgrantfund@gov.scot.