Qualitative research to explore the implications for private rented sector tenants and landlords of longer term and moresecure tenancy

EXECUTIVE SUMMARY

Context

• In September 2013, an independently chaired PRS Tenancy Review Group was set up and tasked with looking at the suitability and effectiveness of the current Private Rented Sector (PRS) tenancy regime, including considering if legislative change is required.
• To inform the Review Group's discussions, Craigforth was commissioned to undertake qualitative research which explored tenants' and landlords' views on, and responses to, a range of longer-term and more secure tenancy options.

Approach

• Participants were recruited using a purposive sampling approach, with the sample reflecting the diversity of the sector. For the landlord group, the emphasis was on ensuring that size of property portfolio was taken into account. The tenant group was to include families with children; higher and lower income working age households; Local Housing Allowance (LHA) recipients; and households including members with protected characteristics.
• A total of 63 tenants took part in the research, with the overall group relatively evenly divided between those living in urban, smaller town or rural locations. There were 43 landlords participants, with an even spread between smaller, medium-sized and larger landlords.

Summary of landlords' views

• Despite their varied profile, the landlords who contributed to the research tended to hold very similar views on the 'bigger' issues. The landlords' position can be summarised as follows:
  • The SAT regime broadly works well and fundamental changes are not required.
  • The arrangements for issuing a SAT, and the tenancy documents themselves, can be lengthy and complicated and there may be a case for simplification.
  • The initial fixed tenancy period plays a key role in allowing landlords to operate a viable business. Even those who have never needed to end a tenancy at the end of the period, value the safety net it offers them.
  • Both the current notice period and grounds for possession also generally work well, although there may be a case for tightening up the grounds relating to rent arrears.
  • Rather than making changes to the tenancy regime, the focus should be on taking action against landlords who are not complying with the legislation and regulations.

Summary of tenants' views

• The views of tenants were more varied, although did divide into two broad positions depending on whether the tenant expected to live in the sector for a relatively short while or whether they anticipated living in private rented accommodation in the longer term.
• The shorter-term, transitional tenants tended to hold the following views:
  • The SAT regime appears to work reasonably well and offers them the flexibility that is generally very important to them.
  • The initial tenancy period offers a welcome period to test out both the landlord and the property. If things are not working out, looking for an alternative property is both a realistic but also a preferred option.
  • The ability to both access but also move on from a property relatively quickly is important, particularly if needing to make a work-related move or buying a property.
• The longer-term tenants tended to hold the following views:
  • For many, the major problems are around property condition and getting repairs carried out. Other considerations, such as concerns about lack of security of the tenancy, are often secondary.
  • However, lack of security can be of critical concern to some, and particularly to those who feel they have few if any other options. Lack of security tended to be most keenly felt by those with strong previous connections to the social rented sector. These tenants would like to see changes which afford them greater security.
  • Tenants are not in a position to 'take on' their landlords and tackle issues associated with poor condition or other breaches of tenancy legislation or regulation. Alterations to the tenancy regime will not change this.

Understanding of the SAT regime

• Landlords reported the use of the Short Assured Tenancy (SAT) as being standard industry practice. Equally, the majority of tenants who were clear about the type of tenancy being used by their landlord had a SAT.
• The research found some variations in understanding of the rules and regulations which underpin the SAT regime. For example, not all landlords agreed about when and how the AT5 document should be issued.
• Tenants tended to be less confident about the basic arrangements that are or should be in place if a landlord has issued them with a SAT. For example, there was varied understanding and some confusion about the arrangements in place once the initial period of the SAT had expired.

Tenancy documents and the potential of a model

• There was a clear consensus that the documentation associated with setting up a tenancy can be both lengthy and complicated, with smaller or newer landlords more likely to express anxieties about the tenancy documentation.
• Given the difficulties some respondents reported with understanding tenancy documentation, it is perhaps unsurprising that many supported the idea of some type of model tenancy document.
• However, some landlords did have concerns, a key one being that the degree of property-to-property variation required could be so considerable as to render the original premise (of a standardised document) null and void.

Strengths of the current regime

• When considering the strengths of the SAT regime, most respondents tended to point initially to its flexibility. This was common to both tenants and landlords, with both seeing advantages to having the opportunity to 'test' whether the other party was a 'good' or 'bad' tenant or landlord.
• The overall impression from both landlords and many tenants was that the initial fixed period is an easy-to-understand and well-understood approach, albeit that there is some confusion about the precise arrangements at the end of that period and thereafter.
• Despite being a business arrangement, there was also a sense that many participants welcomed the potential to bring the arrangement to a civilised end without explanation or the need to find fault.

Weaknesses of the current regime

• Many landlords' concerns were around the practicalities of regaining possession of their property should the need arise. There was a strong consensus that the current processes, particularly those involving the Sheriff Court, are time-consuming, costly and potentially ineffectual.
• Tenants were more likely to raise significant concerns although, as with the landlords, the most frequently raised issue was about how the regime translates into practice on the ground. Property condition and the difficulties around getting landlords to carry out improvements or repairs was the key concern, with those affected having little faith that changes to the tenancy regime would help tackle this issue.
• However, some tenants did have concerns that related directly to the current tenancy regime. These concerns were generally about the lack of longer-term security afforded by the SAT regime, and were very often raised by those with previous experiences of living in the social rented sector.

Possible changes to tenancy length

• The landlords' position was clear and unambiguous; the landlords who took part in this research did not wish to see the removal of the fixed initial tenancy period (currently at a minimum of 6 months), after which they would be able to regain possession of the property without needing to meet specific grounds for repossession.
• Some landlords also made it clear that changes to tenancy length could affect their business decisions - in terms of their ability or willingness to invest in the sector, or the types of tenant to whom they would be prepared to rent.
• Many landlords felt that any changes would be symptomatic of the Scottish Government's approach to the sector over recent years. The view was while 'good' landlords bear the considerable burden of complying with any changes, no meaningful efforts are made to tackle those who do not.
• Tenants' opinions were more varied, with those who expected to use the PRS as a shorter-term, transitional housing option having very few concerns regarding security of tenure.
• Tenants who expected to be living in the PRS in the longer-term generally had a different perspective, although property condition tended to remain the over-riding concern. These tenants were clear that they are not in a position to 'take on' their landlords and tackle issues associated with poor condition or other breaches of tenancy legislation or regulation. They were unlikely to believe that greater security of tenure would make them feel more able or inclined to pursue a right to repair.
• However, many longer-term tenants did still favour changes to the tenancy regime. Those with a strong connection to the social rented sector were most likely to support a change and tended to favour an approach similar to that used in the social rented sector.
• While some tenants supported the idea of greater security, some had chosen to give up such security (offered by a social rented sector tenancy), in favour of a PRS property that better met their needs or was in a location in which they felt safe.

Some tenants, particularly those who received LHA, were concerned that any changes could backfire on tenants such as themselves, with private landlords increasingly disinclined to offer them even sub-standard accommodation.