Rented sector reform: Housing (Scotland) Bill: business and regulatory impact assessment

Evictions: duties to consider delay

Background, Objective and Rationale

There may be certain circumstances and times of year for a tenant where being evicted can be particularly problematic, for example, due to seasonal pressures, periods of religious significance, exam periods or where more time is required to access suitable alternative accommodation. In such circumstances, there may be an equity argument for delaying the enforcement of the eviction order or decree to prevent unreasonable additional hardship on the tenant.

Currently, while the Tribunal and Sheriff Court have the power to delay the enforcement of an eviction order if they consider it reasonable, they do not have a duty to consider whether a delay would be appropriate in every case.

Research shows that insecurity of tenure can have a range of negative impacts on tenants.^[65] There are multiple mechanisms through which vulnerable households can experience insecurity, including the actual experience of eviction, the threat of eviction causing insecurity and an inability to feel ‘at home’, the challenge of trying to find a new tenancy in the market, and the potential for being separated from local support networks, among other things.^[66]

The evidence shows that these mechanisms can have a negative impact on tenants’ mental and physical health, as well as their general wellbeing. While much of this evidence is qualitative and based on the lived experience of tenants, a large study linking data from the UK Household Longitudinal Study to measurable health outcomes found that desire to remain in current home was one element that led to significantly increased levels of biomarkers associated with infection and stress.^[67]

Furthermore, a 2018 report by the Joseph Rowntree Foundation on forced evictions in England and Wales concluded that “the experience of forced moves and evictions were extremely stressful for low-income households as they struggled to find alternative properties because they are often seen as undesirable by private landlords and are often unable to access social housing”.^[68] Illustrating the difficulties that low-income households may experience in finding new accommodation quickly following eviction, findings from the RentBetter study’s 2020 baseline survey of landlords and letting agents in Scotland found that only a quarter of respondents indicated that they would accept new tenants where rent for the property was paid in full or part by Housing Benefit or Universal Credit, with another quarter indicating that they would ‘only sometimes’ let to tenants in those circumstances.^[69] Given that low-income households already experience greater difficulties and associated stress when finding new accommodation, it is important not to compound this by requiring them to do so at a particularly challenging time for them.

Sectors and Groups affected

The sectors and groups who could be directly affected by options presented below include:

• Tenants in the private and social rented sectors
• Private and social landlords
• Letting agents
• Scottish Courts and Tribunal Service
• Sheriff Officers

Option 1 – Do nothing (Business as usual)

In this option, current legislation would remain the same. While some tenants would continue to benefit from a delay in the enforcement of the eviction order where this was raised as part of the proceedings, there would be no guarantee that in all cases the Court and Tribunal would consider whether a delay is appropriate. This could result in cases where an eviction is granted immediately even though it would have a disproportionate impact on the tenant.

Option 2 – Non-regulatory measures

Since the policy objective is to ensure that the question of whether there should be delay in enforcement should be considered in every case, Scottish Ministers do not consider that non-regulatory action could deliver the desired result.

Benefits

Not applicable.

Costs

Not applicable.

Option 3 – Legislate (Preferred option)

This option would see legislative change to introduce a requirement for the Tribunal and the Sheriff Court to always consider (except in limited circumstances) whether it would be reasonable to delay the enforcement of an eviction in the social and private rented sectors for a period of time based on the individual circumstances of the case, taking account of the impact on both the tenant and the landlord. This is the only option that can deliver the additional protection during the eviction process sought.

Benefits

Private and Social Tenants

Making it a requirement for the Tribunal or Sheriff Court to consider a delay to enforcement of eviction will be particularly helpful for those tenants whose circumstances mean that they, or a member of their household, would benefit from a delay, but who are not aware of the potential for the Court or Tribunal to grant a delay and who would therefore not proactively seek one.

Measures in the Bill set out a number of factors that may be taken into account in deciding whether to order a delay to enforcement. These are whether bringing the tenancy to an end without a period of delay would:

i. cause the tenant or a member of the tenant’s household to experience financial hardship

ii. have a detrimental effect on the health of the tenant or a member of the tenant’s household, or

iii. otherwise have another detrimental effect on the tenant or a member of the tenant’s household due to the tenant or the member of the tenant’s household having a disability.

While the overall impact in terms of number of cases is expected to be small, this measure provides an additional layer of protection for tenants. Given the evidence presented above on the potential negative health and wellbeing impacts related to insecurity of tenure and experience of evictions, this measure may help to support the health and wellbeing of tenants by ensuring eviction is delayed at times when it may be the most deleterious for tenants. The knowledge that they could benefit from such protections if needed may also help tenants feel more secure in their tenancies.

Costs

Scottish Courts and Tribunals Service

There will be some additional costs for the SCTS, primarily from the training of members on the new measures as well as costs relating to the additional hearing time required for Tribunal members and sheriffs to consider ordering a delay in the enforcement of an eviction order/decree. The SCTS has provided estimates of these costs for the Tribunal and the Courts, which are set out below.

First-tier Tribunal for Scotland (Housing and Property Chamber)

Implementation costs

For private rented cases heard by the Tribunal, it is expected that there will be some small additional set-up costs, which mainly relate to the training of Tribunal members. These costs are accounted for under rent control section which looks at total Tribunal set-up costs from all measures in the Bill.^[70]

Operational costs

Recurring operational costs result from the additional time a case will take to determine, leading to an increase in members’ fees. Costs have been estimated on the assumption that the new requirement will be considered on the same day as the eviction hearing. There could also be an impact on the Upper Tribunal from an increase in appeals, but we expect any such costs to be negligible. This is because the number of additional cases where a delay is granted is likely to be low, and also because only a small percentage of decisions are appealed.^[71]

Given the uncertainty about the impact on members’ fees when considering an application, costs have been estimated using a range from £103 and £190 per application. Based on the eviction caseload for 2023-24 (adjusted for the full year) of 2,286, this results in an additional annual cost of between £235,458 and £434,340.

Scottish Courts

For the Courts, the additional operational cost for social rented eviction cases is estimated at £122,000 per annum. This costing assumes that these cases will be dealt with by summary sheriffs, and is based on an annual sheriff court caseload for summary cause eviction applications initiated of 12,400 ^[72] and salaries as at January 2024. There will also be costs involved in preparing guidance for Sheriff Court staff on the new provision, and from changes to relevant training courses, although the SCTS has indicated that these can be absorbed in current budgets. There may also be IT changes required to update the civil case management system, but the SCTS were not in a position to provide an estimate.

Social landlords

The imposition of a mandatory requirement to consider whether the enforcement of an eviction order should be delayed is not expected to result in social sector landlords (i.e. local authorities in their capacity as landlords, as well as Registered Social Landlords (“RSLs”)) incurring additional costs when preparing for court. The court already has the power to consider a wide range of factors, including the tenant’s personal circumstances and the consequences of eviction for the tenant and/or their family when deciding whether it is reasonable to grant an eviction order, and social landlords currently prepare their cases for court on this basis.

To the extent that there are additional cases where enforcement of eviction is delayed, it is possible that there could be some additional costs to social sector landlords from increased rent arrears. However, for the reasons set out below, the cost to social landlords is expected to be very small, and will depend on how the judiciary, who are independent of Scottish Ministers, use the new provisions.

First, the total number of social sector tenancy terminations following an eviction decree from the court each year is relatively small: data from the Scottish Housing Regulator shows that in 2018-19 the number of tenancy terminations (evictions or abandonments) following an eviction decree from the court was 1,353 in the local authority sector (97% of which were for rent arrears) and 948 in the Registered Social Landlord sector (88% for rent arrears).^[73]

Secondly, as a delay to the enforcement of eviction in all individual cases will be dependent on the grounds for eviction used, circumstances of the case, and the judgment of the Sheriff, it is not expected that this provision will be used very often. It will not be in the best interests of a tenant or their landlord for the court to allow rent arrears to continue to accrue by granting a delay to the enforcement of an eviction order, unless there are exceptional reasons for doing so. Although no data is available from the SCTS on whether this discretion is currently used in practice, an internal Scottish Government review of published Tribunal decisions during 2022-23^[74] shows that the Tribunal used their discretion to delay the enforcement of an eviction order only in a small number of private rented cases. Assuming that the Sheriff Courts follow a similar approach for social rented cases, this supports the conclusion that the proposed measures will affect only a small number of cases.

Thirdly, even in those additional cases where a delay is granted, the likely losses from rent arrears should be limited. Scottish Housing Regulator data shows that the average rent for a 2-bedroom property is £81 per week for local authorities and £94 per week for RSLs.^[75] The review of Tribunal decisions found that when delays were granted, these varied from two to eight weeks. Assuming that delays granted by Sheriff Courts are similar to the Tribunal, the total additional rent arrears per case (for those cases where rent is not being paid during the delay) would be in the range of £162 to £648 for local authorities, and £188 to £752 for RSL. Tenants will remain liable for any rent arrears accrued during the tenancy and social landlords may seek to use existing legal mechanisms to recover these funds.

Finally, the Bill contains provisions that the additional duties do not apply to certain types of eviction where it would not usually be reasonable to delay enforcement of eviction. In the social rented sector, these include cases of antisocial and criminal behaviour as well as property abandonment.

Where the court does grant a delay, there could be some savings to local authorities under their homelessness duties, as giving tenants more time to find suitable alternative accommodation could result in a reduction in the need for temporary accommodation.

Private landlords

Any additional costs for private landlords resulting from a requirement on the Tribunal to consider whether a delay is appropriate will depend on current practice and the individual circumstances of the case. Engagement with businesses as part of this assessment has indicated a range of views on the potential impact and cost implications of this measure and highlighted existing costs for landlords where a repossession occurs.

The vast majority of private tenancies do not result in a landlord evicting a tenant (fewer than 1% of privately renting households were estimated to have faced eviction in 2023-24).^[76] This measure will also not increase the number of evictions that take place.

The Scottish Government does not expect this measure to result in significant additional costs to private landlords arising from the eviction process, as the overall eviction process remains the same. There is no fee for landlords making an eviction application to the Tribunal and legal representation is not a mandatory part of the process. In addition, the Coronavirus (Recovery and Reform) (Scotland) Act 2022 made all grounds for repossession discretionary. This means that the Tribunal can take account all of the circumstances of a case when considering whether it is reasonable to grant an eviction order. Accordingly, in the majority of cases the Tribunal should already have the information they need to support them to determine whether it would be reasonable to grant a delay to the enforcement of an eviction.

Any additional costs for landlords relating specifically to the eviction process are expected to be minimal and relate to the additional preparation time and paperwork required in relation to consideration by the Tribunal of a delay to enforcement, and any additional Tribunal hearings. Our assumption is that the mandatory consideration of whether a delay is appropriate will not usually require an additional hearing. Using an hourly cost of £25 ^[77] and based on an additional two hours of case preparation time, this could result in an additional cost of £50 for the landlord.

To estimate the total potential additional sectoral costs to landlords, estimates have been based on three scenarios. The high scenario is based on all landlords incurring additional preparation costs in relation to current caseload of 2,286. The medium scenario is based on 50% and the low scenario on 25% of the current caseload incurring additional costs. This results in a sectoral cost for private landlords of between £28,600 and £114,300 per annum from approximately 2026-27 onwards, as set out in Table 25. In practice whether a landlord incurs additional costs from this measure will depend on the individual circumstances of the case.

It is not anticipated that this provision will result in a significant increase in the number of evictions subject to an enforcement delay. As mentioned above, although the Tribunal has an existing discretion to grant a delay, a review of Tribunal decisions indicates that this only happens in a small number of cases. Furthermore, in making a decision whether to delay enforcement, the Tribunal will take into account all the circumstances of the case, compliance with pre-action protocols for rent arrears, as well as the negative impact of any delay (such as additional rent arrears) on both the landlord and the tenant. Landlords will be able to make representations on the impact and reasonableness of a delay as part of the process.

To ensure that any negative impact on private landlords from a delay to enforcement is properly considered, and that the rights of tenants are appropriately balanced against the rights of landlords to recover the let property, the legislation sets out that the Tribunal should consider whether a period of delay in bringing the tenancy to an end would

i. cause the landlord to experience financial hardship,

ii. have a detrimental effect on the health of the landlord, or

iii. otherwise have another detrimental effect on the landlord due to the landlord having a disability.

In addition to this safeguard, the Bill provisions provide that the additional duties do not apply to certain types of eviction where it would not usually be reasonable to delay enforcement of eviction: in the PRS sector, these include cases of antisocial and criminal behaviour, as well as property abandonment. This will benefit landlords recovering properties in these circumstances, and will also help protect neighbours and wider communities in cases of antisocial behaviour, and help to get vacant property back on the housing market promptly where landlords wish to do so.

If a delay is granted, a landlord may incur additional loss of rental income where the tenant is not making any rental payments during the period of the delay. However, it will not usually be in the best interests of the tenant or their landlord for the Tribunal to continue to allow rent arrears to accrue by granting a delay to the enforcement of an eviction order, unless there are exceptional reasons for doing so.

Any additional rental loss will depend on the exact circumstances of the case and the length of any delay and whether the tenant is making any rental payments. Based on an average monthly rent for a PRS landlord of £841 for a 2-bed property,^[78] this measure could result in an additional debt to landlord of £194 for every week that the enforcement is delayed. While engagement with landlords indicated concerns that the measures may result in a rental loss of 6 to 12 months, we think these concerns reflect the 6-month pause required under the 2022 Act. There is no such requirement for a 6-month delay under this option. As discussed above, a review of published decisions by the Tribunal shows that in the small number of cases were there was a delay, this ranged from two weeks to eight weeks, which for an average 2-bedroom property would result in an additional rent arrears of £388 to £1,553. Tenants will remain liable for any rent arrears accrued during the tenancy and landlords may seek to use existing legal mechanisms to recover these funds.

Letting Agents

Where a landlord uses a letting agent, they may also instruct them to act on their behalf when seeking to repossess a property. Engagement has indicated a range of views on the potential impact and cost implications of this measure and highlighted existing costs where a repossession occurs. Additional preparation time for cases and the potential for multiple hearings were identified as potential additional costs.

Additional costs for agents will usually be passed on to landlords and will depend on the individual fee structure in place for that business and the type and level of support provided by a letting agent.

As outlined above, any additional costs are expected to be minimal and current assumptions are that consideration of whether there should be a delay will not usually require an additional hearing. Using an hourly cost of £25 and based on an additional two hours of case preparation time, this could result in an additional cost of £50, recoverable from the landlord as accounted for above.

Letting agents may review their current charging structure for this type of service to ensure they are able to recover any additional costs for their services.

Sheriff Officers

No additional costs for Sheriff Officers are expected from additional duties on the Tribunal to consider a delay to the enforcement of an eviction order. This is because the measure will not increase or decrease the number of evictions granted and/or the level of instructions Sheriff Officer receive from landlords or their agents in relation to the enforcement of an eviction.