Scottish rents spiralling at double the rate of inflation don’t tell the full story: GLC raises concern over the private rented sector in Scotland

Unlawful and unfair exploitation of vulnerable tenants lie beneath Scottish Government statistics 

Rents in Glasgow and Edinburgh’s private rented sector (PRS) have risen more than anywhere else in Scotland, and Govan Law Centre (GLC) believes spiralling rent costs are leading to more homelessness and poverty.

We believe the story beneath the Scottish Government’s official statistics is stark, and deeply worrying.  Casework from GLC’s Citywide Private Rented Sector service in Glasgow reveals how many private landlords aren’t following the legal protections in place for rent increases. 

Some tenants end up paying for the repairs their landlords are obliged by law to carry out.

Many vulnerable tenants are being pushed into financial hardship and misery, and being forced to live below “the breadline” and rely on foodbanks to make ends meet.

In Glasgow, private rents have been hiked up by almost one third between 2010 and 2018 (31.13%) - almost double the rate of inflation (the consumer price index rose by a total of 18.7% over the last eight years - see further Chart 1 below).

GLC’s PRS Co-ordinator Wendy Malloy said: “We can evidence that rent increases being implemented during lets are having a serious impact on household financial sustainability, and increasing the risk of homelessness. A lot of the time these increases are being done without proper legal notice being served and with tenants simply accepting they have to pay”.

“We are seeing many households struggle with arrears and we are providing legal advice and representation in these circumstances. We believe this highlights the need to get the message out to people that there is a formal process in place for increasing rents and mechanisms to appeal should the tenant disagree with the proposed increase. Always seek free advice from your local law centre or advice agency”.

GLC’s Principal Solicitor Mike Dailly said: “Our casework provides cogent evidence of unlawful rent hikes across the City by private landlords. One of our clients is a disabled single parent whose landlord increased her rent by 43% during one month to £1,500 p.m. The housing benefit ‘local housing allowance’ was only £800 p.m. Other clients already struggling to make up housing benefit shortfalls have been trying to cope with rent increases of around £100 p.m. Tenants can apply for discretionary housing payments to help, but these are generally temporary. In practice, many tenants are meeting rent hikes by using their social security money for food and heating costs”.

“There is clearly a need for greater public awareness that rent hikes require formal written notice and must comply with certain legal procedures to be valid. There is always a right to appeal, although the law on market rents tends to favour private landlords. Govan Law Centre believes the private rented sector remains largely unregulated and in practice is too often a free-for-all for landlords out to squeeze as much money as they can from a tenant with limited options”.

“For low income tenants there is no consumer choice or genuine market competition in this sector. We believe there is a case for national regulation - there is no national regulation at present unlike for the social rented sector. There is a need for a ‘living rent’ in this dysfunctional market, and strengthening the rights of private sector tenants in Scotland. The present system is unsustainable and is costing the taxpayer in terms of the social, human, and medical problems it creates”.

Case study Mrs J
Mrs J is a widowed woman with 3 adult children living in private rented property. Mrs J’s has a number of health problems and her own income derives from sickness and disability benefits. Mrs J’s also has an entitlement to housing benefit of £800 per month which was capped at the maximum level of local housing allowance. The client with the assistance of her family were able to pay the difference of £250 towards the contractual rent of £1,050 each month. Mrs J’s landlord came to the clients home to advise that he was increasing the rent to £1,500 each month and that this was to be effective from the next date rent was due. Govan Law Centre were able to advise that this increase had not been intimated to her in the prescribed form and insufficient notice had been given and also advised this to the landlord. A few months on from this her landlord returned and provided the correct intimation and notice which meant there was to be an increase of £450 per month towards the rent. Mrs J and her family were unable to afford this increase despite significant reductions in their household spending. As a result of this increase Mrs J and her family had to make an application for Homelessness on the basis that their rent was unaffordable and can no longer sustain their tenancy.

Case study Mr K
Mr K is a single man living in private rented property. Mr K has lived in the property for over 12 years. Due to poor mental health Mr K has been unable to work throughout the period of his tenancy. Mr K’s housing benefit was capped at the maximum local housing allowance for the property but only had to pay a few pounds from his Employment Support Allowance to meet the contractual rent. At the start of the year his landlord advised that the level of rent was to be increased by £91 per month. Mr K has had some assistance with Discretionary Housing Payment to help meet this increase however due to the nature of the award this was only a short term award. Mr K started further utilising his Employment & Support Allowance to help cover the shortfall but this has meant he has had to cut back significantly on essential expenditure such as food, heating and lighting. Mr K was unable to sustain these cut backs and as such his rent has become affordable. Mr K is now currently looking to move into Registered Social Landlord housing stock but due to the level of housing stock available has yet to find suitable alternative accommodation. As a consequence Mr K has accrued arrears to the value of the monthly rental shortfall.

Case study Ms B
Ms B is a single parent to two boys and lives in private rented accommodation. Ms B works full time, so was paying rent herself until the landlord increased this from £650 to £750 pcm. As the property was also suffering disrepair and dampness, Ms B’s income was being used to provide additional heating and fixing repairs the landlord was refusing to do, such as replace a broken window, clean and paint over dampness. When the rent was increased Ms B begun to miss payments and accrued arrears of £1300 and late payments. Ms B has applied for DHP but this was refused. She was now borrowing from family and friends to manage the arrears and pay full rent. Govan Law Centre were able to report the landlord to Landlord Registration and the Housing and Property Chamber for Scotland and as a consequence a rent relief order and repair enforcement order were granted. Govan Law Centre were also able to ascertain that the rent increase was unlawfully implemented as no rent increase notice had been served. Ms B gave up her private tenancy a few weeks after the enforcement orders were granted to move in with family while seeking social housing.

PRS stats for Scotland from 2010 to 2018 (year end September)

https://www.gov.scot/publications/private-sector-rent-statistics-2010-2018/

Scottish rents spiralling at double the rate of inflation don’t tell the full story: GLC raises concern over the private rented sector in Scotland

GLC settles Sheriff Appeal Court eviction appeal: Elderpark Housing Assn v. M

Govan Law Centre has settled a Sheriff Appeal Court (SAC) case where a single female parent and her children were due to be evicted following an unsuccessful evidential hearing (proof) which had been conducted by a private firm of solicitors in Glasgow. Parties have agreed to allow the appeal insofar as it relates to the eviction, while adhering to the payment decree, with the appeal being dismissed on a no expenses basis. The Glasgow Scottish Secure tenant will remain in her home with the threat of physical eviction lifted.

The case of Elderpark Housing Association v. M concerned an appeal by way of Stated Case is in relation to a decree for recovery of heritable possession granted by the sheriff in summary cause proceedings in July 2017. The appellant argued that the proceedings were incompetent for the social landlord’s failure to comply with section 14(2)(a) of the Housing (Scotland) Act 2001 (“the 2001 Act”). As a matter of law, the appellant contented that the court was not entitled nor empowered to grant decree in the proceedings. The appellant’s arguments did not require to be tested by the SAC, however, the issues raised may be of interest to housing advisors and solicitors generally.

In the appellant’s submission section 14(2) of the 2001 Act is a fundamental statutory requirement that goes to the competency of the eviction proceedings. From a plain reading of section 14, a landlord cannot raise recovery of possession proceedings without complying precisely with the requirements of subsection (2). The language used in subjection (2) sets out the clear intention of the 2001 Act, namely that “proceedings may not be raised unless” a landlord complies with subjection (2). In the appellant’s submission, the use of these words meant that proceedings raised without compliance with section 14(2) are incompetent as a matter of law. There is no provision in section 14 for relief for non-compliance with section 14(2), nor is any power or discretion given to the court on this issue of jurisdictional competency. Section 14(1) and (2) provides as follows:

“14 Proceedings for possession
(1) The landlord under a Scottish secure tenancy may raise proceedings by way of summary cause for recovery of possession of the house.
(2) Such proceedings may not be raised unless—
(a) the landlord has served on the tenant and any qualifying occupier a notice complying with subsection (4),
(b) the proceedings are raised on or after the date specified in the notice, and
(c) the notice is in force at the time when the proceedings are raised”.

The appellant’s appeal point was that the respondent did not comply with section 14(2)(a) of the 2001 Act by failing to serve a notice complying with subsection (4) (the Notice of Proceedings for Recovery of Possession or “NPRP”) on a qualifying occupier within the appellant’s household. Subjection (6) of section 14 of the 2001 Act provides the following statutory definition of a “qualifying occupier”:

“(6) In this section and section 15, “qualifying occupier” means a person who occupies the house as that person's only or principal home and who is—
(a) a member of the tenant's family aged at least 16 years,
(b) a person to whom the tenant has, with the landlord's consent under section 32(1), assigned, sublet or otherwise given up possession of the house or any part of it, or
(c) a person whom the tenant has, with such consent, taken in as a lodger”.

No NPRP was served on the appellant’s daughter who was 16 when defences were lodged. She had been aged 16 for over four months when the NPRP was served on the appellant. This was not a matter in dispute between the parties. The 2001 Act places a duty upon the respondent to ascertain whether there are any qualifying occupiers in the tenancy subjects before serving a NPRP. Section 14(3) of the 2001 Act provides as follows:

“(3) Before serving a notice under subsection (2) the landlord must make such inquiries as may be necessary to establish so far as is reasonably practicable whether there are any qualifying occupiers of the house and, if so, their identities”.

The appellant’s submission was that the sheriff was not entitled in law to grant decree in July 2017. Reference was made to the House of Lords decision in Regina v Soneji and another [2005] UKHL 49, [2006] 1 AC 340. This opinion considers questions of statutory interpretation in relation to whether a provision is mandatory or directory.  The general position has been that where there is a failure to comply with a mandatory statutory provision what then follows is a nullity.  Reference was made to Lord Steyn’s judgment starting at page 349, paragraph 14: “A recurrent theme in the drafting of statutes is that Parliament casts its commands in imperative form without expressly spelling out the consequences of a failure to comply”.

This approach was consistent with the decision of the Sheriff Principal in North Lanarkshire Council v. Cairns 2012 SLT (Sh Ct) 128. This opinion of the court concerned a qualifying occupier – a tenant’s son - unsuccessfully arguing that he had a right to minute for recall of decree. He was not a “party” to the proceedings. However, the Sheriff Principal held that his Article 6 rights in terms of section 6 and schedule 1 of the Human Rights Act 1998 were safeguarded by the requirement for a NPRP to be served on him in terms of section 14 – reference was made to paragraph 32 at page 10 of the court’s opinion. The qualifying occupier had been served with a NPRP in Cairns, and had the opportunity had he so wished to apply to become a party to the action under section 15 of the 2001 Act.

The issue of an NPRP not being served on a qualifying occupier was not pled or argued before the sheriff at first instance. However, the appellant contended that it was pars judicis for the court to consider competency if the issue goes to nullity.

This point was recently considered by the Inner House in Simpson v. Downie 2013 SLT 178 – reference was made to paragraph 10: “By reference to Macphail, Sheriff Court Practice (3rd edn), para.2.09, and to the opinion of Lord Young in Douglas v Tait at (1884) 12 R., p.14, it should not be regarded as pars judicis for the court to take a technical point on competency unless either a nullity, or some important external interest, could be identified”. In Simpson the Inner House dismissed the action as incompetent as the issue was one that went to jurisdictional competency.

The appellant was represented by GLC’s Mike Dailly, Solicitor Advocate.

GLC settles Sheriff Appeal Court eviction appeal: Elderpark Housing Assn v. M

GLC secures recall of mortgage repossession decree despite defender having appeared in court: Santander UK plc v. P

Following the decision of the Sheriff Appeal Court in NRAM plc v. Cordiner last year, it is generally thought that a homeowner cannot recall a decree by a "Minute for Recall of Decree' where he or she had appeared in court, or been represented.  

This week, Govan Law Centre (GLC) was able to secure a recall of a mortgage repossession decree despite the homeowner having previously appeared before the sheriff.  A summary of the case is set out below. 

Mr P consulted Govan Law Centre through the Ayrshire Homelessness Prevention Project because his mortgage lender, Santander UK plc, had raised a repossession action against him. His mortgage had matured and the full balance had become due. His lenders had obtained decree for repossession. As a result, Mr P was facing homelessness.

Mr P had not attended the first hearing of the case, as his lenders’ solicitors had told him he did not need to, since they would ask for the case to be continued for him to get financial advice. Mr P attended the next hearing of the case personally, and he was given further time again by the Sheriff. Mr P was not aware of the next hearing date, and therefore did not attend. Unfortunately, at this hearing, decree was granted in his absence. Mr P had not been represented in the process, nor put forward any defence. 

Mr P instructed Govan Law Centre to lodge a Minute for Recall of Decree on his behalf. This was lodged and a hearing was held at Kilmarnock Sheriff Court. The Pursuers opposed the Minute for Recall on the basis of a recent decision of the Sheriff Appeal Court, in NRAM plc v Cordiner (2017) SAC (Civ) 27. They argued that the Minute for Recall was not competent on the basis of this decision. The Sheriff refused the Minute for Recall. 

Section 24D of the Conveyancing and Feudal Reform (Scotland) Act 1970 states: 

“(1) A person mentioned in subsection (2) below may apply to the court for recall of a decree granted on an application under section 24 (1B) of this Act

(2) Those persons are (…) (b) the debtor, but only if the debtor did not appear and was not represented in the proceedings on the application under section 24(1B); “

In Cordiner, the Defender had lodged defences, been represented at previous hearings, consented to decree, amongst various other procedural stages. On appeal, the Sheriff Appeal Court held that, as the Defender had appeared and been represented in the proceedings, she was prevented from using the recall process. 

Mr P instructed us to lodge an appeal of the Sheriff’s decision refusing the Minute for Recall on the basis that his case could be distinguished from Cordiner, and on the basis that the Sheriff’s decision was incompatible with his Convention Rights under the European Convention on Human Rights. 

Having regard to the reasoning in Cordiner, it was Mr P’s position that the question to be determined was whether in his case litiscontestation had occurred, in which case, the appellant would have been prevented from seeking a recall of decree. This was the case in Cordiner, which had a particularly extensive procedural history. This had not occurred in the present case, as confirmed by the Sheriff in her note. She stated “At no time did he offer any defence to the action”

Additionally, in Cordiner, the court was not persuaded that they required to fully consider the requirement to read down the relevant section of the legislation in line with the European Convention on Human Rights, as the defender had fully engaged in proceedings, having lodged pleadings and been represented in numerous hearings. This was not the case in the present proceedings, and Mr P submitted that the Appeal Court should fully consider these submissions, and read down the legislation to be compliant with his Convention Rights.

Before the appeal hearing was due to be heard in his case, Mr P’s lenders agreed to the decree being recalled. The appeal was therefore dropped, and the case referred back to the Sheriff court. There is an evidential hearing fixed. Mr P is proceeding through the Mortgage to Rent Scheme and hopes he will soon be in a position to discharge his liabilities to his lenders, and remain in his home. 

It certainly would have been beneficial for borrowers in general to have received some clarity from the Appeal Court about the position of Minute for Recalls being lodged in similar circumstances, where no formal defence has previously been tendered and decree in absence is granted. However, this is an extremely good result for Mr P. We urge anyone in similar circumstances to seek urgent legal advice. 

The defender and appellant was represented by GLC's senior solicitor, Laura Simpson, and Mike Dailly, Solicitor Advocate was instructed in the appellate proceedings. 

GLC secures recall of mortgage repossession decree despite defender having appeared in court: Santander UK plc v. P