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

Is the buy-to-let market a property bubble waiting to burst?

GLC's Principal Solicitor, Mike Dailly writes: "SCOTLAND’S private rented sector is a phenomenon. It has trebled in size over the last 15 years and now makes up over 15 per cent of all Scottish households. For our cities the story is more profound.  

Scottish Government figures published last month show that private lets represent 19 per cent of all homes in Glasgow, Edinburgh and Perth. For Dundee the figure rises to 23 per cent and peaks at 26 per cent in Edinburgh.

How did this happen? Almost half a million homes have been lost from Scotland’s social rented sector since the right to buy was introduced in 1980. While the Scottish Parliament ended that right last July, the impact coupled with the growth of the buy-to-let mortgage market has fuelled the private let sector".  Read the full column in The Herald here (Saturday, 7 October 2017).

Is the buy-to-let market a property bubble waiting to burst?

GLC warns MSPs that Private Tenancies Bill would give tenants a 'zero hours contract' on their home unless amended

Govan Law Centre gave oral evidence before the Scottish Parliament's Infrastructure and Capital Investment Committee on 18 November 2015, along with the Legal Services Agency, the Law Society of Scotland, COSLA, ALACHO and the City of Edinburgh Council. The Official Report of the meeting is available online here.

Giving evidence on behalf of GLC, Mike Dailly said: "The aims of the Private Housing (Tenancies) (Scotland) Bill were good but there were too many mandatory grounds for landlords to evict tenants. It is the equivalent of giving a tenant a zero hours contract on their home."

"As a matter of principle and economic prudence, Govan Law Centre does not believe an ever-increasing PRS is capable of meeting Scotland’s housing need. The sector falls short of being fit for purpose at present. We support UNISON Scotland’s proposals for encouraging pension funds to invest in building good quality affordable housing for rent."

"The private rented sector in Glasgow has grown in recent years and it can be summed us as 'A tale of two cities.'  For those who can afford higher rents there is choice and more good properties available but for those who have no alternative it is a bad experience. The executive looking to move home for a job would have good choice because he has good income but lots end up in private rented homes because they have no other choice."

The ICI Committee is taking oral evidence from the Minister for Housing in Scotland on Wednesday 2 December 2015, and will thereafter prepare its Stage 1 Report on the Bill in January 2016.

GLC warns MSPs that Private Tenancies Bill would give tenants a 'zero hours contract' on their home unless amended

Powerless: no expectations, choice or security - Govan Law Centre's research report on the experience of tenants in Scotland's private rented sector

Govan Law Centre's research report, funded by the Big Lottery in Scotland, on the experience of tenants in Scotland's private rented sector has been published online (full link below).

We searched out and listened to the personal experience of a wide range of tenants in Glasgow’s private rented sector.  Our report is their story. Their voice represents a common experience which we have no reason to believe is not replicated across Scotland and the UK.

Our study, funded by the Big Lottery in Scotland, reveals that most tenants feel powerless and worry that they have little more than a month’s security of tenure.  Learning from their experience, GLC's report makes a number of major law reform, practice and policy recommendations.

http://www.govanlc.com/powerless.pdf

We do not believe the Scottish Government's Private Rented Housing (Tenancies) Bill, published last week, as currently drafted is capable of tackling the many problems our report evidences and identifies. We hope the Bill can be amended in order to give Scotland private rented sector tenants a little power, choice and security in their relationships with private landlords.

Coverage of GLC's report in the media:
Evening Times Special Report 
The Herald
The Herald Opinion 

Powerless: no expectations, choice or security - Govan Law Centre's research report on the experience of tenants in Scotland's private rented sector

Back to the future? Scottish private sector tenancy reforms would leave tenants in a worse position than those in 1980

Govan Law Centre (GLC) has expressed dismay that the Scottish Government's proposed private sector tenancy reforms are considerably more regressive for tenants than the then Conservative Government’s introduction of the short assured tenancy in Scotland some 34 years ago.

The Government's proposals are set out in its document, 'Consultation on a new tenancy for the private sector'. The proposals appear progressive at first glance, with the suggestion of abolishing the 'no-fault ground' for eviction in short assured tenancies, however, when one reads further it becomes apparent the provision of greater security of tenure for tenants is wholly illusory as the Scottish Government set out eight new mandatory grounds of eviction that would enable landlords to choose to evict on the flimsiest of reasons.

In GLC's response to the consultation response we argue that the mandatory repossession grounds undermine the entire policy exercise:

In relation to rent arrears, the proposed ground 6 (three months’ arrears of rent) is in direct conflict with the will of the Scottish Parliament in legislating in the Homelessness etc., (Scotland) Act 2003 to provide a reasonableness defence for the current three months arrears of rent (ground 8, schedule 5, Housing (Scotland) Act 1988). Where is the evidence now that this defence should be repealed in relation to rent arrears which may be due to housing benefit errors or delays."

"The proposed new mandatory grounds 1 to 3 are couched in very weak language: the use of the word ‘want’ sets the bar very low. For example, it would not be necessary to provide evidence that a house was being marketed for sale, or that the mortgage lender had required a sale to repay the lending secured over the property.  Instead, all that would be required to evict a tenant in the private sector is that the landlord ‘wanted’ to move back in, or sell, or that their lender wanted to sell. In other words, there would be no need to establish an actual sale was taking place or that the landlord really did need to and was moving back into the property".

"Ground 4 is even more open to exploitation by landlords to the detriment of tenants: all that a landlord need say is that he or she intended to ‘refurbish’ to evict a tenant/family. What is ‘refurbish’? It might never materialise, or indeed it could be as little as painting a wall or installing a new sink. Why should this be a mandatory ground of eviction?"

"Ground 7 makes provision for a mandatory ground of repossession for ‘anti-social behaviour’. If the anti-social behaviour was a symptom of an illness or behaviour that had since been modified why should the tenant be subject to mandatory repossession? The requirement on the court to consider reasonableness is an essential requirement to ensure fairness and justice."

"Ground 8 enables a mandatory ground of eviction where the tenant has otherwise breached the tenancy agreement. Without the common sense protection of a defence of ‘reasonableness’ will tenants be evicted for the most minor contractual breaches?

Finally, we note PRS evictions will no longer be dealt with by the Sheriff Court and instead will be dealt with by the First Tier PRS Tribunal. This change in policy (for reasons of cost savings) does concern us because losing the roof over your head is such an important issue that it should be dealt with by an experienced and more senior judge.  We also question how can PRS Tribunals be seen to be genuinely impartial when their chairs are often part-time judges employed or engaged by landlords in private practice to undertake eviction actions?"

Back to the future? Scottish private sector tenancy reforms would leave tenants in a worse position than those in 1980

Housing (Scotland) Bill fails to meet the needs of homeless Scots, young people and those suffering from mental health problems

GLC's Garry Burns (right); Paul Brown, Legal Services Agency;
Michael Clancy, Law Society of Scotland

Govan Law Centre (GLC) were invited to give evidence to the Infrastructure and Investment Committee this week (22 January 2014) in relation to the proposed Housing (Scotland) Bill (a BBC video of the Parliamentary evidence session can be viewed here: http://www.bbc.co.uk/democracylive/scotland-25843753 )

GLC advised the committee that although Glasgow was unique in Scotland with regards to its homelessness problems that the figures for the rest of Scotland don’t tell the true story. That the problem with hidden homelessness (that is homelessness that is not officially recorded) is an issue across the whole country.

In our view, the consultation process had to be far more thorough and inclusive as there was no input from people who were vulnerable or at a disadvantage, nor were there any consultations with young people or young people’s organisations.

Adjusting the “reasonable preference” in the manner put forward by the Bill's policy would be to the detriment of future applicants for social housing. By not awarding those who are living in overcrowded conditions or are living in intolerable standards, reasonable preference families will suffer. RSL's are charities, who have enjoyed significant public subsidy, and as such have an obligation to society, one of those obligations should be to offer tenancies to those who are living in houses which don't meet the tolerable standard. 

RSL’s having more power in suspending peoples housing applications for previous misdemeanors in housing for an undefined period would in our view be an erosion of a housing applicants rights.  The extension of powers for RSL’s to convert tenancies into SSST is giving RSL’s too much power over their tenants. There doesn't appear to be any significant evidence for further erosion of tenants’ rights. ASBO are a serious matter and the rights of all tenants have to be met, however essentially tripling the length of time through which a family or individual has to have a very real and serious threat of eviction over their head is not something we feel should be in this Housing Bill.

In relation to private landlords, GLC believe that far too often police do not take action on unlawful evictions and action should be taken to resolve this issue. Where landlords have carried out illegal evictions which is a criminal offence, GLC would like to see serious repercussions for such actions. This could include empowering private landlord registration scheme operating in local authorities to have more powers of enforcement than they currently have. There is also to possibility that criminal charges can be brought against landlords who commit crimes when evicting tenants.

We also believe that private rents are excessively high for tenants, particularly if they are on low or modest incomes. The Scottish Government should carry out a review into private sector rents and use their powers to curb rents which are unaffordable to those on low or modest incomes. By creating fairer rents there would also be a significant saving to the taxpayer if the tenant is on benefits which pay for their housing.

Govan Law Centre is grateful to have been invited to give evidence the committee and hope that our recommendations are considered and implemented. If the intention of the Scottish Government is to enact housing policy that is more socially just for all, then the Bill as it stands is very far from achieving this. Far more research and consulting has to be done with those who are hit hard by high rents and are excluded from social housing. The Bill thus far mostly seems to fit the needs of RSL's at the expense of tenants and potential tenants.

Housing (Scotland) Bill fails to meet the needs of homeless Scots, young people and those suffering from mental health problems