Private landlords in Scotland are advised to act reasonably when interacting with tenants who are unable to make rent payments due to the coronavirus pandemic. By working cooperatively to strike an agreement, the interests of both parties can be fulfilled.
If you are unable to negotiate repayments or provide enough flexibility, there are government support measures in place which can provide relief to tenants in financial difficulty. By providing a gateway to this information, you can help change the lives of tenants struggling to pay rent.
Financial Support for Tenants
As a starting point, Universal Credit can help low-income tenants access financial support, including housing costs. If a tenant is eligible for Universal Credit, they can take advantage of a housing payment which can be used to pay landlords. In Scotland, this can be transferred directly to the tenant, either once or twice a month. Alternatively, this can be paid to the landlord through an Alternative Payment Arrangement (APA).
If the tenant cannot afford to pay rent after receiving Universal Credit, they may be able to apply for a Discretionary Housing Payment (DHP). This is facilitated by the local council, so the tenant should be referred to their local council for more details on eligibility and the application process.
Tenant Hardship Loan Fund
The Scottish Government established a £10m Tenant Hardship Loan Fund for tenants who cannot afford to pay their rent as a result of change in employment circumstances or their finances due to the coronavirus pandemic. This loan can be used to clear rent arrears dating back to 1 January 2020; but, it can only be used to cover a maximum of 9 months’ rent arrears.
The loan also provides short-term support to tenants to help them gradually return to making full repayments. As employment uncertainty due to the coronavirus pandemic continues to threaten livelihoods, the Scottish Tenant Hardship Loan Fund provides a financial cushion to tenants in serious financial difficulty.
For the loan to be awarded, tenants will need to pass a credit check and affordability check. This ensures that they have the financial ability to make repayments. The loan administrator will contact the landlord or the landlord’s letting agent to confirm the tenants current financial situation, such as monthly rent, outstanding rent, and corresponding due dates. They will be required to sign an agreement which confirms that no action will be taken to repossess the property during the agreed loan term under the following grounds:
- Outstanding rent arrears
- Landlord wishes to reside at the property
- Landlord’s family wish to reside at the property
- Property is required for a purpose other than housing
Any formal action already taken will also need to be withdrawn.
Tenants were granted further housing protection during the coronavirus pandemic as part of the Coronavirus (Scotland) Act 2020, currently lasting until the end of February 2020. The new rules mean that landlords must give tenants at least six months’ notice before commencing legal proceedings for eviction. If the tenant disagrees, you must wait for the eviction notice period to end and ask the First-tier Tribunal for Scotland Housing and Property Chamber for an Eviction Order. You will need to fulfil pre-action requirements before an eviction order can be granted. Landlords should note that no eviction orders can be enforced within level three and level four areas until 31 March, be aware, this is reviewed every 21 days. Exemptions are in place if the tenant demonstrates illegal, antisocial, or criminal behaviour.
If your tenant is on low income and is unable to afford housing costs, they may be exempt from paying Council Tax. Council Tax Reductions are also available for single-person households, disabled people, and students in Scotland.
The rules concerning landlord and tenant rights vary in Scotland, so this should be taken into consideration. Temporary Covid-19 measures are likely to be extended in light of further uncertainty due to the coronavirus pandemic and are subject to regular reviews. If tenants are claiming the Discretionary Housing Payment, eligibility may vary due to individual council rulings. As businesses experience severe cash shortfalls, this is likely to impact employees and their ability to make rent payments, so flexibility should be reasonably exercised where appropriate.
Sharon McDougall of Scotland Debt Solutions is a DAS-approved Money Adviser. She is a renowned debt help specialist, providing support to individuals with personal debt problems in Scotland during the coronavirus pandemic.
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