Campaigners for fairer, cheaper housing in Scotland have hailed the sweeping reforms to tenant’s rights in the country as “a new dawn” for anyone who is already renting, or thinking about it.
New changes to Scottish rental reform will simplify leases and create greater equity. Since the changes came into force, many are now wondering if the rest of the UK will follow suit. Either way, the Scottish reform teaches several important lessons, which we’ll go into in more detail below.
Leases with set end dates don’t work
Scotland’s reform eliminates leases with a set end date. For example, before reform, a 12-month lease would be set to end on an arbitrary date, usually around the 1st of the month. This arbitrary date hurts both the landlord and the tenant.
Tenants may need to move before or after that end date. Being forced to move a month or two before they need to can really damage a tenant’s plans and create a hole in their budget. Being trapped in a lease when a family or professional obligation comes about can be even more detrimental to the tenant’s finances and force them to make terrible decisions.
Landlords are also placed in a quandary because if they need to sell the property or plan to move into it themselves, their plans can be held up by a tenancy, costing them money. In an emergency, this could become devastating.
The reformed tenancy agreements require tenants give 28-days notice to end the lease and landlords give 84-days notice. The reform also spells out reasons that landlords can end the lease, including desire to sell or move into the property. Landlords only need to give 28-days notice in cases where the tenant defaults on the lease agreement.
Rent increases need control
With the new style lease agreements, landlords need a way to raise rents to keep up with inflation. The rental reform provides this through a mechanism that allows landlords to increase rents no more than once in a 12-month period. Tenants who feel their landlord increased their rent unfairly can appeal to a rent officer. Local officials may also introduce rent caps in their areas. Landlords who feel their tenant has violated lease terms can appeal to a tribunal. This process also provides a simplified eviction process.
Rent welfare must be paid flexibly and more frequently
The Scottish government has also implemented a program that increases the frequency of rent-welfare payments through the universal credit system by splitting the monthly payments into fortnightly payments, as The Guardian explains in an article on Scottish housing reform. The fortnightly payments allow recipients to more easily budget for rent, groceries, utilities, and other necessities. Because they are on tight budgets, making the money last for a full month becomes challenging.
The payment change also allows the government to pay the rent directly to the landlord. This change makes life and budgeting easier for the tenant. Relived of the responsibility of managing the rent payments, they can more easily focus on other expenses.
Tenant farming leases need reform
In an article for Farmers Guardian, Ewan Pate explains that a new government report concludes that, farmer’s rent needs to be reformed. Under the current system, landlords base the rent for tenant farmers on the market rate, according to prices in the area. The report concludes that this disadvantages the tenant farmers because of the imbalances in supply and demand in the rental market.
A proposed new system would base rent payments on the productive capacity of the land. This method benefits both the farmer and the landlord. Because rent prices are based on production, each receives a fair share of the benefit.
Food for thought for anyone renting out a property in the United Kingdom.