Scotland to move on 'no-fault' ground for repossession

While we wait for the statutory review of the Residential Tenancies Act 2010 to formally commence in New South Wales, we couldn't help but notice this recent snippet from the Scottish Government's programme for 2015-16 (find it on page 71 of this download)

The Private Tenancies Bill will increase security of tenure for tenants while providing appropriate safeguards for landlords, lenders and investors. This is part of the Scottish Government’s broader approach to reforming the private rented sector to make it a more professionally managed and better regulated sector, that provides good quality homes, and is attractive to those who want to live, work and invest in it. Specifically, the Bill will: 

• Introduce a Scottish Private Rented Tenancy to replace the current Assured system. 

• Remove the ‘no-fault’ ground for repossession, meaning a landlord can no longer ask a tenant to leave simply because the fixed-term has ended. 

• Provide comprehensive and robust grounds for repossession that will allow landlords to regain possession in specified circumstances. 

• Provide more predictable rents and protection for tenants against excessive rent increases, including the ability to introduce local rent controls for rent pressure areas. 

• Create a more streamlined, clearer to understand tenancy system that is fit for the modern private rented sector.

Now, without the benefit of the Bill in all its detail, all we can say is - what a great bunch of ideas! In fact, some of these are not so different from those we've suggested in our recent report on our own legislation. From our report:

The most significant way the Act undermines tenants’ housing choices is by allowing landlords to end tenancies without grounds. Section 84 of the Act allows a tenancy to be terminated with only 30 days notice at the end of a fixed term, and section 85 allows a periodic tenancy to be terminated with 90 days notice, without requiring a specific reason. Landlords do not need to prove or even justify their reason for termination – they simply hold the right to end tenancies on their say so. 

Put another way, tenants can be made to move – at considerable personal and financial cost – without a good reason. Or, as is more likely, for a bad reason, because there is always a reason to end a tenancy. These provisions become landlords’ trump card, and tenants are acutely aware of this. In our 2014 Affordable Housing Survey, 77 per cent of respondents said they had put up with a problem, or declined to assert their tenancy rights, for fear of an adverse consequence. 

But it’s not just a question of whether tenants will baulk at raising concerns with a landlord. It is a common occurrence for tenants to receive a notice of rent increase with a no-grounds notice of termination in the same envelope, inviting them to choose which one they prefer. Nor is it unusual for tenants who take their landlord to the Tribunal, on matters of performance of residential tenancy agreements, to receive a no-grounds notice of termination some time thereafter. We are aware of one occasion where a real estate agent served a no-grounds notice of termination in the lifts on the way out of the Tribunal; and another where an agent drafted a no-grounds notice of termination and handed it to the tenant before the Tribunal member had finished delivering a decision on an application for repairs. 

The ‘termination without grounds’ provisions affect more than just whether tenants can make informed choices about where they will live, and for how long. They serve as a constant reminder to tenants that their hold on property is tenuous, and only ever at the will of the landlord. They actively undermine the objective of ensuring tenants are empowered to enforce their rights. 

The TU proposes a change to the Residential Tenancies Act 2010 to amend sections 84 and 85 to remove the option to end tenancies without grounds, and instead provide an expanded list of grounds. This could include circumstances where the landlord requires the property for another legitimate purpose, or where the property is to be renovated such that vacant possession is required. The question should be: does the landlord’s purpose require the recovery of vacant possession, or could it be affected without displacing a sitting tenant? Such a question should be subject to rigorous oversight by the New South Wales Civil and Administrative Tribunal, and the Tribunal should have discretion to decline to make termination orders where appropriate. This discretion should be available to the Tribunal even where a landlord’s grounds for termination are made out, in circumstances where the tenant’s need to remain in occupation outweighs the landlord’s need to recover possession. 

This expansion of grounds would be in addition to those that already appear in the Act, such as the tenant being in breach of the residential tenancy agreement (for fixed term and periodic tenancies) and where vacant possession is a condition of sale (for periodic tenancies). We note this would build upon and improve the model in the Tasmanian Residential Tenancy Act 1997.

... and, we now note, our proposal is in keeping with the Government of Scotland's programme for 2015-16. If the NSW Minister for Innovation and Better Regulation - who has responsibility for Fair Trading as part of his portfolio - doesn't act quickly on this one, he might just be playing catch-up before too long.