Wednesday, February 10, 2016

Scotland set to fluff it?

Back in September we saw that the Scottish Government was getting set to move on their 'no-fault' ground for eviction. But as the story develops, it's starting to look like a study in how not to reform renting laws for the better. A number of new grounds to end a tenancy are being considered in Scotland, to replace the "no fault" provision. These include where the landlord intends to sell, move a family member in, or use the property for a non-residential purpose. Termination would be mandatory if these grounds are used.

In commenting on the proposed changes, Shelter Scotland urged the Government to consider a "reasonableness test" to ensure the new grounds for termination would not simply become a tick box exercise for private landlords. And a solicitor from the "independent, community controlled" Govan Law Centre, Mike Dailly, said:
What we will see in Scotland is evictions where landlords 'intend' to move in a member of their family, put the property on the market for sale, refurbish or stop letting. These intentions will guarantee the automatic eviction of tenants, but we all know most of these intentions will never materialise.
We're inclined to agree. From what we've seen, the Scottish proposal gets it wrong on two counts - the grounds for termination are mandatory, and they are too vague.

A good renting law would give landlords a number of reasonable grounds upon which to end a tenancy, while ensuring that tenants can ask a Tribunal to consider both the veracity of the ground relied upon, and whether there are any other circumstances that should be taken into consideration in any specific case. Tribunal orders that terminate a residential tenancy agreement should always be discretionary, even where the grounds for termination are made out. When it comes to ending tenancies the stakes are higher for tenants than for most landlords - it's far more disruptive to have to find a new home than to make adjustments to dealings with property. But, in order for this discretion to be meaningful, grounds for termination should go beyond a mere intention.

The experience of tenants in Tasmania paints a useful picture to illustrate this. The Tasmanian law says a tenancy can end because "the premises are to be sold or transferred to another person". In the Autumn 2015 publication of their newsletter Rent Rant, the Tenants' Union of Tasmania wrote about their provisions:
One ground is that the premises are to be sold. However, what exactly does the phrase ‘the premises are to be sold’ mean? According to one recent decision of the Magistrates Court, the definition includes an intention to sell. If this decision is adopted by all Magistrates there is a range of activities that an owner can engage in to satisfy the requirement that a residential property is to be sold ... In a case recently heard by the Magistrates Court a tenant was served with a notice to vacate and disputed it, as the owner had neither signed a sale contract nor advertised the premises in any way. However, there had been an agreement made with an agent to sell the property for the owner, signed by both owner and agent. They agreed on selling the house vacant. The Magistrates Court subsequently found that the notice to vacate was valid and made an order for vacant possession.
The Tasmanian legislation also gives discretion to a court when making vacant possession orders, around whether the reason for giving notice was "genuine or just". But if the ground itself can be reduced to a vague notion of intent rather than action, it does not lend itself to useful consideration of this discretion.

This contrasts with our own law in New South Wales, which says a tenancy can end "on the ground that the landlord has entered into a contract for sale of the residential premises under which the landlord is required to give vacant possession of the premises" (our emphasis). It also gives the Tribunal discretion, so that if a landlord enters into a sham arrangement for sale - and the Tribunal becomes satisfied of this during termination proceedings before it - the Tribunal could decline to end the tenancy.

The New South Wales Government is currently reviewing our own renting laws, and the Tenants' Union is calling for the removal of terminations without grounds. Our position includes the expansion of grounds for termination, along with the retention of tenants' ability to test grounds for termination in the Tribunal. Grounds need to be specific, along the lines of the NSW current renting law's ground that the property is for sale. Grounds need to be contestable, such that a tenant is given the opportunity to request evidence in relation to the landlord's actions. And where appropriate, the Tribunal needs to be able to decline to make termination orders even where the grounds are made out.

We might now be looking to Scotland as an example of how not to proceed. On this point, we'll give the last word to the Govan Law Centre:
We had really hoped the Scottish Government would have listened to the advice of the Scottish Parliament's Committee, which had carefully considered evidence from a wide range of tenant bodies, homelessness charities and advice agencies, and cautioned against these mandatory grounds of eviction. Sadly they have sided with the interests of private landlords; and of which many elected members are.

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