Budget 2021: What does it mean for landlords?

Chancellor Rishi Sunak's busy Budget statement contained no direct 'giveaways' for landlords - however, there were a number of measures which may have an indirect impact.

Carly Stewart, a Senior Solicitor & Solicitor Advocate in our Dispute Resolution team, looks at what the announcements mean for landlords here in Scotland.

The Covid-Recovery budget announced by Chancellor Rishi Sunak this week provides for the extension of furlough, the Job Retention Scheme and the £20 increase on Universal Credit. These measures go some way to easing the financial burden on tenants, with the hope that will assist them in meeting their rental payments. Do they go far enough to ease the pain for many landlords who have received reduced or even no rent for almost a year now? 

The Stamp Duty Land Tax savings in England for buy to let properties have been extended until later in the year with the threshold reducing from £500,000 to £250,000 in June, and reducing again to £125,000 in September. There has been a steady increase in the demand for rental properties. 

The SDLT relief south of the border may allow private landlords to satisfy that demand. But in Scotland, the SDLT relief currently in place is due to end at the end of March 2021 and the Scottish Government has decided not to extend it. One wonders how the demand for private rented housing stock in Scotland will be satisfied if Scottish Landlords have received little financial support in the face of reduced rental income and are not to benefit from the tax savings being offered south of the border. 

Evictions

At present there are effectively 4 sets of measures in place to guard against eviction in the private rented sector:

1. The notice periods for termination of a lease have been extended to 6 months in most cases (3 months in some cases);
2. Landlords must comply with new “pre-action requirements” before seeking an eviction order, including provide the tenant with debt advice and trying to work with the tenant to come up with a rent repayment plan;
3. There is now a “reasonableness” test to be satisfied before an eviction order will be granted. The reasonableness test will not be satisfied if the pre-action requirements have not been complied with; and
4. There is a ban on the carrying out of evictions. 

Measures 1 to 3 are in place until the end of March 2021 but it is anticipated they will be extended further, perhaps to the summer or the end of September. Measure 4 is also in place until the end of March. This measure is more likely to be guided by the health pandemic and may continue to apply to certain areas of the country depending where they sit in the “Tier” system. 

What can landlords do?

There is a common misconception that the widely-publicised “ban on evictions” means a landlord can do nothing. That is not the case. It is still competent to serve notices, raise a tribunal application and have an eviction order granted. 

It is only the physical carrying out of the eviction by sheriff officers that is temporarily on hold for public health reasons. Given the extended notice periods still in force, it is important to (1) issue any notices and (2) engage with the tenant through the pre-action procedure just as soon as possible.

It is also very important to note that if you have previously served a notice, tribunal proceedings for eviction must be commenced within 6 months from the expiry date of the notice, otherwise the notice will fall and it will be necessary to start the whole process again with a new notice. 

 If you would like more detailed advice, feel free to email Carly by clicking here