Landlords face fines of up to 36 months’ rent under government plans

A proposal that landlords be fined up to 36 months rent has been put forward in a consultation paper.

The Scottish Government’s ‘A New deal for Tenants’ proposal says it is introducing fines of up to £25,000 for landlords’ if there has been an unlawful eviction - however, a leading agent suggests the reality could be much larger.

DJ Alexander Ltd - part of the Lomond Group which is the largest lettings and estate agency in Scotland - says the consultation paper is proposing “to remove the current process for calculating damages for an unlawful eviction and replacing it with a multiple of the monthly rent in line with the approach taken in relation to wrongful termination orders.”

The proposal continues by saying: “ This would better empower tenants to seek redress where a landlord does not follow the correct legal process for ending a tenancy.”

According to the paper this means that landlords can be fined up to 36-months’ rent if there is an unlawful eviction which they calculate as thirty-six times the average Scottish rent of £693 which works out at £24,948. 

But DJ Alexander’s chief executive - prominent agent David Alexander - says this figure could be considerably higher since it is based on up to 36 times the rent the tenant actually pays so in Edinburgh this could be nearer £40,000.

Section 37 of the Housing (Scotland) Act 1988 currently sets out the mechanism for the valuation of damages where an unlawful eviction has occurred. This requires a surveyor’s valuation which often results in a nil valuation. 

Therefore, the Scottish Government proposes that, as “Only a small number of cases have therefore ever been taken. Reform would help to simplify the process for a tenant to challenge an unlawful eviction increasing access to justice. This would in turn deter landlords from carrying out an illegal eviction as the risk of challenge and penalty will be higher.”

“The level of damages should reflect the seriousness and negative impact on the tenant, of an illegal eviction. For example, the Legal Services Agency (LSA) proposal suggests a minimum of six times and a maximum of thirty-six times the monthly rent should be set. Other examples of this type of approach currently in use are penalties in relation to a wrongful termination order would be a maximum of six months’ rent.”

The paper goes on to ask: “What other ways can we make it easier and more attractive for victims of illegal eviction to seek redress and exercise their rights.” And it proposes “further use of fines. Such an approach is likely to help establish a clear principle that it is a significant financial risk for a landlord to evict illegally.”

David Alexander says: “We can see from this consultation paper that the intention of the Scottish Government is not to produce a bill which is of equitable value to all involved in the private rented sector but to vilify and attack landlords and property investors and put all rights in favour of tenants.

“The majority of those involved in the private rented sector (PRS) only evict as a last resort and would never consciously initiate an unlawful eviction yet this paper seems to imply that this is a daily event and standard practice for landlords and agents. 

“The constant vilification of the PRS by the Scottish Government runs the risk of frightening many landlords and investors out of the market into property south of the Border or out of the sector altogether. If this is the intention of the Scottish government then that is fine, they must do what they think is appropriate and explain afterwards where they will place the 700,000 plus tenants that currently live in the PRS in Scotland.”

The Scottish Government consultation proposes further punitive actions as “It is currently a criminal offence for landlords not to update their landlord registration details where there is a change in circumstances. However, in practice, we know this is not a particularly effective deterrent given police capacity - therefore, a more productive deterrent may be to consider the introduction of Rent Penalty style notices by the body who will collect the data. A Rent Penalty notice is a legal notice that suspends the rent liability of the tenant(s) of a property.”

The Scottish Government acknowledges in the paper that the Private Rented Tenancies Act introduced sweeping reforms which meant that private tenants now have more protection in Scotland than any other part of the UK but “we have been monitoring the impacts and now is the time to strengthen the parts of it that have not worked as anticipated.”

David Alexander continues: “That the paper states ‘What other ways can we make it easier and more attractive for victims of illegal eviction to seek redress’ indicates this is not so much a consultation but an edict to give all power to tenants and remove any rights from landlords, property investors and owners of rented properties in Scotland. 

“Again, if the Scottish government feels that it does not need to negotiate or treat the private rented sector fairly then that is their choice. Those who provide the 340,000 homes in Scotland in the private rented sector are a flexible and mobile group of investors who can, and will, move if punitive and unfair legislation drives them out.”

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