Case Study
New Rules Could Help Debt Recovery for Landlords
Monday 23rd June 2008
The Scottish Executive has announced that as of 14 January 2008, the limits for both Small Claims and Summary Cause actions raised in the Sheriff Court will increase. This will mean that in the vast majority of cases landlords will be able to raise actions for payment of the full amount of a tenant's rent arrears, without the need to restrict the amount sued for, where these arrears exceed £1,500 and the action is combined with eviction.
The upper limit for a Small Claims action will rise from the current limit of £750 to £3,000. The upper limit in a Summary Cause action will rise from £1,500 to £5,000. This is the first time the limits have risen in nineteen years, and marks a positive change in the way actions for payment and recovery of possession will proceed for registered social landlords.
Actions for recovery of possession must continue to be raised under the Summary Cause procedure. However, the rise in the upper limit now means that where payment of arrears is also sought, the payment part of the decree need no longer be restricted to £1,500. Historically, landlords have often had to write off a large part of the arrears accrued where those arrears have been over the £1,500 limit. Any amounts over £1,500 currently have to be raised as an Ordinary action, which is a more lengthy and expensive process. A separate eviction action would also have to be raised. This means that landlords more often restrict an action to £1,500 with eviction, rather than incurring the additional legal costs of raising an Ordinary action. The new limit of £5,000 now means that in the vast majority of cases all of a tenant's rent arrears can be pursued under a Summary Cause action, rather than having to restrict the amount sued for to avoid the increased time and cost involved in an Ordinary action.
Example: Mrs Smith has accrued rent arrears totalling £3,000. Her landlord raises an action for recovery of possession and payment. Under the current limits, this action would be raised under the Summary Cause procedure with the amount sued for restricted to £1,500. Under the new limits, the full amount of £3,000 can be sued for together with eviction.
These new limits will apply to all proceedings raised on or after 14 January 2008. Where proceedings have been raised before this date, the amount sued for cannot be amended to take into account the new limits.
If you would like further information please contact:
Shirley Evans: spe@tcyoung.co, 0131 220 7660
Andrew Cowan: asc@tcyoung.co, 0141 221 5562
Jim Bauld: jdb@tcyoung.co.uk, 0141 221 5562
Ruth Johnston: rej@tcyoung.co.uk, 0141 221 5562