In our recent blog, Claire Mullen explored key changes to the legislation which can be expected once the Housing (Scotland) Bill receives royal assent and becomes law. Here, we take a closer look at forthcoming changes to wrongful termination (WT) provisions which apply to Private Residential Tenancies (‘PRT).
The Current Position:
Since the introduction of PRTs in 2017, the Private Housing (Tenancies) Scotland Act 2016 has enabled tenants who believe they have been mislead into ceasing to occupy their tenancy to raise a claim against their former landlord. Applications can be made to the Tribunal following grant of an Eviction Order or where the tenant leaves the property after receiving a Notice to Leave.
Under Section 59 of the 2016 Act, should the Tribunal grant a Wrongful Termination Order (WTO), the maximum the landlord can be ordered to pay the former tenant is a sum equivalent to six times the monthly rental charge immediately before the tenancy ended.
Where an allegation of WT is made, landlords will often have an explanation and a genuine change in circumstances. WT proceedings can be defended on that basis. When engaging in the Tribunal process to defend a claim for a WTO, the existing legislation provides some degree of certainty in that landlords and representatives can calculate their maximum liability, should the Tribunal find in favour of the tenant.
The position upon implementation of the Housing (Scotland) Bill:
The changes to be introduced in light of the Bill will vastly change landlord’s maximum liability should a former tenant successfully pursue a claim for WT.
Firstly, the amendments mean the Tribunal will calculate financial awards in multiples of the ‘relevant sum’ rather than the rental charge at end of tenancy. The relevant sum will be either the rental charge or £840 whichever is the higher amount.
If the Tribunal determines a WTO should be issued and a financial award is appropriate, the legislation will now stipulate a minimum level, that being three times the relevant sum and the maximum award will be set at 36 times the relevant sum.
Example under existing legislation
PRT starts in 2018 with rent of £500pm
Increased to £650 pm in 2024
Tenancy ended in 2025. Tenant alleges WT
Minimum award = £ NIL
Maximum award = £3,900
Example following the Bill
PRT starts in 2018 with rent of £500 pm
Increased to £650 pm in 2024
Tenancy ended in 2025. Tenant alleges WT
Minimum award = £2,520*
Maximum award = £30,240
*the Bill does include provisions permitting an award lower than the minimum if it considers it appropriate to do so, having regard to all the circumstances of the case
This clearly marks a significant increase to landlord’s potential liability. The exact sum awarded will be determined by the Tribunal taking into account the manner of the wrongful termination and the impact that it has had on the tenant. It remains to be seen whether the changes will incentivise former tenants to raise WT applications with the Tribunal. Landlords who have experienced a change in circumstances following issue of a notice to leave or grant of an eviction order are encouraged to seek legal advice promptly.
