With the changing legislative landscape for landlords, there is empirical and substantial anecdotal evidence to suggest that landlords are seeking to recover possession more and more for reasons other than for rent arrears. Whether that be to sell properties to exit the private rented sector (in whole or part) or to recover a property for themselves or for family members. Beyond that, the use of grounds seeking recovery of properties to renovate or carry out substantial works is also increasing. With that in mind, the Upper Tribunal has recently issued an interesting decision found here setting out what the correct approach the First-tier Tribunal should take when approaching such claims.
What was the case about?
The landlord sought possession of the property, which was let under an assured tenancy, in terms of Ground 6 of Schedule 5 of the Housing (Scotland) Act 1988. Ground 6 applies where a landlord “intends to demolish or reconstruct the whole or a substantial part of the house…”. Ground 6 is subject to the condition that the landlord “cannot reasonably carry out the intended work without the tenant giving up possession of the house..” because of various reasons set out in paragraph 6b) of Ground 6 which include that, even if the tenant accepts a variation of the tenancy, the work still cannot be carried out or that they refuse to grant such a variation. The basis of the notices served in this case was that the landlord wished to carry out extensive works including fitting central heating, providing a new water supply, new bathrooms and kitchens and remodelling the house to add rooms and extending it. In the first instance, the First-tier Tribunal (FTT) refused the application, primarily on the basis that they had “substantial questions” about the landlord’s intention to do the works because of an expressed desire to transfer the property to his stepson to live in with his family. The landlord appealed to the Upper Tribunal. The Upper Tribunal, in granting the appeal, looked at the decision of the FTT and set out where they had erred in their approach to the case and Ground 6.
What did the Upper Tribunal decide?
Whilst there are various aspects to the decision setting out why the FTT erred in law, the Upper Tribunal confirmed that correct approach when assessing the landlord’s intentions is whether the landlord has a “firm and settled intention to carry out the works” and the landlord’s purpose or motive for such works is irrelevant. That would presumably also be the case where the intention was to subsequently sell the property after renovation. In this case, the FTT was criticised because they were guilty of “speculation” and approaching the case incorrectly when they made a finding (without any evidential basis) that the landlord would transfer the property to his stepson without carrying out the works and failing to properly address the question of the landlord’s intentions in their findings. The Upper Tribunal further stated that there was “nothing suspect” about a landlord seeking to dispose of the property in the future and that the desire to transfer the property to his stepson was a “legitimate exercise of the Appellant’s right to dispose of his property as he sees fit”. FTT were also criticised for seeking to impose an obligation on the landlord to consider how the works might be carried out without the tenants giving up possession rather than addressing whether the works could not reasonably be carried out without vacant possession. The Upper Tribunal set out the appropriate approach being that when considering ground 6, a tribunal should determine:
- Whether a landlord intended to carry out the proposed works;
- Whether those works could not reasonably be carried out without the tenants giving up possession;
- That none of the alternatives to eviction as set out in paragraph 6b) of schedule 5 applied; and
- The reasonableness of granting an order for possession.
As mentioned, there were many more aspects to this case where the FTT’s decision was found lacking, including in their approach to the question of reasonableness. For example, the Upper Tribunal criticised the FTT for making a finding that one of the tenants who was 57 years old was “elderly”, for not taking into account £13,000 worth of rent arrears and failing to explore the contradiction between their finding that the tenants would inevitably be made homeless if the order was granted and the tenant’s evidence that they intended (and presumably were able) to purchase the property, as well as considering the extent to which the landlord’s proposed works exceeded those required for a Repairing Standard Enforcement Order for the property (the existence of a RSEO being no bar to possession being granted).
Overall, in reading the Upper Tribunal decision it is hard to escape the conclusion that the whole approach of the FTT to this application had been fundamentally flawed and at the time of writing the Upper Tribunal was still to determine further procedure and whether the case was to be remitted back to the FTT to be redetermined or even whether it is in the interests of justice for the Upper Tribunal to hear fresh evidence in this case. However, the case gives some useful guidance on seeking possession under Ground 6 and makes it clear that a landlord’s future intentions (so long as those intentions are legitimate) for the property after renovation (including to sell) are not something a tribunal ought to take into account unless it has a direct bearing on whether the landlord intends to do the proposed work.
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