Upper Tribunal quashes landlord’s “financial hardship” eviction order

The Upper Tribunal for Scotland has quashed a decision of the First-tier Tribunal (FTT) which had granted an eviction order in favour of a landlord who claimed she had to sell her tenancy property to alleviate financial hardship in case [2024] UT 39.

The eviction ground 1A of schedule 3 of the 2016 Private Housing (Tenancies) (Scotland) Act 2016 was introduced by the Cost of Living (Tenant Protection) (Scotland) 2022 and remained in force until 31 March 2024.

The tenant had been in occupation for over four years with no arrears of rent. A rent relief order was made against the landlord upon the basis of non‐compliance with a repairing standard enforcement order. The landlord owned a number of let properties.

The focus of the tenant and appellant’s appeal was on the soundness of the FTT’s finding in fact no.20, which said: “The applicant [landlord] is suffering financial hardship and requires to sell the property to alleviate same”.

The appellant contended that finding in fact no. 20 lacked sufficient evidence to support it under reference to Advocate General for Scotland v Murray Group Holdings Ltd [2015] CSIH 77; 2016 SC 201 at [43]; Henderson v Foxworth Investments Ltd [2014] UKSC 41; 2014 SC (UKSC) 203 at [67]; and Thomas v Thomas 1947 SC (HL) 45 at 48.

The appellant also argued that the FTS fell into error in proceeding to invoke rule 18 of the 2017 regulations as key facts remained in dispute.

In quashing the FTT’s eviction order and remitting the case to a differently constituted tribunal Sheriff Kelly held that: “[47] There was no evidence about the applicant’s overall financial picture. There was no evidence as to how this particular property and its mortgage liability fitted in with the complete financial picture of the applicant. Absent additional information about her overall financial position, the viability of the applicant seeking a fresh mortgage in light of the value of the property and its potential rental income could not be assessed. The FTS failed to gather a full picture of the applicant’s financial situation or circumstances”.

“[48] As the FTS noted “financial hardship” is not defined the 2016 Act. The FTS’ assessment of that factor ought not to be restricted to an assessment of financial hardship in respect of this property alone. In certain circumstances, the FTS assessment of financial hardship may not require all of the material referred to in the FTS communication of 22 June 2023 to be produced and analysed. If there was information omitted, the FTS would have to explain why nonetheless it could arrive at a view on the applicant’s financial hardship. Here the FTS have assessed the financial position in isolation. It looked at the value of the property, the term of the mortgage and the sum required to redeem it and relied upon the submissions of the agent about the feasibility of that position altering. Its acceptance of that position over the appellant’s submission is not reasoned in any way”.

The appellant was represented by Mike Dailly, Solicitor Advocate as instructed by Govanhill Law Centre’s Legal Caseworker, Lyndsey McBride. The landlord and respondent was represented by Mr Deen of Apex Services, Glasgow.

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