Can You Rent A Property While You Are Sequestrated In Scotland?
Your tenancy does not pass to the trustee. Section 79(3) takes a private residential tenancy, an assured tenancy, a protected tenancy and a Scottish secure tenancy out of the estate.
Your landlord cannot simply end the tenancy either. Section 51 of the Private Housing (Tenancies) (Scotland) Act 2016 confines the First-tier Tribunal to the eviction grounds set out in Schedule 3 to that Act.
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Free, confidential and no obligation.That is a better answer than most readers expect, and it is not the answer the ranking pages give. Two sections of statute do the work, and almost nobody writing about this cites either.
What does change is the money. Rent arrears you already owe are treated completely differently from rent falling due from now on, and what discharge writes off is the provision that separates them.
Does your tenancy pass to your trustee?
No, and this is the point the whole article turns on. Section 79(3) of the Bankruptcy (Scotland) Act 2016 takes a tenant’s interest under four kinds of tenancy out of the estate that vests in the trustee.
The four tenancies, and they cover almost everyone
| The tenancy | Who holds one | Where it comes from |
|---|---|---|
| A private residential tenancy | The standard private let since 1 December 2017 | Section 79(3)(d) |
| An assured tenancy | A private let granted before that date, including a short assured tenancy | Section 79(3)(a) |
| A Rent Act protected tenancy | An older regulated tenancy where no premium can lawfully be required on assignation | Section 79(3)(b) |
| A Scottish secure tenancy | A council or housing association let | Section 79(3)(c) |
| The qualifier that travels with all four | The tenancy comes into the estate on the date the trustee serves notice to that effect | Section 79(4) |
Between them those four cover every residential tenancy an ordinary Scottish reader is likely to hold. A short assured tenancy is a species of assured tenancy, so it is inside paragraph (a).
The qualifier you should know about
Section 79(4) lets the trustee serve a notice bringing the tenancy into the estate, at which point it vests as if under section 86(5).
So the exclusion is a default rather than an absolute. Nothing read says when a trustee would serve such a notice, and what a trustee actually does gives the wider picture.
What the Accountant in Bankruptcy says about it
The Accountant in Bankruptcy’s own debtor guide puts it in plain words: if you rent your home, your trustee normally has no interest in the house provided you can show proof it is rented.
That squares exactly with section 79(3), and it is different from what happens if you own your home.
Can a landlord evict you because you have been sequestrated?
Only through the Tribunal, and only on a statutory ground. Section 51(1) and (2) of the Private Housing (Tenancies) (Scotland) Act 2016 confine the First-tier Tribunal to the grounds in Schedule 3, so a landlord has no route outside them.
What section 51 actually says
The First-tier Tribunal is to issue an eviction order if it finds that one of the grounds named in Schedule 3 applies, and section 51(2) says the Schedule 3 provisions are exhaustive of the circumstances in which it may find a ground applies.
So a landlord who wants you out has to name a ground and satisfy a tribunal that it applies.
That is the protection worth understanding, and it is the reason a bankruptcy clause in an agreement is not by itself a route to eviction.
Why we are not printing the list of grounds
The eviction grounds have been amended more than once since the Act came into force, and we have not been able to obtain the current revised Schedule 3. We are not going to tell you what is and is not in it from a version that may have been overtaken.
This matters more than it sounds. Any notice you receive has to name the ground the landlord relies on, and that number is what an adviser will check against the Schedule as it stands today.
What we can say without qualification is the section 79(3) point above. Your tenancy is not an asset your trustee takes and sells, which is the thing most readers arrive here afraid of.
Two cautions we are not going to resolve for you
| The issue | What the source says | Why we are not settling it |
|---|---|---|
| A trustee applying to cap your rent | The Accountant in Bankruptcy's debtor guide says a trustee can apply to the sheriff to set a limit on how much rent you should pay | We searched the 2016 Act for a provision conferring that power and did not find one. Treat it as the Accountant in Bankruptcy's statement, not as a section |
| A bankruptcy clause in your tenancy agreement | Citizens Advice Scotland says some agreements let a landlord end the agreement if a tenant becomes bankrupt | The Tribunal may issue an eviction order on a private residential tenancy only on a ground in Schedule 3, so a clause in an agreement is not by itself a route to eviction. Nobody has published a reconciliation of the two |
| What to do about either | Take your tenancy agreement to a money adviser before you apply | Neither question is settled in published material and neither should be guessed at |
Citizens Advice Scotland’s warning about bankruptcy clauses is worth taking seriously enough to read your own agreement. It also sits awkwardly with the exhaustive grounds, and nobody has published a reconciliation.
Which parts of this we have not looked at
Only the private residential tenancy regime was read for this article. Eviction from a Scottish secure tenancy, or from an assured or short assured tenancy, runs under different Acts we have not checked.
The estate exclusion in section 79(3) covers all four tenancy types. The eviction answer above is about the private residential tenancy only.
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Free, confidential and no obligation.What happens to the rent you already owe?
Arrears at the date of sequestration are ordinary debts in it. Section 145(1) discharges you from the debts and obligations you were liable for at that date, and rent arrears are not on the list of exceptions.
Before and after the award
| The question | Rent owed before the award | Rent falling due afterwards |
|---|---|---|
| Is it a debt in the sequestration? | Yes, as an ordinary debt | No, it is a new debt |
| Are you discharged from it? | Yes, on discharge, under section 145(1) | No. It stays payable in full |
| Who does the landlord deal with? | Your trustee, through a claim | You, in the ordinary way |
| Can it support an eviction action? | The arrears themselves are caught by the sequestration | Unpaid rent is what a landlord would act on, and the Tribunal route runs through Schedule 3 |
| Where does the money come from? | The estate, if there is anything to distribute | Your income, allowed for in your budget |
| What survives either way | A landlord's right of hypothec is preserved by section 88(2) | Nothing else in section 88 helps a landlord |
Rent falling due after the award is a new debt and it has to be paid in full. Which debts survive sequestration covers what else is not written off.
One technical point about the landlord
Section 88(2) says the vesting of your estate does not affect a landlord’s right of hypothec. That is an old security over certain moveable property.
It rarely changes the outcome in a modern residential let. It is a reason to let your trustee and your adviser deal with the landlord rather than making a side arrangement yourself.
Why the distinction is the whole risk
A tenancy that was becoming unsustainable because of arrears can survive a sequestration, because the arrears go with it. Missing the rent that falls due afterwards is a fresh breach and a live ground.
Will a landlord or letting agent find out?
They can, if they look, and the check is regulated. Paragraph 58 of the Letting Agent Code of Practice requires an agent to explain what will be checked and by whom, and to get your written permission first.
Where a sequestration is visible
| Where | Who sees it | The detail |
|---|---|---|
| The Register of Insolvencies | Anyone, free of charge, by name | Article 325 covers what it shows and for how long |
| Your credit file | A lender or agent running a check, and you | A sequestration reaches credit files through the Accountant in Bankruptcy's commercial data feed out of the register |
| A letting agent's referencing check | Only with your written permission, which paragraph 58 of the Letting Agent Code requires | The agent must explain what will be checked and by whom |
| What you can be charged for it | Nothing beyond rent and a deposit | Section 82 of the Rent (Scotland) Act 1984 makes a referencing, admin or application fee an offence, and the permitted deposit is capped at two months' rent |
| Your landlord, automatically | Nobody has to tell them | There is no notification duty to a landlord anywhere in the Act |
| If an agent breaks the Code | A tenant may apply to the First-tier Tribunal | Section 48 of the Housing (Scotland) Act 2014 |
The register is free and public. Whether your sequestration is public covers what is shown, and how sequestration affects your credit file covers the other route.
You cannot be charged for the check
Section 82 of the Rent (Scotland) Act 1984 makes it an offence to require a payment beyond rent and a refundable deposit of no more than two months’ rent as a condition of granting a tenancy, and the definition covers any service or administration fee.
Section 20(1) of the Private Housing (Tenancies) (Scotland) Act 2016 applies that to a private residential tenancy. So a referencing fee, an admin fee or an application fee is an offence.
If an agent breaks the Code, section 48 of the Housing (Scotland) Act 2014 lets a tenant apply to the First-tier Tribunal for an order requiring the agent to comply.
What we are not going to tell you
Nothing in the Code, the 2014 Act or any Scottish instrument sets a rent-to-income ratio, regulates a guarantor or says what an agent may conclude from a sequestration. Those are decisions, not rules.
Can you take on a new tenancy while you are sequestrated?
There is no legal bar on signing one. The obstacles are practical, and the one with a criminal sanction attached is borrowing towards the deposit.
The credit disclosure rule
While you are undischarged you must tell a lender you are bankrupt if you are borrowing £2,000 or more, or any amount at all if you already owe £1,000 or more.
Utility charges and council tax are left out of that £1,000 calculation.
Section 218(13) makes obtaining the credit without disclosing the position an offence. A deposit and a first month’s rent can cross that line without feeling like borrowing.
Sort the banking out first
Nothing in the Act freezes an account, and what your bank does about it is its own policy. Whether you can have a bank account while bankrupt deals with that properly.
For a tenancy it matters more than it looks. A standing order to a landlord that fails in month one is an avoidable problem.
What tends to help
- Saying where you stand rather than waiting for a referencing check to surface it.
- A written record of rent paid on time from your current landlord.
- A budget that shows the rent is affordable, which the sequestration process produces anyway.
- Written permission given knowingly, so you know what is being checked and by whom.
How does sequestration affect paying the rent each month?
Your rent is allowed for before any contribution is worked out. How a debtor contribution order is calculated sets out the assessment, which starts from what your household actually has to spend.
Which tool does the assessment
The prescribed tool is the Common Financial Statement, under regulation 15(1) of the Bankruptcy (Scotland) Regulations 2016.
Most sources name the Standard Financial Statement, which is the tool used elsewhere in the United Kingdom. Regulations that would have moved Scotland to it were drafted in 2018 and never made.
That is worth knowing if an adviser or a website hands you the wrong form. The two documents are not the same thing and only one of them is prescribed in Scotland.
The rent statement we are attributing rather than asserting
The Accountant in Bankruptcy’s debtor guide says you may have to move if your trustee thinks you are paying too much rent, and that the trustee can apply to the sheriff to set a limit on how much rent you should pay.
We looked for a provision of the 2016 Act conferring that power and did not find one. So take it as what the Accountant in Bankruptcy says rather than as a section you can look up.
Tell your trustee if things change
A rent increase or a move is a change in your circumstances, and the duty to report one is immediate. That is also how a contribution gets varied when your outgoings rise.
What should you check before you apply?
Four things, and a money adviser can go through all of them in one appointment. Your agreement, your arrears, your budget and which route you qualify for.
The checklist
- The termination and default clauses in your own tenancy agreement, because Citizens Advice Scotland warns about bankruptcy clauses.
- How much rent you owe, and whether the landlord has already started anything.
- Whether your rent sits comfortably in your assessed expenditure.
- Whether your bank account will survive the award, and what would replace it.
Renters often fit the shorter route
One of the Minimal Asset Process conditions is that you own no land, which a tenant meets by definition. Choosing between the two routes runs through the other seven.
There is no application fee for that route and discharge comes at six months. Whether you qualify turns on your assets and your income rather than on your housing.
Where to get it done free
Citizens Advice Scotland, StepChange, National Debtline and Advice Direct Scotland all do this at no charge, and money advice is compulsory before a debtor application anyway. How sequestration works covers what that appointment involves.
Frequently asked questions
Does my tenancy become part of my bankrupt estate?
No. Section 79(3) takes a tenant’s interest under a private residential tenancy, an assured tenancy, a Rent Act protected tenancy and a Scottish secure tenancy out of the estate, unless the trustee serves a notice under section 79(4) bringing it in.
Can my landlord evict me because I went bankrupt?
Only through the First-tier Tribunal and only on a ground in Schedule 3 to the Private Housing (Tenancies) (Scotland) Act 2016, which section 51(1) and (2) make exhaustive. We have not been able to obtain the current revised Schedule, so ask an adviser to check the ground named in any notice against the Schedule as it stands.
What about a bankruptcy clause in my tenancy agreement?
Citizens Advice Scotland warns that some agreements contain one, and the Tribunal may still only issue an eviction order on a Schedule 3 ground. The two positions have not been reconciled anywhere published, so take your agreement to an adviser.
Are rent arrears written off by sequestration?
Arrears owed at the date of sequestration are ordinary debts and you are discharged from them under section 145(1). Rent falling due after the award is a new debt, it stays payable in full, and falling behind on it is a live risk to the tenancy.
Will a letting agent see my sequestration?
It is on the Register of Insolvencies, which anyone can search free of charge, and it reaches credit files through the Accountant in Bankruptcy’s data feed. An agent may only run a check with your written permission.
Can a letting agent charge me for a credit check?
No. Section 82 of the Rent (Scotland) Act 1984 makes it an offence to require any payment beyond rent and a refundable deposit of no more than two months’ rent as a condition of a tenancy, and section 20(1) of the 2016 Act applies that to a private residential tenancy.
Can I borrow for a deposit while I am undischarged?
Not without disclosing your position. Section 218(13) makes it an offence to obtain credit of £2,000 or more, or credit of any amount while you owe £1,000 or more, without telling the lender.
Can my trustee make me move somewhere cheaper?
The Accountant in Bankruptcy’s debtor guide says a trustee can apply to the sheriff to set a limit on how much rent you should pay. We could not find a provision of the 2016 Act conferring that power, so treat it as the Accountant in Bankruptcy’s statement and ask your trustee.
Related guides
- Will You Lose Your Home If You Are Sequestrated In Scotland? What passes to the trustee, when a sale needs your agreement, the three-year rule for the family home, and what little equity changes.
- Is Your Sequestration Public On The Register Of Insolvencies? What the register shows, who can search it and for how long, why the entry outlasts discharge, and how it differs from a credit file.
- How Does Sequestration Affect Your Credit File In Scotland? Why six years comes from agency policy rather than statute, how the entry reaches your file, and what happens to the accounts behind it.
- Can You Have A Bank Account While You Are Bankrupt In Scotland? What happens to the money in your account on the day of the award, whether a bank can refuse or close it, and which features go.
- How Is A Debtor Contribution Order Calculated In Sequestration? How the common financial tool sets your surplus, what spending can be allowed above the triggers, and what a payment break does.
- Which Debts Are Not Written Off By Sequestration In Scotland? The short statutory list discharge never touches, where student loans and aliment sit, and what happens to a secured debt.
- Should You Choose Sequestration Or Minimal Asset Process Bankruptcy? The eight conditions that decide the route, what each one costs, how long each lasts, and what a car, savings or a property share change.
- Does Discharge From Sequestration End Everything After 12 Months? What discharge releases, what keeps running afterwards, how the trustee's own discharge differs, and when yours can be delayed.
- What Does A Trustee In Sequestration Do? Who acts as your trustee, the section 50 duties, what happens to the things you own, and when the trustee's job finally ends.
- How Does Sequestration Work In Scotland? The three routes in, who becomes your trustee, what you pay, what happens to the things you own, and what discharge does not clear.
Written as general information about Scottish debt law rather than regulated financial or legal advice, and your own circumstances may change the answer. Free, impartial help is available from Citizens Advice Scotland, StepChange, National Debtline and Advice Direct Scotland.