SCOTTISH GOVERNMENT RESPONSE TO PRIVATE RENTED HOUSING (SCOTLAND) BILL STAGE 1 REPORT

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1 SCOTTISH GOVERNMENT RESPONSE TO PRIVATE RENTED HOUSING (SCOTLAND) BILL STAGE 1 REPORT I am writing in response to the Local Government and Communities Committee s Stage 1 Report on the Private Rented Housing (Scotland) Bill. I want to thank the Committee for its careful consideration of the Bill. I am pleased that there are so many areas of common ground, particularly in the recognition that the Bill addresses serious problems and will bring benefits to many communities, including vulnerable people. I welcome the fact that, overall, the Committee recommended that the general principles of the Bill should be agreed to. I would like to respond in some detail to the specific recommendations made and issues raised by the Committee in its Report. 1. Landlord Registration Fit and proper person test paragraph 37 The Committee asked the Scottish Government to clarify how antisocial behaviour orders would be taken into account with regard to the fit and proper person test for landlord registration. Section 1(1)(b) of the Bill would insert a new subsection (7) into section 85 of the Antisocial Behaviour etc. (Scotland) Act Subsection (7) states that an antisocial behaviour order and an antisocial behaviour notice are particular examples of material that must be considered under section 85(3) and (4) of the 2004 Act when deciding whether an applicant (or a person acting for the applicant in relation to the lease) is fit and proper. Section 85(3) makes clear that material is only relevant if it relates to any actings of the applicant or agent with regard to antisocial behaviour relating to a house that was or is let by the landlord applicant. It is therefore only within this context that an antisocial behaviour order or an antisocial behaviour notice could be relevant to the fit and proper person test. New subsection (7) does not mean that a landlord would be disadvantaged by granting a tenancy to someone who had been served with an antisocial behaviour order that did not relate to a house let by that landlord. If a tenant had been served with an antisocial behaviour order that did relate to a house let by that landlord, the issue would then be whether the landlord had taken appropriate action to address the antisocial behaviour. It would remain the responsibility of the local authority to make an informed decision in relation to each case. Registration numbers in advertisements paragraph 51 The Committee recommended that a combination of kite marks and registration numbers should be used to indicate that a landlord is registered and asked the Scottish Government to consider whether, with such a system, To Let boards could be included in requirements relating to advertisements. The original idea that an advertisement for a property to let should include the landlord s registration number came from local authorities, who considered that this would be useful for enforcement purposes. The Private Rented Sector Strategy Group then recommended that it should be included in the consultation on the Private Rented Housing Bill. There was considerable support for the proposal from respondents to the consultation. Throughout this

2 process it was made clear that the primary objective of the proposal was to assist local authority registration teams, who could use the number to identify whether a property had been included in a valid application for registration. A subordinate benefit would be that a prospective tenant could see that a landlord appeared to be registered. Not including registration numbers in advertisements would thus defeat the purpose of the provision. I asked the Bill Sounding Board to consider the idea of additionally requiring a kite mark in advertisements. The Sounding Board did not support this suggestion for various reasons, including that it would cause even higher costs for landlords; that it would suggest that a landlord had achieved a certain standard (as with accreditation), rather than having simply complied with the legal requirement to register; and that it would be easy for an unregistered landlord to misuse a symbol (and more difficult for such misuse to be detected by a local authority than when a false number is used), whether in an advertisement or on a To Let sign. There would also be resource implications of the development and setting up of a kite mark scheme. The Scottish Government has therefore concluded that we should keep the requirement for a registration number to be included in an advertisement, not adopt a national kite mark system, and continue to exempt To Let boards. We are keen to explore further, nonlegislative measures, such as working with newspapers and web providers to develop a voluntary code of practice whereby they do not accept advertisements from unregistered landlords. In order to reduce potential costs for landlords, we are investigating the possibility of requiring only one registration number in an advertisement for a property where there are multiple registered owners. Part of the rationale for the stakeholder suggestion of a kite mark was that it would increase tenants awareness of landlord registration. However, I consider that there are measures in the Bill that would be more effective in raising awareness of registration, such as the tenant information pack and increasing the information available to the public through the landlord register database. Regulation of letting agents paragraph 58 The Committee recommended that the possible regulation of letting agents should be considered by the PRS Strategy Group in its further work on the development of the sector. There would be obvious advantages in the regulation of agents, and I know that many reputable agents would support such a measure. In order to commence wider discussion around the fact that letting agents are currently not required to register in their own right, the matter has been included as part of the evaluation of landlord registration. The analysis of this issue will be fed into the work being taken forward by the PRS Strategy Group. Meanwhile, the Bill includes measures to address problems associated with less reputable agents, such as the power for a local authority to require an agent to provide a list of the properties managed (which could be targeted at agents who deliberately act for unregistered landlords) and the clarification of pre-tenancy charges that can be made. Penalties for acting as an unregistered landlord paragraphs 71 to 72 We agree with the Committee that it is essential that the courts impose appropriate penalties when there are convictions relating to landlord registration and HMO licensing offences. The Scottish Government will seek to highlight the availability of higher fines. As I indicated during the Stage 1 debate on the Bill, I will write to the Lord Advocate on this matter.

3 I have made clear that I am very sympathetic to the idea of a dedicated housing court or tribunal and I agree with the Committee that the Scottish Government should investigate whether such a system could be established. The PRS Strategy Group will consider in its future work plan how effectively the courts are working for the sector. In this context I would also mention that I have listened carefully to the argument that local authorities should receive additional funding for their work to build evidence for a prosecution, and I have written to the Chancellor of the Exchequer to request that consideration be given to enabling revenue from fines for landlord registration offences to be retained in Scotland. It seems only right that monies generated through the Scottish landlord registration regime be retained in Scotland and recycled to support further enforcement activity. Enforcement activity paragraph 79 We agree with the Committee that the variation among local authorities in the approach they take and priority that they attach to the enforcement of landlord registration needs to be addressed. However, we do not agree that the Bill will not bring about a higher level of consistency among local authorities. Several measures will address this issue, including the clarification of the material that must be taken into account in carrying out the fit and proper person test and the power to obtain information from persons associated with a house to enable or assist a local authority to carry out its registration functions. Furthermore, the requirement introduced by section 10 that a local authority must have regard to Scottish Government guidance on the exercise of its landlord registration functions will allow the Government to disseminate best practice to local authorities, particularly in the light of the conclusions of the ongoing evaluation of landlord registration. This guidance will be subject to further consultation and will also build on the work of the enforcement sub-group of the local authorities national landlord registration network, which drafted national enforcement guidance principles. I am keen that, whilst we endeavour to encourage an appropriate degree of consistency in working methods, the system must also give local authorities the flexibility necessary to take account of local circumstances, while sharing a consistent view of the objectives to be achieved. CoSLA has also stressed the importance of this. Interaction between Landlord Registration and Council Tax and Housing Benefit teams paragraph 90 The Committee calls on the Scottish Government to continue to support the use by local authorities of council tax and housing benefit data to identify unregistered landlords. We entirely agree with this position. A number of local authorities have developed good working practices to suit their local needs and the Scottish Government encourages good practice options, such as local authority Housing Benefit Teams refusing to process new housing benefit applications without a landlord registration number, if appropriate. Best practice in the use of council tax and housing benefit data is one of the key issues to be covered by the Scottish Government s statutory guidance to local authorities on the exercise of landlord registration functions, given the wide variations in the approach taken by enforcement teams. Promoting the use of this data does not, however, detract from the significance of the new power in the Bill to obtain information from people associated with a house, which will be crucial in some situations to prove, for example, whether a tenant is an unconnected person, i.e., not a member of the landlord s family.

4 Statutory guidance - paragraph 98 The Scottish Government will make the statutory guidance on landlord registration available to the Committee as soon as is practicable. However, in order to make the guidance as thorough and as useful as possible, it will not be possible to complete it until the conclusions of the current evaluation of landlord registration have been reached. The Bill also requires the Scottish Ministers to consult local authorities and other appropriate stakeholders on the guidance and this input will be very valuable. We would see local authority practitioners having a clear role in this. Re-registration - paragraph 109 The Scottish Government agrees with the Committee that it is extremely important that landlords re-register at the end of their three-year period of registration. It is a local authority s responsibility to follow up registrations which have expired and not been renewed as part of its enforcement activity. As local authorities are only part-way through the bulk of their renewals, it is too early to ascertain if there are a large number of landlords still letting properties who are not coming forward to renew their applications. We will continue to monitor the situation. Consistency of approach and enforcement paragraphs 110 to 111 The Committee believes that issues of consistency of approach and enforcement remain unresolved, but that statutory guidance will assist in improving these. We consider that the statutory guidance (and other measures in the Bill, such as powers to obtain information) will go a long way to improve consistency of approach and enforcement. The current evaluation of landlord registration, which has been externally commissioned, may, as the Committee says, identify a need for further legislation, but we also expect its findings to be important in the drafting of the guidance and in the future work of the PRS Strategy Group. Awareness of prospective tenants paragraph 118 The Committee considers it crucial that prospective tenants, as well as those who are already tenants, are aware of the rights and responsibilities associated with being a tenant. We expect that the introduction of the tenant information pack will generate publicity, which will bring the pack and its contents to the attention of those who are not yet tenants. We will also work with the PRS Strategy Group, which includes tenant and landlord groups and local authorities, to see how everyone involved in the sector can help to raise awareness among prospective tenants, as well as existing tenants and landlords, by ensuring good communication of information. 2. HMO Licensing Additional types of HMO - paragraph 150 I can confirm that any order specifying additional types of licensable HMO under new section 125(1)(b) of the Housing (Scotland) Act 2006, inserted by section 13(1)(a) of the Bill, would be subject to affirmative procedure by virtue of section 13(6) of the Bill, which amends section 191(4)(a) of the 2006 Act accordingly. Linking HMO licensing and planning permission paragraph 151

5 I think it would be helpful to clarify a couple of the points made in paragraph 151 of the Report. In the first place, the Bill provisions will not enable a local authority to refuse to grant an HMO licence on the grounds that occupation of the accommodation as an HMO would be a breach of planning control. It will, however, be able to refuse to consider an application for a licence in such circumstances, until planning permission has been obtained. This discretionary power will allow a local authority to address the current anomaly of its having to grant a licence to an HMO operating in breach of planning control, with the possible adverse effects on local amenity, neighbours and law-abiding landlords. Secondly, this new power will not directly address problems related to the subdivision of rooms and the installation of new services in tenement flats, since it is unlikely that such works would be subject to planning consent, as opposed to requiring building warrants. However, the benchmark standards for HMO licensing will help in this regard as they include minimum standards for space and layout. Statutory guidance on HMO licensing - paragraph 152 The Committee asked to be provided with the new statutory guidance on HMO licensing as soon as possible and preferably before Stage 3. A public consultation on a draft of the guidance is due to begin in early February and will run for six weeks. The final version of the guidance will be issued later, taking into account the consultation responses. We will provide the Committee with a copy of the consultative draft guidance as soon as the consultation begins. 3. Overcrowding Statutory Notices Use of an overcrowding statutory notice where there is not a short assured tenancy - paragraph 173 The Committee asked for clarification of the application of overcrowding statutory notices in situations where there is not a short assured tenancy, and particularly how landlords could legally reduce overcrowding. The steps that could be taken to reduce overcrowding would depend on the terms of the agreement. The particular case that was raised in evidence was where there was no formal arrangement in place, so an assured tenancy was assumed to exist, although the same principles would apply to a formally constituted assured tenancy. Possession of a house subject to an assured tenancy could be obtained legally if, for example, there was a breach of a tenancy obligation relating to the occupancy level or if suitable alternative accommodation was available. The local authority might be able to provide assistance to find the latter. Where a landlord lacked power to evict tenants legally, the local authority would be able to serve an overcrowding statutory notice requiring the landlord not to add to or replace occupants as they leave, until the statutory occupancy level was reached, and requiring any future lease to include a maximum occupancy condition. This is similar to the existing procedure under section 166 of the Housing (Scotland) Act 1987 and would not require the landlord to carry out any evictions. Relationship to homelessness and access to social housing paragraphs 185 to 189 While recognising that action has to be taken now to address the significant and serious problem of overcrowding, the Committee expresses concern that the use of overcrowding statutory notices could cause confusion in relation to laws on homelessness and access to social housing and that it is difficult to assess the impact on homelessness and the housing stock. It recommends that the Scottish Government consults widely on the guidance on

6 overcrowding statutory notices, monitors the number of notices issued and the circumstances leading to their issue and reviews the provisions to assess their effectiveness and their impact on homelessness and the housing stock. I can confirm that the guidance for local authorities will clarify how and when overcrowding statutory notices could be used. It will be essential, for example, that local authorities take account of the availability of alternative accommodation when exercising the powers. This is a complex area, which makes it all the more important that a wide range of stakeholders feed into the Scottish Government s consultation on the guidance. We will therefore consult widely. We will also monitor the use of notices by local authorities and review the provisions to assess how effective they are in dealing with overcrowding and their other effects. 4. Miscellaneous Tenant information packs information on electrical safety and consultation - paragraphs 202 and 203 The Committee asked for the Scottish Government s views on a suggestion from the Electrical Safety Council that, when making provision about the contents of the tenant information pack, the Scottish Ministers should require the inclusion of a Periodic Inspection Report and confirmation of whether a Residual Current Device had been installed in the property. This is an interesting proposal, which we will consider before consulting with stakeholders on the provisions of the order specifying the contents of the information pack, as required by the Bill. The Scottish Government will keep the Committee informed about the consultation and its results. Landlord applications to the Private Rented Housing Panel fees paragraph 209 The Committee asked the Scottish Government to respond to concerns expressed by the Association of Registered Letting Agents about the Scottish Ministers power to require a landlord to pay a fee when applying to the Private Rented Housing Panel (PRHP) for assistance to gain access to a rented house in relation to the Repairing Standard. Landlords and tenants are in different positions. Tenants are consumers who are paying for the provision of a home. They have free access to the PRHP when there are grounds for believing that the service provided by the landlord is not meeting the legal requirements set by the Repairing Standard. As providers of a service, landlords are businesses and it is therefore more appropriate that they should pay costs relating to that business. At the moment landlords have to go to court to enforce the right of entry, which involves costs. Access to the PRHP should speed up the process of gaining entry and cost less than court action, so it is reasonable and appropriate, since landlords will benefit from the new procedure, that a fee should be paid for the PRHP s assistance. 5. Financial Memorandum The Committee asked the Scottish Government to respond to Glasgow City Council s concerns that additional resources will be required to deal with overcrowding (paragraph 214 of the Report). Glasgow City Council indicated that the use of overcrowding statutory notices might require at least 1.5 new members of staff and that there could be indirect effects on the Council s homeless unit and legal team. It will be at the discretion of each local authority whether it uses the power to serve an overcrowding statutory notice in a particular case, taking into account all the circumstances,

7 including possible effects on homelessness. If the decision is to use the power, it is for the local authority to prioritise its resources. The other local authorities who gave evidence to the Committee and the Finance Committee did not raise this issue, which implies that any resource implications for Scotland as a whole would be minimal, particularly since evidence from local authorities to the Committee was that the notices would be expected to be served seldom and as a last resort. It is likely that most of the notices that would be served would be as a result of action by Glasgow City Council, which originally proposed the introduction of overcrowding statutory notices, so any costs incurred by it are unlikely to be reflected in other local authority areas. I hope that these remarks have clarified the issues raised in the Committee s Stage 1 Report and will be helpful in further consideration of the Bill. I am copying this letter to the Clerk to the Local Government and Communities Committee. Alex Neil Minister for Housing and Communities 4 February 2011

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