Landlord registration - review of applications and fees: consultation analysis

Executive Summary

1. In May 2013, the Scottish Government (SG) published its Strategy for the Private Rented Sector in Scotland, setting out the vision for a private rented sector. While most landlords aim to provide good quality accommodation and services to their tenants, the available evidence indicates that some landlords are not aware of their legal responsibilities.

2. In March 2018 the Scottish Government launched a consultation – 'Landlord Registration in Scotland: Consultation on a review of landlord registration applications and fees' – seeking views on a requirement for landlords to provide additional information about compliance with legal duties, and on a range of options for increasing application fees. The proposals set out in the consultation paper were designed to strengthen the system of landlord registration in a proportionate way. The consultation opened on 15 March 2018 and closed on 7 June 2018.

Respondent Profile

3. In total, there were 239 responses to the consultation, of which 80 were from organisations (broken down as below), 95 from individuals and 64 from those who identified themselves as landlords.

Table 1: Respondent Groups

	Number
Housing association	8
Local Authority	30
Lettings / residential lettings / property management	23
Professional organisation	4
Representative organisation	5
Safety / risk	4
Tenants' interests / tenants / Residents group	3
Other (e.g. charities / health / professional organisations / manufacturer)	3
Total organisations	80
Individuals	95
Self-identified landlords	64
Total respondents	239

Key Themes

4. A number of key themes were evident across questions as well as across respondent groups and these are summarised below.

• A need for changes to the online registration system which is currently perceived not to be user-friendly or fit for purpose; requests for a user-friendly, streamlined and fully automatic online registration system, with guidance provided to landlords. Some allowance would need to be made for landlords who are not able to apply online.
• The proposals as set out in this consultation paper will result in increased workloads for landlords and create unnecessary paperwork. These will also introduce extra costs and administration for local authorities.
• Concerns over how the proposals will fit with current data protection and GDPR requirements.
• The need for enforcement to be applied in order to deal with rogue landlords, with a perception from some that landlords who do register are currently subsidising rogue landlords who do not register.
• A need for consistent administration across Scotland, with some suggestions for a national registration system to be operated across Scotland rather than having 32 different systems which lead to duplication of effort and inconsistency across Scotland.
• Requests for transparency in how local authorities make up their charges.
• The suggested proposals (or some of them) will duplicate information provided which is already required through other legislation.
• Data gathered through the landlord registration system should be shared across local authorities and could be used to feed into relevant policy areas as an aid to decision-making.

Consultation Questions

5. The following paragraphs summarise the main findings from each of the consultation questions.

Main Findings: Prescribed information

Expanding prescribed information (Q1, Q1b, Q1c, Q2)

6. A majority of respondents agreed that landlords should have to confirm whether they comply with each of the requirements specified in the consultation paper. A key theme was simply that this will encourage landlords to comply with the requirements, ensure that the market has compliant landlords or that it helps landlords to understand their obligations. Those in disagreement with this proposal or who gave an answer of 'unsure' focused on the increased workloads this would introduce for landlords, thus making the registration process more onerous and time consuming. Other issues related to the need for enforcement of legislation and the need for an effective online registration system.

7. Key specific requirements, each cited by a minority, which respondents felt landlords should not have to confirm that they comply with included Energy Performance Certificates (EPC), mortgage / loans / tax, legionella assessments, gas safety and electrical safety.

8. A majority of respondents (117) felt that landlords should be required to provide evidence of compliance with the specified requirements, although a minority (82) disagreed with this. Two key themes were that this would create unnecessary paperwork and burden on landlords or that this would create too much administration and / or cost for local authorities and impact on timescales. There were some suggestions, each from a small proportion of respondents that local authorities should carry out random sample checks each year, that landlords should have to provide evidence on request; or that evidence should be provided with application forms. It was felt that it can be difficult to provide evidence for some forms of certification although specific evidence that could be provided included electrical or PAT testing, gas safety certificates, EPCs, carbon monoxide safety and fire compliance.

9. Other questions that it was felt should be included in an application for landlord registration included details of any criminal convictions, whether action has previously been taken by a tenant against a landlord, whether registration has ever been refused, relevant landlord insurance, proof that mortgage right-to-let has been granted, details of any standard security over a property, property ownership, gas, electrical and fire compliance and whether an agent is used.

Energy performance certificate rating (Q3)

10. A majority of respondents agreed that landlords should be required to provide the domestic EPC rating for property. The highest level of disagreement came from respondents in the lettings / residential lettings / property management sub-group.

11. A minority of respondents noted that the EPC rating is already provided when a property is advertised; a similar proportion felt this will ensure compliance with legislation and that the EPC is a useful document to provide. However, a small proportion of respondents felt that the EPC is of little benefit to tenants as they are unlikely to make decisions on where to live based on this. Other points, each made by a small proportion of respondents, were that there is an existing EPC database which could be used to help with the registration process or that legislation is about to change and an EPC will be needed to show that a landlord meets the requirements of the new legislation.

Miscellaneous amendments to prescribed information (Qs4-5)

12. A majority of respondents felt that applicants should only be required to provide a home address and a correspondence address, whilst a large minority generally agreed with this proposal. Another key theme was that if a landlord is paying to use an agency, all communication should be via that agency. The issue of data protection and / or GDPR was raised by some respondents, with concerns that personal information should not be publicly available. There were some suggestions for other types of information that could be provided. These included an email address, a home address and a correspondence address or an option to use a business address.

13. There was also majority support for the proposal that applicants should be required to provide an email address, and home and mobile phone number (if they have one), and a key theme that emerged at this question was one of general support. There were some suggestions of a need for flexibility within the system, alongside suggestions for specific types of information that could be provided. Again, the issue of data privacy was raised by a small proportion of respondents, with comments that the register should be managed by the local authority and not be available to the general public.

Main findings: Landlord registration application fees (Qs6-14)

Application fees (Q6)

14. A greater number of respondents disagreed (119) than agreed (99) that it is reasonable to increase registration fees in line with inflation, to reflect the increased cost to local authorities, with greatest levels of disagreement from organisations involved in lettings / residential lettings / property management, self-identified landlords and individuals.

15. A key theme from those who agreed with this proposal was that this is reasonable or that current fee levels do not reflect the amount of work conducted by local authorities. However, a smaller proportion of respondents felt that the current fee is fair, already high enough or that there is no justification for a fee increase, for example, because costs for private landlords are already high. Other issues raised, each by a small proportion of respondents, included requests for an increase to be in line only with inflation, transparency in how costs are calculated, the need for an online registration system that is fit for purpose or for a national Scotland-wide registration system.

Additional fee (Q7)

16. A majority (106) of respondents felt it is reasonable for local authorities to charge a lower additional fee, in cases where the maximum set fee exceeds the cost of the work undertaken to prompt a landlord to make an application, although a large minority (91) disagreed. A small proportion of respondents suggested a fixed fee for applications, with one standard national fee applied for late applications. There were also a small number of requests for discretion to be applied by local authorities in cases of unusual circumstances. Local authorities themselves were concerned about the planning and administration of this proposal.

Landlord registration fee discounts (Q8)

17. A majority (130) of respondents disagreed with the proposal to change the 10% discount to online applications, compared to 78 who agreed, and the highest levels of agreement came from local authorities. The key theme mentioned related to issues with the current online application system. There was also a preference from some respondents to retain the online discount as it currently exists; that said, there was also comment that the majority of landlords now complete the application online and that the 10% discount is no longer needed, although there were some suggestions for an increased fee for offline applications.

Landlord registration online system (Q9)

18. A higher proportion of respondents disagreed with including an amount in the application fee to cover the operating costs of the online registration than agreed; a key theme was that additional fees should not be necessary or that the current registration fee is sufficient. That said, a minority of respondents perceived the proposed cost of £2 every three years as being reasonable or minimal.

19. There were some comments that as the registration system is government-led, then they or the public purse should pay registration fees; additionally, there was a perception from some that the system offers no benefits to landlords. There was also a perception that online registration should be more efficient and counteract any additional costs. There were also concerns from small numbers of respondents that higher costs will discourage landlords from registering, that landlords are already being expected to deal with increased financial burdens, that increased costs to landlords may result in increased rents to tenants or that properties will be removed from the rental market. Once again, there were some comments about the registration system and a need for improved functionality.

Joint owner discount (Q10)

20. More respondents disagreed (117) than agreed (84) with the proposal for a local authority to receive an application fee when they carry out a fit and proper person test on a joint owner. Highest levels of agreement came from local authorities and highest levels of disagreement from organisations in the lettings / residential lettings / property management sector, self-identified landlords and individuals. The key theme mentioned was that if the full joint owner discount is not offered, then many joint owners will not be declared to the local authority.

Multiple area discount (Q11)

21. A higher proportion of respondents disagreed (121) than agreed (75) that each local authority should receive the full application fee when a person applies to more than one local authority, and the fit and proper person assessment is required. A key theme from those not supporting this proposal was that local authorities should be able to share their information and not have to duplicate work; this would also help reduce costs. There was support for having one national landlord licensing authority and having standardised rules across Scotland for checks.

22. The key theme from those in support of the proposal was that local authorities need to conduct their own fit and proper person assessment and the associated administrative work (this was particularly noted by local authorities).

Agent fee discount (Q12)

23. A majority (141) of respondents agreed with the proposal for landlords to receive a 100% discount on the application fee for a letting agent who has applied to be registered with the Scottish Government, compared to 40 who disagreed. The majority of pro-comments included that the discount would be applied consistently or equitably, that landlords would be encouraged to use registered and trained agents, that the discount would encourage better landlord compliance, that landlords are already paying agents and that landlords should not have to pay fees as well as agents.

24. A minority of respondents noted that letting agents will shortly have their own register and will not be required to register on the landlord registration system; thus they would not be liable for a fee so a discount would be inappropriate.

Change of circumstance (Q13)

25. A large majority of respondents held negative opinions in relation to charging a fee for specific changes in circumstance to an existing registration, with a minority stating that there should be no additional charges. The dominant theme was that this would deter landlords from updating changes. A minority of respondents felt that there should not be charges applied for updating online information.

26. Those in favour of this proposal agreed that local authorities need to cover costs, although some respondents gave specific examples of which types of charges should, or should not, incur additional charges i.e. if the change is non-routine such as issue of an HMO licence or legal action against a landlord, then it could attract an additional fee.

Incentivising landlords (Q14)

27. Views were relatively split, in that a broadly equal number of respondents supported or did not support the proposal to offer incentives to landlords and agents to apply for registration and / or improve their practice. The benefits of offering incentives or discounts included reductions in enforcement costs, reduced bureaucracy and participating in the Landlord Accreditation Scheme, obtaining membership of the Scottish Association of Landlords (SAL) or taking part in forums, conferences and meetings. There was also support for training course attendance or accredited training to qualify for discounts.

28. A minority of respondents were in favour of having a discount available, such as for early renewal or within a specified time prior to registration expiry. Smaller numbers also suggested that incentives may increase compliance.

29. Those not in support of incentives for landlords focused on the fact that registration is a legal obligation and there should be no incentives. Some commented that this would not help to deter rogue landlords who are non-compliant anyway and some suggestions of a need to enforce penalties for non-compliance. A number of these respondents were against extra training or accreditation being eligible to qualify for discounts. There were some suggestions that better guidance and communication with landlords should be a priority.

Main Findings: Impact Assessments (Qs15-16)

Equality Impact Assessment (Q15)

30. The large majority of respondents felt there were no proposals in the consultation that would impact or have implications on equality groups. Only very small numbers of respondents cited any specific groups of individual who might be impacted upon by any of these proposals.

Business and Regulatory Assessment (Q16)

31. A majority of respondents felt the proposals would have financial, regulatory or resource implications for them or their business, and this view was particularly high among self-identified landlords. Additional costs specified by respondents included increased registration fees, increased compliance costs and the loss of discounts. There were also some references to an increased administrative burden. Some respondents felt one impact could be the continuing viability of the rental sector or that tenants would suffer from rent increases. Many of the local authorities also commented that these proposals would result in a need for additional resources because of increased workloads for staff, for example, for checking certification.