Landlord registration: statutory guidance for local authorities 2017

2. Strategic Overview

Role of Landlord registration

In May 2013 Margaret Burgess, then the Minister for Housing and Welfare, launched 'A Place to Stay, A Place to Call Home' [1], setting out the Scottish Government's vision and strategic aims for the private rented sector.

The vision is

"A private rented sector that provides good quality homes and high management standards, inspires consumer confidence, and encourages growth through attracting increased investment"

In order to achieve this vision, three strategic aims were identified:

• to improve the quality of property management, condition and service;
• to deliver for tenants and landlords, meeting the needs of the people living in the sector; consumers seeking accommodation; and landlords committed to continuous improvement;
• to enable growth, investment and help increase overall housing supply.

The Strategy further clarified the purpose of landlord registration as:

• providing a register of all private landlords for public inspection with the added assurance that the local authority has conducted a fit and proper test;,
• providing a regularly updated register that can be used to assist dialogue between local authorities and landlords, and to disseminate best practice information; and
• ensuring that landlord registration enforcement action is targeted at tackling the worst landlords in the sector, whether that involves dealing with concentrations of such landlords in vulnerable urban communities, or challenging the practices of individual landlords in more rural or sparsely populated areas.

The landlord registration regime should help landlords reach the standards required by legislation to privately let properties. Those landlords who are unwilling or unable to achieve these standards should be removed from the rental market.

Poor standards harm not only tenants but also tarnish the image of the industry, reflecting badly on the private rented sector and disadvantaging the landlords who do manage their lets in a professional manner. A perception that the worst landlords can continue to operate risks reduced investment and could lead to a lack of availability of private rented properties.

Local Housing Strategies

Landlord registration assists in the development of local housing strategies. As at 31 January 2017 the landlord registration database held records of over 262,000 landlords with over 361,000 properties, compared to 180,000 landlords with just over 250,000 properties in 2011. Findings from the 2015 Scottish Household Survey indicate that the proportion of households in the private rented sector has grown steadily from 5% in 1999 to 14% in 2015. The sector clearly plays an important role in meeting housing need right across Scotland.

There are a range of submarkets within private renting which should be recognised in the approach to regulation. These include:

• Students;
• Migrant workers;
• Specific minority ethnic communities;
• Houses in Multiple Occupation;
• Landlords specifically targeting benefit dependent tenants;
• Renting in rural and remote rural communities; and
• Longer term letting to an increasing number of families.

An awareness of the size and nature of the private rented sector in a particular area is an important factor in helping local authorities to determine local housing need and develop appropriate local strategies to meet that need. It may be appropriate for authorities to develop different approaches to engaging with landlords and tenants in different submarket groups.

Local housing strategies should also cover the strategic objective of reducing and preventing homelessness and include information on how local authorities can balance their obligation in relation to homelessness with their role in helping to regulate the private rented sector.

Local authorities should set out the strategic outcomes that they are seeking to achieve in relation to the private rented sector, describing how those outcomes will be achieved and how success will be measured.

Better Regulation

Scottish Regulators' Strategic Code of Practice

In Scotland there are well-established better regulation programmes, including

measures to improve the way legislation is developed and applied in practice. In that

context, the Regulatory Reform (Scotland) Act 2014 includes provisions on promoting regulatory consistency, improving environmental regulation and a duty on

regulators to contribute to achieving sustainable economic growth.

The ' Scottish Regulators' Strategic Code of Practice' [2] was made under section 5 of the 2014 Act and was approved by the Scottish Parliament on 18 February 2015. The Code was developed with and by both regulators and stakeholders. The Code requires regulatory functions to be exercised in accordance with the principles of better regulation.

Section 5 (5) of the Act requires regulators to whom the code applies to have regard to the code (a) in determining any general policy or principles by reference to which the regulator exercises any regulatory functions to which the code applies, and (b) in exercising any such regulatory functions. This duty to "have regard to" the

Code means that the regulator must take into account the Code's provisions and give them due weight in developing their policies or principles or in setting standards or giving guidance.

The principles of the Code apply to local authority delivery of landlord registration functions and set out the approach that local authorities should adopt, including that regulatory functions should be exercised in a way that is transparent, accountable, proportionate, consistent and targeted only where necessary. This means that for the majority of landlords who do operate in a responsible way, registration should not be burdensome. There is a distinction between landlords who may simply be unaware of their legal obligations and those that deliberately choose to flout the law. It is for local authorities to follow the principles of the Code and target effective enforcement measures at the landlords who do not act within the law, to ensure they either improve their practice or they are removed from the sector. Prosecution should be considered for the worst offenders.

The Code advises that regulators should share information about compliance and risk. Data Protection legislation constrains the way organisations use information, but in the limited circumstances where the law allows, regulators with common interests or activities should agree secure mechanisms for sharing information. The UK Information Commissioner's Office ( ICO), the regulator of the Data Protection Act 1998, has issued the ' Data sharing code of practice ' [3]. This is a statutory code which provides a framework for organisations to make good decisions about data sharing and which local authorities should consider when engaging with landlords and other departments or agencies.

Legislative framework

Landlord registration is one of many pieces of legislation available to local authorities to help meet the aims set out in the Private Rented Sector Strategy. Local authorities should consider how landlord registration can be used alongside other legislation to drive improvements in landlord practice or tackle illegitimate landlord businesses. Section 85 of the 2004 Act is clear about the types of material that local authorities must have regard to when undertaking the fit and proper person test. In addition to evidence of specific offences, there is provision for authorities to take into account any contravention of the law relating to housing or landlord and tenant law. There is also provision for any other relevant material to be taken into account.

The chart below shows the timeline over which a range of provisions have been introduced to help drive improvements in the private rented sector, and which can be used to support landlord registration. The regulatory framework will be strengthened further by three key policies which are due to come into force by 2018 - the new private residential tenancy regime; the transfer of certain functions to the housing and property chamber of the First tier Tribunal (December 2017) and the regulation of letting agents (early 2018).

Other areas of legislation, some less obviously linked to housing, may also help to support landlord registration regulatory functions. These include:

• Trading Standards;
• Environmental Health and Waste Management;
• Unfair contract terms;
• Communal repairs and maintenance;
• Statutory Nuisance;
• Antisocial Behaviour

Landlord criminality

Whilst criminal landlords are in the minority, their illegal practices can have a disproportionate and devastating impact on communities and businesses across Scotland. Some criminality will be linked directly to the letting of houses, such as illegal evictions and operating as an unregistered landlord. In some cases, illegal landlord practice will be linked to other issues, such as providing illegal employment, benefit fraud, tax evasion, human trafficking, cannabis farms and money laundering. These are examples of material that is pertinent to the fit and proper person test.

The Scottish Government's publication ' Scotland's Serious Organised Crime Strategy' [4] sets out a vision of a Scotland free from serious organised crime, where communities are free from fear of violence; where businesses can compete fairly and prosper without being disadvantaged by those who launder money, evade taxes or cut corners; and where the vulnerable are protected from those who would seek to exploit, traffic or cheat them.

This vision maps well against the aims of landlord registration, by protecting households, neighbours and communities and in ensuring that good landlords do not see their business undermined by landlords who operate outside the law.

Local authorities should be aware that the private rented sector is attractive to criminals as a means of laundering money through property ownership and management. Criminals may also seek to legitimise their businesses by gaining recognition through various licencing and registration schemes. For example, successful landlord registration would be an attractive prospect to a serious criminal or crime group, who may use registered properties for activities such as prostitution, people trafficking, and the cultivation and production of illegal drugs.

As part of Police Scotland's commitment to developing a joined up approach to working against serious organised crime, there is a willingness to work with local authorities across a number of policy areas relating to the private rented sector, including landlord registration.

Recent improvements in joined up working practices include agreement by Police Scotland to establish a single contact point to Police Scotland for local authorities through their nominated Divisional Local Authority Liaison Officer via 101 or a locally agreed contact number. This is backed up with support from the National Police Scotland (Safer Communities) team offering specialist advice in relation to Serious Organised Crime.

Local authorities should consider how they can work in partnership with Police Scotland to identify landlords who are not registered or who are not suitable to be registered. In addition to those landlords involved in serious organised crime, this should extend to those involved in lower level crime. Examples of how local authorities are using Information Sharing Protocols to develop and implement more effective monitoring of compliance and enforcement processes are included later in this guidance.