Landlord registration: statutory guidance for local authorities 2017

4. The 'Fit and Proper Person' Test

Local authorities must refuse an application for registration if not satisfied that the applicant is a fit and proper person to let houses.

The fit and proper person test is intended to provide a level of assurance that the landlord or agent is a suitable person to let privately rented property. It is a standard that all private landlords are required to uphold throughout the time that they operate as a private landlord.

Local authorities must take account of the information prescribed in section 85 of the 2004 Act when carrying out the fit and proper person test. This includes, amongst other things, material which shows that the person has committed specific offences or contravened any provision of housing law or landlord and tenant law, material which relates to any acts of the relevant person regarding antisocial behaviour affecting the house, and repairing standard enforcement orders.

Section 85(4) requires local authorities to have regard more generally to any material if it is relevant to the question of whether the landlord or agent is fit and proper. This means that local authorities can consider material other than a conviction or tribunal decision to assess whether or not an applicant is fit and proper to be approved for registration.

Unless a local authority is satisfied that the applicant is a fit and proper person to let houses, the application should not be approved. Further information about the duty on local authorities to provide advice and assistance, where the authority proposes to refuse or revoke an application is contained in Section 5 "Duty to Provide Advice and Assistance".

Joint owners

The 2004 Act offers some key principles on how applications from joint owners should be processed.

Every joint owner of a property must submit a valid application. Jointly owned properties should not be let until all joint owners have submitted a valid application otherwise the owner who has not submitted an application will commit an offence.

It is for local authorities to decide whether to determine applications for all the joint owners of a property at the same time. Whilst this may mean that some applications may need to be put on hold until all joint owner applications are submitted, there are benefits to taking this approach. Where joint owner applications are approved at the same time, the registrations will have the same start and expiry dates. Subsequent renewals should be more straightforward than if there are multiple expiry dates. This approach also avoids any complications that may arise if one joint owner is a fit and proper person, but another joint owner is not.

If a local authority decides to assess joint applications separately, the individual registration periods should start from the date each application is approved. The dates for the joint owner's registration periods should not be aligned.

If any one of the owners is found not to be fit and proper, the application for that owner should be refused, unless steps could be taken to address the relevant concerns. The other fit and proper owners should be approved, as it is the person who is being assessed as fit and proper for entry on the register, not the jointly owned property.

The result of this would be that the jointly owned property should not be let by any of the owners. If the jointly owned property is let to a tenant, the owner who is an unregistered landlord is guilty of an offence under section 93(1) of the 2004 Act.

Where only some joint owners are registered (because one or more of them have failed the fit and proper person test) the local authority should write to them advising them of this fact and the consequences of letting out the property.

Where the 'registered' owner owns another property in his or her sole name he or she will be able to let that property as it is unaffected by the fact that a joint owner of another property is unregistered.

Change of owner

In some cases, an application may be submitted with a property that is already included under another person's registration. This is most likely to happen where the property has been sold and the previous owner has not updated their registration details. In such cases, the landlord should not be prevented from meeting their legal duty, and an application for registration should be allowed. Where a duplicate address is identified, the local authority should make appropriate enquiries to establish the facts relating to the relevant property.

Scrutiny of applications

The registration process should not be an onerous burden on responsible landlords, who meet all their legal obligations in relation to letting houses. The application process is in the form of self-declaration of circumstances based on the specified information that must be included in the application. It is the applicant's responsibility to declare that the information provided in an application is complete and accurate, to the best of their knowledge.

Local authorities should develop an explicit risk based approach, using their experience and local intelligence, to identify and target registrations where further scrutiny might be appropriate. Such an approach may take the form of random checks.

Case study

Renfrewshire Council send a 5% sample of applications to Police Scotland, who have specific officers dealing with landlord registration, to enable them to comment on applications. Cases that give cause for concern are referred to the council's Regulatory Functions Board, comprising of elected members of the Council. The Board has refused registrations based on information about criminality, the existence of a Repairing Standard Enforcement Order and failure to provide requested information.

Local authorities hold a range of information across different teams and departments that could be relevant in determining if a landlord meets the fit and proper person test. Those dealing with landlord registration applications should make use of information available within the local authority, including from:

• Legal Services/Licensing;
• Environmental Health;
• Housing;
• Antisocial Behaviour/Community Safety;
• Trading Standards
• Housing Benefits/Department for Work and Pensions;
• Homelessness Services;
• Money Advice/Debt Management Services
• Council Tax records

It may also prove useful to verify that the applicant is indeed the owner of the property, if it is suspected that the applicant is applying on behalf of an unsuitable owner.

The range of risks that each local authority considers and the weight that it applies to each will be a matter for local decision making but should include consideration of the following:

• offences that are required to be disclosed;
• intelligence provided by Police Scotland;
• evidence relating to the extent of the applicant's knowledge of private tenancy law and good practice;
• evidence of any delay or attempt to avoid registration;
• failure or delays in providing information;
• complaints from tenants or neighbours;
• issues arising from registration or property management in other local authority areas;
• any available information about the physical condition of the property;
• adverse decisions by the Housing and Property Chamber of the First Tier Tribunal ( FTT).

Local authority risk frameworks should provide the basis for deciding what, if any, further scrutiny is required. Where an authority is satisfied that there are grounds for additional scrutiny of an application the approach taken should be proportionate to the level of risk identified but re-evaluated should new information give rise to further concerns.

Additional scrutiny of applications could include:

• seeking specific documentation relating to the property or the landlord's approach to letting (e.g. copies of the lease to be used);
• a property inspection (e.g. in connection with the repairing standard);
• details of the basis for the appointment of any agent involved;
• contacting the tenant;
• seeking further information from Police Scotland.

Police intelligence on a landlord or agent that is of sufficient quality and weight may be helpful to local authorities when undertaking the fit and proper assessment.

Whilst convictions represent the strongest evidence, it is for local authorities to determine the level of evidence appropriate for refusing registration or removing a landlord from the register. Making use of all available evidence will help decision makers to demonstrate a more robust and risk based approach to the fit and proper test.

Local authorities should consider establishing internal and external Information Sharing Protocols ( ISPs) to set out the terms of disclosure and sharing of information about private landlords. Many local authorities have confirmed that this approach is being taken on the basis of powers under section 139 of the 2004 Act to help inform the fit and proper assessment of landlords applying to be registered.

Information is also shared with Police Scotland for the purposes of preventing and detecting crime under the Data Protection Act 1998. The legal basis for sharing information should be included in any protocols that are put in place.

There may be cases where there is evidence of repeated behaviours in relation to letting houses. These could include:

• use of unfair lease terms;
• delaying repairs and poor quality repair work;
• failures in communications with tenants;
• the inclusion of discriminatory terms in advertisements;
• advertising properties through social media and other methods in return for sexual favours;
• accessing a tenanted property without the tenant's knowledge.

Judgement about the impact of these behaviours is likely to be linked to the extent to which the tenant is vulnerable. This is particularly important where the landlord is targeting letting of houses at a particular client group, for example to those on benefits, migrant workers or those who do not speak English as their first language.

Both the paper application form and online form for landlord registration include a privacy statement that information held about the applicant may be used to determine whether the relevant person is a fit and proper person to act as a landlord or agent. It also confirms that relevant information may be shared with other local authorities and that information may be shared with, or sought from Police Scotland and other relevant authorities. Information may be shared in terms of section 139 of the 2004 Act and also for the purposes of preventing and detecting crime under the Data Protection Act 1998.

The Data Sharing Code of Practice, available on the Information Commissioner's website is a statutory code that provides practical advice to all organisations, whether public, private or third sector, that share personal data and covers systematic data sharing arrangements as well as ad hoc or one off requests to share personal data.

Relevant convictions

Changes in legislation relating to the rehabilitation of offenders mean that landlords applying for registration no longer need to disclose certain spent convictions. The Rehabilitation of Offenders Act 1974 (Exclusions and Exceptions) (Scotland) Amendment Order 2015 ( SSI 2015/329) introduced the concept of 'protected' convictions. A protected conviction does not need to be declared, even though landlord registration was previously an excluded profession under Schedule 3, section 9 of SSI 2013/50. Further amendments to the list of offences in the 1974 Act were made by SSI 2016/91, which came into force on 8 February 2016.

Local authorities should consider the impact of this change on the range of material that they must have regard to as part of the fit and proper person test. Local authorities should consider whether any protected convictions that are declared by an applicant, when they did not need to be declared, should be disregarded.

A local authority can request a criminal record certificate if it has grounds to suspect that information provided in an application is, or has become, incorrect in relation to material covered by section 85 (2),(3) and (4).

Case studies – Working with Police Scotland

Closer working with Police Scotland in North Lanarkshire has resulted in over 30 landlords being referred by the Fit and Proper Person Review Panel to the North Lanarkshire Licensing Committee. This approach has resulted in landlords being removed from the register/agreeing to be removed from the register prior to a Committee decision.

See Annex C – Case Studies 1 for further detail on the North Lanarkshire initiative, and other approaches to working with Police Scotland to inform the fit and proper person assessment taken by East Ayrshire, Dundee City, Angus and Moray Councils.

Requesting additional information

Whilst the information that must be provided in an application for registration is set out in legislation, some authorities have taken a risk based approach to requesting additional supporting evidence to show that all legal requirements are met. This approach is supported by section 97A of the 2004, which gives local authorities the power to obtain information from anyone associated with a particular property to help exercise landlord registration functions. Further information on how local authorities can use this power is contained in section 6 "Compliance".

The legislation requires applicants to make a declaration that they comply with all other legal requirements relating to their lettings. It is for local authorities to decide whether it is appropriate to request additional information to support an application, and to which applications this should apply.

Failure to provide supporting evidence might be an indicator that the landlord is not complying with all the legal duties relating to letting houses and as such may not be a fit and proper person. The person may be committing an offence if they knowingly give false information in connection with an application. Together with any other information held, local authorities must arrive at a balanced judgement on whether to approve or refuse the application.

Case studies - Requesting Additional Information

See Annex C – Case Studies 2 for examples of where local authorities are using existing powers to request additional information to support the fit and proper person assessment.

Decision making

Local authorities should establish appropriate arrangements for approving, refusing or revoking registration. Given variations in local authority governance structures, it may not be possible for all local authorities to operate in the same way. However, consideration should be given to the level of authority needed to make process applications and make routine decisions.

In many cases the decision to approve an application will be straightforward. However, refusing an application or revoking registration may have serious consequences for a landlord, tenant and agent and so authorities should have processes in place to ensure that decision making can be escalated to senior officers, scrutiny panels or licensing or registration committees as appropriate.

Given the range of practice across Scotland, local authorities may find it helpful to share information about what decision making structures they have in place.

Some cases will inevitably be more complex and so local authorities should seek advice from their own legal services where interpretation of the legislation is needed.

Approved applications

If an applicant is judged to be a fit and proper person for the purpose of registration, then the application should be approved and an entry made in the register.

The legislation states that the registration entry should be removed from the register on expiry of a 3 year period from the date of entry (generally the date of approval) or from the date registration is revoked if this happens within the 3 year period. For practical reasons, landlords who wish to continue to be registered can apply up to 3 months before the expiry date to ensure there is no break in registration.

If an application is submitted and approved after the expiry of a previous registration, the start date of the new registration period should not be backdated to the original expiry date. Registration is valid for three years although the fit and proper person status of the registered person can be reviewed at any time if there are concerns that registration requirements are no longer being met.

Refused applications

If a local authority is not satisfied that an applicant is a fit and proper person, and the person cannot take appropriate action to change that assessment then the application should be refused.

An applicant has the right of appeal against a refusal to register. The appeal must be made by summary application within 21 days of the decision. The sheriff may make an order that the person should be registered, specifying whether that person is fit and proper as an owner or an agent. If the sheriff refuses the application, there is a further right of appeal, within 21 days to the sheriff principal. The decision of the sheriff principal is final. Section 92ZA of the 2004 Act makes further provision for noting a decision to refuse entry to, or remove a person from the register. The note should be removed on expiry of the relevant period.

Where a local authority either proposes, or has decided, to refuse an application or revoke a registration, the local authority must provide the landlord and tenant with advice and assistance. See section 5 "Duty to provide advice and assistance" for further information about this duty.

HMO Licensing and Landlord Registration

Local authorities should consider whether a landlord has already been recognised as fit and proper through the HMO Licensing regime. Where a landlord holds an HMO licence, the landlord will be fit and proper for the purposes of landlord registration. In such cases local authorities should take a risk based approach to deciding whether the landlord can be passported onto the landlord register. This approach reduces the need for an unnecessary second fit and proper person test to be undertaken, for which a registration fee would not be chargeable. The legislation provides that where an application is made by a person who already holds a current HMO licence issued by the same authority, no registration fee is due, and no property fee is due for any house covered by the HMO licence.

HMO licensing focuses on the house as well as its management by a fit and proper person. The same fit and proper person test, as set out in section 85 of the 2004 Act, applies to both HMO licencing and landlord registration. It is possible for an owner to be registered as fit and proper but not granted an HMO licence for a house due to serious problems with the condition of the property. That owner could still obtain a licence for another house that meets all the local standards laid down by the authority. It should not be possible for an owner to be denied landlord registration but granted an HMO licence. Conversely, if a person failed the fit and proper person test for an HMO, then the local authority should consider the impact of that decision on the person's landlord registration status. In this respect, close working and sharing information between HMO licensing and landlord registration is crucial to the success of both regimes.