Landlord registration: statutory guidance for local authorities 2017

6. Compliance

Identifying unregistered landlords

Private landlords are expected to comply with their legal duty to register with the relevant local authority. If a landlord lets out a house to an unconnected person without being registered the landlord commits a criminal offence. The serious nature of the offence is reflected in the scale of the fine which can be applied on conviction and the Rent Penalty Notices that can be applied to unregistered landlords. A person guilty of operating as an unregistered landlord is liable, on summary conviction, to a fine of up to £50,000. In addition to imposing a financial penalty, the court may disqualify the convicted person from being registered by any local authority for up to 5 years.

Failure to register may be due to ignorance of the regime or a deliberate attempt to avoid registration but in both cases failure to comply with registration requirements is likely to have a detrimental effect on the quality of the let or the tenant's experience.

Identifying unregistered landlords remains a challenge and local authorities should use all sources of information available to them. These include:

• Housing Benefit/Local Housing Allowance claims;
• Council Tax register;
• Local Housing Allowance claims;
• Tenancy deposit scheme information;
• Environmental health reports;
• Reports/complaints from tenants, homeless applicants, landlords, members of the public;
• DWP (where Universal Credit is paid);
• Housing Options information where the client is renting; and
• the electoral roll.

Landlord registration teams should establish close links with colleagues who have an interest in improving standards in the private rented sector. It is expected that teams will develop clear information-sharing mechanisms with their own colleagues in Environmental Health, Anti-Social Behaviour, Homelessness, HMO Licensing and Social Care teams as well as any colleagues whose day to day work will help in establishing ownership of a property and identifying unregistered landlords. This joined up approach may also help to identify evidence that is relevant to a local authority's assessment of the fit and proper status of the landlord.

Local authorities can also access data from three approved tenancy deposit schemes in Scotland. All of them make information available to local authorities about the landlords that register with the individual schemes. It does not automatically follow that because a landlord has complied with tenancy deposit legislation they are also a registered landlord. Data provided by the tenancy deposit schemes is an accessible and useful resource that has been used successfully by some local authorities to identify unregistered landlords. All local authorities should consider the value of using this data in this way

Case studies

See Annex C – Case Studies 5 for examples of the approaches being taken to identifying unregistered landlords by Dundee, East Ayrshire, East Lothian, Fife, Midlothian and Renfrewshire Councils.

Tenants themselves are a useful source for identifying landlords and local authorities will find themselves engaging with tenants for a variety of reasons, e.g. payment of local housing allowance. Tenants who find it difficult to enforce their rights in respect of getting repairs done to their properties may also make contact with local authorities with a view to the council making a third party application to the Housing and Property Chamber of the First Tier Tribunal. Landlord registration teams may wish to make their colleagues aware of the online landlord registration system and the ability to search for registered landlords, and the importance of alerting their landlord registration colleagues when a search does not produce a match.

Likewise, prospective tenants may contact landlord registration teams when they cannot find a landlord's registration details using the public search function. This should serve as a prompt to the local authority to investigate that landlord further.

Externally there are many sources that can bring an unregistered landlord to light. For example, as Universal Credit rolls out, with the housing element being paid directly by the Department for Work and Pensions ( DWP), processes are in place for DWP to check the landlord status on Scottish claims and notify the local authority accordingly. This will ensure checks on landlord registration form part of a claim for assistance with housing costs for a private residential let in Scotland.

Adverts for let properties must display the landlord registration number or the phrase "landlord registration pending" when an application has been made but not yet determined. Local authorities may wish to carry out random checks on property letting web-sites; local adverts and social media to ensure this is the case. In some cases it may be that an advert is accompanied by a false registration number or declaration of an application pending. Local authorities may wish to consider how sample checking of property adverts may be incorporated as a regular check or part of a specific exercise.

Failure to comply with the duty to include specified information in adverts, without reasonable excuse, is a breach of housing law. Such material can be considered as part of the fit and proper person test. Section 89 (4) of the 2004 Act also makes provision to remove a registered person from the register if they fail to comply with this duty.

Duty of registered person to provide information

A registered person has a legal duty to keep the information they have provided in their application for registration up to date. If a change of circumstances means that the information becomes inaccurate, the relevant person must update their online registration account or notify the local authority in writing of the change that has occurred.

A person who, without reasonable excuse fails to comply with this duty is guilty of an offence and is liable on summary conviction to a fine not exceeding level 3 on the standard scale. It is for local authorities to consider whether prosecution is proportionate, depending on the nature of the offence and the detail of the change that was not notified to the authority. Where prosecution is not justified a review of the person's fit and proper person status may still be appropriate.

Power to obtain information

Local authorities have the power to require people associated with a property to provide information to enable or assist them to carry out their landlord registration functions.

Section 97A of the 2004 Act (as introduced by the Private Rented Housing (Scotland) Act 2011) sets out the power for local authorities to obtain information from anyone associated with a particular property to help with the exercise of landlord registration functions. The power can therefore be used to require landlords, tenants and agents to provide information.

One example of how this power may be used is by requiring an agent to provide a list of all properties they manage along with the owners' contact details and registration numbers. This is intended to help authorities to identify unregistered landlords and provides another useful tool to support enforcement, increase protection for tenants and improve management of the regime. Another example of how this power can be used is requesting additional evidence relating to gas and electrical safety, or buildings insurance for tenement properties to support the fit and proper person test.

It is an offence for a person to fail to provide information requested under section 97A, without reasonable excuse, or to knowingly or recklessly provide false information. In the case of a vulnerable tenant for example, it would be for the local authority in the first instance to decide whether they were justified in not providing the requested information and whether to refer it to the Procurator Fiscal. A person guilty of such an offence is liable on summary conviction of a fine not exceeding level 2 on the standard scale.

Case studies:

Dundee City Council has used this power to confirm the properties owned by a landlord/managed by an agent and to confirm a landlord's address.

Aberdeenshire and West Dunbartonshire Councils have used this power to put a process in place to request a list of clients from letting agents. This enables the Council to identify unregistered landlords.

Dumfries and Galloway used this power with online letting agents primarily based in England who were advertising rental properties without the inclusion of the landlord registration number, to request details of the landlord.

Glasgow City Council has procedures in place to use this power, and has used it to obtain information from tenants on one occasion and a letting agent on another.

Rent penalty notices

It is a criminal offence to operate as an unregistered landlord. Whilst prosecution is the ultimate sanction for landlords, rent penalty notices are be an effective tool for encouraging landlords to register. For a Rent Penalty Notice ( RPN) to be issued the local authority must be satisfied that the relevant person is not registered. An RPN cannot be issued for any other reason. Available evidence shows that the threat of a rent penalty notice is enough to prompt approximately 3 in every 4 affected landlords to take action to comply with registration requirements. This is a good example of how measures can be used to encourage compliance in a proportionate way and local authorities should consider using this enforcement measure in cases where an unregistered landlord is identified.

For RPNs to be fully effective, the local authority must communicate clearly with both the landlord and the tenant. Section 94 of the 2004 Act covers service of notice of an RPN and includes scenarios where the landlord cannot be identified, the current address is unknown or there is a failure to serve notice on the tenant or any agent acting for the landlord.

Where the tenant is in receipt of housing benefit or local housing allowance, effective procedures and communication routes should be established with colleagues processing those benefits to ensure that as far as possible the correct housing entitlements are paid.

With the roll out of Universal Credit ( UC), the way in which claimants receive help with housing costs has changed. Under UC the rent element is paid by DWP. Both claimants and landlords can apply to have the housing costs paid directly to the landlords in some circumstances.

Due to the rules on change of circumstances under UC, the period covered by the RPN may not correspond with the tenant's assessment period. In some cases payment of housing costs may continue to be made, despite an RPN being in effect. In other cases, payment of housing costs may not be made for a period beyond the term of the RPN so that the tenant may have no funds to pay rent which they are liable for. Effective application of a rent penalty notice would ideally involve liaison with the tenant or DWP with regard to payment cycles, to ensure that the penalty is effective and the tenant is not disadvantaged. It is however recognised that this information may not be easy to access and that additional resources may be required.

DWP has expressed a willingness to work with local authorities to help facilitate rent penalty notices but it is clear that the current UC framework is likely to impact on the effectiveness of this enforcement measure. The legislation is not prescriptive about the effective date or period of RPNs, and so local authorities are able to consider how they will apply rent penalty notices in the light of the UC framework.

Discretionary Housing Payments may be considered if a tenant is placed into rent arrears in these circumstances.

Additional fee

The legislation ( SSI 2005/558) states that where the application is submitted only after the local authority has issued two separate requests for an application to be made, an additional fee of £110 is payable. It is important that the fee is applied consistently by all local authorities. This demonstrates to compliant landlords that the sanction is being applied effectively against non-compliant landlords. It also ensures that local authorities receive the income from fees to cover the additional costs of dealing with unregistered landlords and those that do not renew their applications. There is no provision in legislation for a right of appeal against the additional fee.

Overview of breaches, offences and sanctions

When a landlord breaches the terms of the 2004 Act, there are a range of sanctions available under the 2004 Act, including criminal prosecution or disqualification. These sanctions effectively bar a landlord from letting a house where the landlord is not fit and proper. There are several ways in which a landlord or agent might be in breach of registration requirements and there are cases where immediate recourse to prosecution, removal from the register or a rent penalty notice will be disproportionate, in the first instance.

The table at Annex B summarises the types of breaches and accompanying sanctions available through the 2004 Act.