« Previous | Contents | Next »
Listen
A REVIEW OF THE FIRST YEAR OF THE MANDATORY LICENSING OF HOUSES IN MULTIPLE OCCUPATION IN SCOTLAND
EXECUTIVE SUMMARY
CONTEXT
1. On 1st October 2000, a scheme for the mandatory licensing of Houses in Multiple Occupation (HMOs) was introduced by an Order under the Civic Government (Scotland) Act 1982. Local authorities in Scotland were required to establish local licensing schemes which in their first year, encompassed HMOs with six or more occupants who were not all members of one or two families. There are very limited exemptions from the scheme of types of HMOs; otherwise it covers HMOs in the public, private and voluntary sectors. A reduction of the occupancy threshold number by one will take place in each successive year, until by October 2003, HMOs for three persons require to be licensed. Guidance was published by the Scottish Executive to assist local authorities in the implementation of their local schemes and to encourage maximum consistency of approach across Scotland. The Guidance includes recommended standards for the accommodation, fire safety and tenancy management.
2. In May 2000, the Minister for Communities undertook to review the effect of the mandatory licensing scheme after its first year of operation. The Scottish Executive commissioned a research study to consider the progress of the scheme. Given the short period the scheme had been in operation and its focus on the larger sizes of HMOs, it was recognised that the research could provide initial findings only. The HMO research was carried out in conjunction with a wider study of the private rented sector in Scotland.
RESEARCH METHODS
3. The research methodology combined qualitative and quantitative methods: a postal survey of all 32 local authorities; eight case studies based on interviews with local authority lead HMO officers; a telephone survey of 10 private sector owners of an HMO licensed in the first year; a telephone survey of accommodation managers in three universities and two housing associations affected by the licensing scheme; a telephone survey of three private owners of three person HMOs due to come in to the scheme in 2003; face-to-face interviews with 13 private sector HMO tenants, and telephone and face-to-face interviews with representatives of nine organisations with a particular interest in the scheme.
4. Relevant documentary information was also incorporated from the Social Justice Committee's inquiry into the scheme, the minutes of the Scottish Local Authority HMO Benchmark Group, HMO reports and publicity material from local authorities and some individual submissions received about the operation of the scheme.
MAIN RESEARCH FINDINGS
In the first year of the mandatory HMO licensing scheme:
The effectiveness and the impact of mandatory licensing
1. The scheme was effective for those HMOs that were licensed. They achieved very good standards although private owners considered the standards had been over-onerous
2. There was consensus that in the first year of licensing, overall, the scheme had only limited effectiveness in raising standards because just over half of the 6 person HMOs that should have been licensed by the end of the first year, appear to have been licensed
3. One of the main problem local authorities faced in achieving full licensing coverage of the six and above HMOs, arose from the failure of many HMO owners to apply for a licence. There was general agreement that the owners who came forward early with applications were better managers and more conscientious owners than those who evaded licensing
4. The types of properties that had been licensed in the first year tended to be the owned by the more conscientious private sector HMO owners committed to the business of renting and by non profit owners
5. There was a broad consensus that over the first year of the licensing scheme, there had been no major decline in the number of privately rented HMOs or in occupancy levels. There had been sales and reductions in occupancy numbers but these did not appear to have been significant
6. Most private sector HMO owners supported the principle of licensing. It was seen as legitimate for the government to seek to ensure good standards and safety in shared accommodation but they were critical of its implementation, partly for the standards it imposed and partly for their sense that with too many owners having failed to apply for a licence, it had not delivered any tangible benefits to them for having come forward to have their properties licensed
7. The majority of owners of larger HMOs who had voluntarily licensed their properties in the first year of the scheme, indicated that they would stay in the HMO rental business for some years, despite the additional costs incurred due to licensing. However, some owners of larger HMOs were likely to sell but licensing regulation may only be part of their reasons
8. There was no consensus that the future number of HMOs in the private rented sector would decline. Half of authorities believed there would be no negative impact on future supply but a greater weight of opinion from the other authorities together with HMO owners, universities and some key player organisations feared that the owners of the smaller 3 person HMOs and to a lesser extent, owners of 4 person HMOs will leave the market or reduce occupancy levels rather than face licensing
9. Overall, there was no confidence from contributors that the private rented HMO sector will expand. There was seen to be only very limited potential for new entrants to the sector, but this would depend on a buoyant local housing market in specific locations and was likely to be very selectively targeted such as at the top end of the rental market
10. Although information was limited, there was a consensus that the first year of the scheme had not resulted in significant rent rises for HMO tenants in the private rented sector. Where rents had risen, it seemed to be as much a response to inflationary factors or the length of time since previous rent increases as to moves to recoup the capital expenditure required to meet licensing costs
11. There was a degree of consensus but with dissent by a number of local authorities, that licensing will lead to rent increases in the future
12. Owners of HMOs in the non-profit sector such as universities and Abbeyfield Societies, were more explicit about the inevitability of licensing costs being passed on to tenants than private sector HMO owners
The promotion of the mandatory licensing scheme
13. Local authorities had produced leaflets and publicity material and held public meetings about the introduction of the scheme, some involving Scottish Executive staff, but the general consensus was that, with some notable exceptions, pre-scheme promotion and publicity and information for the start of the scheme was inadequate and poorly planned
14. The critical attitude of HMO owners to the lack of clear information was often linked to their initial, personal experiences with authorities, particularly involving poor communication by authorities and what they perceived as inflexible attitudes by officers
15. There was no single, over-riding explanation for the poor introductory promotion of the HMO scheme across Scotland. The main reasons identified by participants were: (1) the failure by authorities to give licensing sufficient priority and resource it with sufficient staff; (2) the closeness of the release of the final version of the Guidance to the commencement of mandatory licensing on 1 st October 2000, and (3) disputes within local authorities and with fire brigades about standards to apply and where the professional leadership of the licensing scheme should rest
16. Publicity material about the scheme was targeted almost exclusively at HMO owners. Material designed specifically for tenants was absent. The material written for tenants was basic and incorporated as a minor section of leaflets designed for owners
17. Apart from short, general leaflets, detailed information to HMO owners on rules, procedures and standards for licensing was very largely, uplifted from the Scottish Executive Guidance
Licence application processing, administration and joint working
18. A very low proportion of HMO licence applications for HMOs of 6 or more persons was approved. Of over 1300 applications received in the first year, only 16% were approved within the 12 month period
19 Comparison of the survey statistics with official statistics to 31 March 2002 indicates a marked improvement in processing after the first year of the scheme. The number of applications approved in the first 6 months of the second year of the scheme was almost 250% higher than in the preceding 12 months. The increase was from 206 to 710 in total.
19. The norm across the case study authorities was the establishment of joint interdepartmental working groups to prepare for the introduction of the mandatory licensing scheme
20. Despite the acknowledged benefits of joint working groups, most authorities either disbanded or suspended them soon after their local licensing scheme began. Two notable exceptions were the HMO working groups of Glasgow and Edinburgh city councils which continued to operate to deal with continuing policy development needs and co-ordination across departments or with other agencies
21. There was no unanimity of view by local authorities on which department or professional officer group was best placed to take the lead role for HMO licensing. The lead was most commonly taken either by environmental health professionals or licensing administrators in central services departments
22. In some authorities, the lead role of one department was, in practice, split, with a loss of unified control of the processing and decision-making on applications. The consequences of the split responsibility for technical and administrative aspects of the licensing process can result in delayed decision-taking and poor interchange of information between key participants
23. HMO inspections were universally based on informal arrangements between officers. The predominant core inspection 'team' was composed of environmental health, building control and fire officers
24. Just over half of authorities had a positive, trouble free working relationship with their regional fire brigade. The remaining authorities reported some minor and major problems had arisen
25. Minor problems between local authorities and fire brigades were mainly around difficulties in co-ordinating joint inspection appointments. Major problems arose in some authorities over the requests from fire brigades for the payment of a fee, the fire safety standards that should be applied to HMOs and who had the primary responsibility for fire safety standards - building control officers or fire officers
26. The view of the senior fire officer's organisation (CACFOA) was that the primary interest of fire officers was to ensure they were properly consulted and that appropriate safety standards were applied to HMOs
27. There was no consistent approach to the charging of fees by fire brigades for inspections and reports or the payment of fees by local authorities
28. Other than where housing officers had the lead role and in the City of Edinburgh Council, housing officers generally played no role or a minor and variable role in HMO licensing
29. The private sector HMO owners generally thought that the inspection process had been efficient and officers had treated them fairly but they were critical that officers were sometimes over-preoccupied by minor details, poorly co-ordinated in their approach to standards and rather inflexible in their unwillingness to discuss issues
30. Private sector HMO tenants who had lived in their accommodation before the approval of its licence indicated they had no contact with any inspection officers
31. Local authorities views were divided about the viability of looking to a future where HMO inspections could be carried out by only one skilled officer
32. Nearly all local authorities had good relationships with the police in relation to the supply of reports on applicants
33. Very few local authorities had made any contact with their Procurator Fiscals office
34. Where local authorities such as Glasgow and Edinburgh had sought to have an HMO owner prosecuted for evasion of the licensing scheme, the standard of evidence required had proved very demanding and was considered a significant obstacle to achieving a successful prosecution
Data collection and monitoring
35. Local authority knowledge on the size of the HMO sector and the number of HMOs of different sizes within their area was very poor, particularly for the smaller 3 person HMOs
36. Local authorities employed a wide variety of methods to identify HMOs but there was little evidence of a systematic approach to data collection and investigative work having been adopted
37. The city councils of Edinburgh and Glasgow were the only authorities where evidence was found of systematic street-level, survey work to identify HMOs
38. The costs of investigative survey work were incorporated in licence fees and therefore charged against owners who had made applications for a licence
39. There was an inconsistent and muddled position regarding rights of access by HMO officers to housing benefit records in order to identify potential HMOs
40. Virtually no integrated HMO/ licence data-base management existed in the case study authorities. The use of key performance indicators appeared limited to Edinburgh and Glasgow City Councils. There was no evidence of any performance monitoring of the licensing scheme at members level
Costs and fees
41. Only a third of local authorities provided information on the first year costs of operating their mandatory licensing scheme
42. Only half of local authorities provided information on whether the first year of their mandatory licensing scheme had operated with a surplus or deficit
43. Of the 11 local authorities that provided operational cost information, their annual costs varied from 1400 to 760,000
44. Of the 16 local authorities that provided information, 13 reported an operating deficit for the first year of the scheme. All but one deficit was under 17,000
45. Generally, across local authorities, it did not appear that a solid financial framework was in place to accurately identify the costs of operating mandatory licensing schemes
46. There was considerable variation in licence fees across local authorities. Just over half of authorities charged fees of between 31 and 133 per annum or equivalent. Nine authorities charged between 233 and 300 per annum and 6 charged between 400 and 567 per annum or equivalent
47. While most rural authorities had low fees so too did a number of urban authorities
48. Generally, private sector HMO owners expressed limited criticisms of the licence fee they were charged. Most, faced much higher other licensing costs connected with plans, certificates and property upgrading compared to the licence fee
49. The 3 universities in the research were more dissatisfied with the licence fees than the private owners of HMOs
50. The 3 universities faced protracted negotiations with local authorities before reaching an agreement on acceptable charges for their student blocks and halls of residence
51. Even after agreement with their local authorities, the three universities faced licence fees for student blocks and halls of residence, estimated over 3-4 years, at a minimum of 300,000 excluding the licence fees for traditional tenement flats that they owned
52. Nearly all local authorities defended their fees as reasonable
53. There were contrary views by local authorities as to whether applicants who had applied for a licence and paid their licence fee were effectively subsidising the costs of authorities investigating non-compliant owners. Some thought this was inevitable. Others denied it, pointing out that their schemes were in deficit despite the fees paid
54. The provision of grant aid by local authorities to HMO owners to meet part of their costs in upgrading their properties to obtain a licence was very limited
The benchmark standards
55. Over three quarters of authorities had adopted the Scottish Executive's recommended benchmark standards without alteration or with only minor alteration
56. However, the six authorities that had made significant alterations to the benchmark standards included the city councils of Dundee, Edinburgh and Glasgow where the great majority of HMOs in Scotland are located
57. Three quarters of local authorities found the incorporation of parts of the technical Standards into the benchmark standards to be quite helpful
58. The main criticism made by local authorities of parts of the Technical Standards was the inclusion of some Technical Standards for new buildings in setting the standards for old buildings, particularly tenement flats. Difficulty with the application of the fire safety standards were the main concern, particularly secondary escape routes
59. The owners of private sector HMOs generally agreed with the need for adequate fire safety precautions in HMOs but had mixed views about the appropriateness of the fire safety standards their local authorities had adopted
60. While some private HMO owners felt the fire safety standards reasonable and understandable, others thought some standards applied were too onerous or trivial and unnecessary
61. The tenants in private sector HMOs generally had a favourable opinion of the standard of their accommodation and a good awareness of the fire safety equipment within the HMO. Their HMO's state of repair, cleanliness and the facilities for cooking were all rated good or average. Occasional examples of dissatisfaction arose with the quality of heating appliances supplied by the landlord
62. The housing associations were not favourably disposed to their local authority's standards for fire safety, believing them to be over-onerous. The universities were less exercised by fire safety issues but other aspects of the benchmark standards such as heating systems and building maintenance exercised their concerns
63. Delays occurred in promoting schemes and processing applications in some authorities because of differences of opinion between local authority officers and fire officers as to the most appropriate fire safety standards to apply
64. Fire brigades wanted a higher standard of fire detection and fire alarm system for HMOs with 5 or less occupants than was recommended in the Scottish Executive Guidance
65. Where there was a dispute on the appropriate fire safety standards, local authorities took a conservative view of fire risks in smaller HMOs and adopted the higher standards recommended by fire brigades
66. The relationship between planning consent for change of use to multiple occupancy and approval of an HMO licence was confused with local authorities adopting contradictory positions on whether planning consent was a precondition of award of an HMO licence
Tenancy management standards
67. Over three-quarters of local authorities stated that they gave tenancy management standards equal priority to benchmark standards in the assessment of licence applications
68. Nineteen authorities reported no significant problems when assessing tenancy management standards but only five of these authorities had any contact with HMO tenants
69. The majority of private sector HMO tenants knew they were living in a licensed HMO. Their landlord had been the main source of this information not their local authority
70. Only 13 local authorities had plans to improve their communication with HMO tenants
71. Edinburgh City Council had developed a proactive role in the assessment of tenancy management standards that could be considered good practice
72. Checking tenancy agreements was the main focus of local authorities in assessing tenancy management standards
73. Over half of local authorities reported no significant problems with establishing and assessing tenancy management standards
74. Most private sector HMO tenants rated their landlord's management as 'good'
75. The assessment of tenancy management standards had not proved very problematic for most private sector HMO owners
76. HMO owners may use lawful leases but not necessarily operate lawfully.
Exemptions, timescales and threshold numbers
77. Three-quarters of local authorities wanted no changes to the categories of HMO exempted from the mandatory licensing scheme
78. A small minority of local authorities were supportive of the exemption of Abbeyfield Society homes but most could see no justification for distinguishing the need to protect elderly residents in Abbeyfield homes from the need to protect other vulnerable groups by requiring a licence to be obtained
79. Abbeyfield Scotland believed Abbeyfield homes should be exempt, given the extent of similar regulation they already underwent, the voluntary fire safety inspections carried out and internal audit that the homes were already subject to
80. Hardly any local authorities supported the exemption of very sheltered housing schemes from licensing, although associations with such schemes thought that licensing was duplicating other regulations already in operation and added very little value to the health and safety of residents
81. No local authorities supported the exemption of woman's aid refuges. Grounds against exemption were that the women and children who lived in them, even if only temporarily, deserved the same standard of protection from fire provided by licensing as any other group living in shared accommodation
82. Scottish Women's Aid believed exemption from licensing was justifiable. Grounds for exemption included: voluntary fire inspections were carried out by fire officers; the refuges were not the only or principal home of the women and the refuges have to meet certain standards under agreements with their owners - local authorities and housing associations
83. Almost two thirds of local authorities wanted no change to the timescale for reducing the occupancy threshold in October 2002 or to the minimum level of three that the threshold will reduce to in October 2003
84. Across the third of authorities who favoured some change, there was no consensus as to what the change should be
85. Two thirds of local authorities did not support any less strict regulations and standards being applied to three person HMOs than applied to larger HMOs
86. There was no consensus across local authorities as to whether or not to exempt the landlord plus two tenant's category and the landlady and two lodger's category
87. Almost all the private sector HMO owners favoured the exemption of three person HMOs and thought that if they were included in the scheme, there would be a serious impact on supply
88. The universities did not seek exclusion of three person HMOs but Edinburgh University was concerned about the impact of including landladies with two lodgers. Dundee University owned 3 person flats and said they would not be able to afford the fire safety and maintenance improvements and would be sold
89. Private sector owners of three person HMOs thought licensing was quite unnecessary and would have serious consequences for the financial viability of renting. Selling was a possibility
90. There was no consensus across key player organisations about excluding three person HMOs. The landlord and agent organisations wanted them exempted. Other organisations had no official view but leaned towards inclusion rather than exemption. However, they were conscious of particular issues at this level of occupancy and were cautious of simple blanket inclusion of every type of three person HMO.
« Previous | Contents | Next »