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A REVIEW OF THE FIRST YEAR OF THE MANDATORY LICENSING OF HOUSES IN MULTIPLE OCCUPATION IN SCOTLAND

CHAPTER THREE PAST HMO POLICY AND LEGISLATION

A REVIEW OF THE LAST 20 YEARS

3.1 This Chapter provides a short review of key points in the development of HMO policy and legislation over the last 20 years, culminating in the introduction of the mandatory scheme on 1 ^st October 2000.

3.2 Mandatory licensing is the most recent expression of a long line of government initiatives on HMOs stretching over several decades in response to the perceived failings of the private rented sector to provide acceptable standards of accommodation, often for vulnerable households. The recent history is important to understand as it highlights how intractable some HMO problems have been and how difficult it has proved to produce effective policy and legislative solutions

THE 1980S: THE PROBLEMS WITH BED AND BREAKFAST ESTABLISHMENTS

3.3 The 1980s is an important period to understand. It was the events of that period that led to the first calls for some form of licensing of private sector HMOs. In the years following the passage of homelessness legislation in 1977, more bed and breakfast 'hotels' (B&Bs) appeared as local authorities increasingly resorted to using them as temporary housing for homeless families. It was the mid 1980s before authorities began to switch their policies and draw on their own stock but few avoided continuing residual use of B&Bs to met their statutory duty.

3.4 Another stimulus to the dramatic growth of B&Bs in the early to mid 1980s came from rising unemployment and uncapped government expenditure on the payment of board and lodgings allowances to supplementary benefit recipients (Currie and Miller, 1987). A new wave of entrepreneurial landlords entered the market to take advantage of the lucrative income that was available for accommodating unemployed single people. Central and local government became increasingly concerned about abuse of the social security system, the inappropriate placing of vulnerable families in low quality B&Bs and potential physical and sexual exploitation of young people by some unscrupulous landlords.

3.5 Such problems at the lower end of the private rented sector shaped the thinking in that era of the need for better legislation that targeted the owners of HMOs as much as their properties. Existing legislation only dealt with the property. At that time, the principle legislation to deal with HMOs was the consolidated Housing (Scotland) Act 1966 - itself consolidated in the Housing (Scotland) Act 1987 - together with the Public Health (Scotland) Act 1897. In other words, the housing problems of the 1980s had to be addressed by legislation whose roots were decades earlier. Other legislation played a lesser role - planning legislation, building control regulations, the Fire Precautions Act 1971, the Health and Safety at Work, Etc. Act 1974 and food hygiene regulations. This myriad of legislation and inconsistent definitions of an HMO and conflicting occupancy threshold numbers for intervention compounded the intrinsic difficulties of regulating the lower end of the HMO sector.

NEIGHBOURHOOD IMPACTS

3.6 A parallel concern in certain parts of Glasgow and Edinburgh was the growth in numbers of HMOs that were formerly family dwellings. This was largely due to the expansion of the student population and mainly affected larger tenemental flats in residential neighbourhoods. The concentration of shared flats led to a fear that the character of previously tranquil, high amenity areas would be transformed or destroyed by the unchecked growth in HMOs and increasing dominance in numbers of young people who were only transient residents with little understanding or respect for 'tenement living'. The two local authorities adopted various policies to try to counter this growth. At one point in the 1980s, Glasgow City Council unsuccessfully pursued private legislation and Edinburgh unsuccessfully sought new bye-law powers. Both authorities adopted development control planning policies that sought to control concentrations of HMOs to a certain percentage of all dwellings within specified boundaries and to refuse planning consent, where required, to HMOs that were flats in tenements. Chapter 9 provides further details of their policies but a consensus grew through the 1980s that planning powers were not an effective means of controlling the growth of HMOs and their concentration in certain areas. The difficulties were due to defining multiple occupancy in planning terms and of enforcing decisions that use of a family dwelling as an HMO must cease.

THE PRESSURE FOR LICENSING

3.7 The Housing (Scotland) Act 1987, part VIII was discretionary in the sense that local authorities were not under a duty to apply its powers. It gave authorities powers to establish a registration scheme for HMOs, to raise property management standards, to ensure the provision of a satisfactory means of escape, to control overcrowding and to apply a Control Order to take over management of an HMO for up to five years. Powers were also available for authorities to 'step in' and carry out works where an owner had failed to comply with a notice. An owner was guilt of a criminal offence for non-compliance with any notices served. These powers are still available today. A number of local authorities established registration schemes and applied the various notices, particularly fire safety notices. In a number of authorities, the standards of some HMOs were improved but there was a growing frustration at the problems with ineffective enforcement.

3.8 Despite this array of powers, the act had its limitations. The bureaucratic procedures surrounding the implementation of its powers and their ineffectiveness in ensuring better management by landlords were criticised by Glasgow and Edinburgh city councils. One solution proposed by a national campaign group including SCSH, Shelter and the City Councils of Glasgow and Edinburgh was the application of section 44 of the Civic Government (Scotland) Act 1982. This allowed the Secretary of State for Scotland to designate the letting of a House in Multiple Occupation as an activity that required to be licensed under the terms of the act. A key aspect of this approach was that it could address the landlord/ owner as well as the property.

3.9 Increased regulation of private sector HMOs could not have been expected. The Conservative Government supported market deregulation. However, a consultation paper (Scottish Office, 1988) raised the possibility of a change in HMO legislation. The paper presented a critical analysis of the problems with the legislation and in the HMO private rented sector: the imbalance between supply and demand, the inefficiency and bureaucracy surrounding the current enforcement powers, the vulnerability of some HMO residents and possible gaps in the existing range of powers. The paper rejected the idea of a new unitary HMO act but offered two alternative proposals for consideration. Either the legislative status quo could be maintained but supported by good practice guidance about how local authorities could more effectively operate their existing powers, or licensing of HMOs could be considered. This option was cautiously presented:

" ... the Government are (sic) not yet convinced that a licensing scheme is necessary. However, in the interests of debate the following outline proposals are put forward to suggest features a scheme would need to have to be more effective than the existing powers" (Scottish Office, 1988: 8).

3.10 The paper was a turning point in central government HMO policy in Scotland and the point at which HMO policy in Scotland diverged significantly from that in England and Wales.

THE DISCRETIONARY HMO LICENSING SCHEME

3.11 Using civic government act powers, the Conservative Administration introduced a Licensing Order (Scottish Office, 1991a) that allowed local authorities to establish, if they wished, a licensing scheme for particular houses in multiple occupation. A central feature of the Order was the licence applicant. For the first time, local authorities could take account of whether the applicant was a " fit and proper person to be holder of a licence" (Civic Government (Scotland) Act 1982, Schedule 1). The aim was to address one of the key limitations of the 1987 Act, its inability to address the honesty or past criminal record of the applicant as owner or manager. That was a central objective for those who supported the use of civic government powers as opposed to housing act powers.

3.12 The definition of a licensable HMO differed markedly from the definition in the Housing (Scotland) Act 1987. For licensing it set a minimum numerical threshold of 5 persons from more than 2 families. An HMO was:

"a house (other than a house in respect of which a Control Order under section 178 of the Housing (Scotland) Act 1987 is in force) which is the only or principal residence of more than four persons, being persons who are not all members of the same family or of one or other of two families" (Scottish Office, 1991a: 1)

3.13 The Order gave authorities discretion, not only to introduce a licensing scheme, but to decide the occupancy threshold level for licensing. Glasgow's original minimum level was HMOs with 10 or more residents, at least 2 of whom had to be on housing benefit, whereas Edinburgh's threshold was originally 11 or more residents and Aberdeen's was 5 or more residents (in all cases from more than 2 families). A circular (Scottish Office, 1991b) provided Guidance Notes to authorities on good practice and their available powers across different legislation. Authorities could incorporate tenancy management standards along with property and fire safety standards though this was not an obligation.

3.14 The Order included no exemption categories. The Guidance highlighted the targets for licensing to be bedsits, shared flats, shared houses/ flats and houses let in lodgings, implying the priority was HMOs in the private rented sector. However, it gave authorities discretion as to the types of HMOs and landlords to include within their schemes. It advised that exemptions should include tourist guest houses and hotels and that shared accommodation provided by educational establishments, registered under the Social Work (Scotland) Act 1968 " and accommodation provided by housing associations registered by Scottish Homes may not require action" (Scottish Office, 1991b: 4).

THE REVIEW OF THE DISCRETIONARY LICENSING SCHEME

3.15 Only seven local authorities introduced a discretionary licensing scheme. In 1997-98 a review of the effectiveness of the operation of the schemes was carried out for the Scottish Office (Currie et al, 1998). The scheme proved to have had only limited success despite the number of years some authorities had operated it. Standards in licensed HMOs had been raised, a more systematic approach to setting standards had been achieved than under housing act powers, standards were enforceable as conditions of licence approval, and the honesty and character of landlord licensees had been taken into account. However, there were numerous weaknesses in terms of the Order, the guidance and implementation by local authorities. Nearly 50 pointers for improved policy and practice were made. A variety of problems limited its success. The very ordered framework of civic government licensing procedures did not sit easily with the very diverse and dynamic nature of the private rented HMO sector and there was an inconsistency in approach between licensing powers and other regulatory powers. There were also some fundamental operational problems at local authority level:

• Inadequate staffing and financial resources
• Lack of priority for HMO licensing relative to other activities
• Problems with corporate working arrangements.

1997: THE LABOUR PARTY MANIFESTO COMMITMENT TO NATIONAL LICENSING OF HMOS.

3.16 The research into the discretionary licensing scheme was commissioned on the return of the Labour Party to government in 1997 in response to the Party's general election manifesto commitment in Scotland (and the rest of the United Kingdom) to require all local authorities to introduce " a full system of licensing" (Scottish Labour Party, 1997) to protect HMO tenants. The critical evaluation of the effectiveness of the discretionary licensing system contributed to the on-going development of policy options for delivering the electoral commitment of the government. Following a consultation exercise with local authorities and other interested parties, the Scottish Executive reported that " The great majority of respondents was in favour of mandatory licensing" (Scottish Executive, 2001a: 1) While different legislative and timescale options were considered, the Civic Government Act powers offered the quickest method by which implementation could be achieved on a mandatory, Scotland-wide basis.

3.17 However, not everyone working in the private rented sector shared this view about conditions in the sector. The Private Rented Sector Forum ² (PRSF) has argued that the presumption that the contemporary conditions in the private rented sector were so bad as to necessitate mandatory licensing was misplaced and ignored the modern, quality private rented market that had evolved and bore little relation to the state of the market two decades ago:

" it is the lack of perception of the modern residential letting market that has created many of the problems that have stemmed from the passing of the 2000 HMO legislation" (PRSF, 2002)

THE MANDATORY HMO LICENSING SCHEME

3.18 Considerable work had gone into developing the framework for the scheme when the death occurred in Glasgow of two students from a fire in a 3 person basement flat with bars across its windows and smoke detectors that did not work. In September 1999, the Minister for Communities announced that by April 2000, all Scottish local authorities would establish a mandatory licensing scheme under the Civic Government (Scotland) Act 1982 (Scottish Executive, 1999). However, because of the need for proper consultation, the accompanying guidance (Scottish Executive, 2000b) could not be finalised for that date. Introduction of the Order was consequently put back until 1 October 2000.

3.19 The definition of an HMO differs from that in the discretionary scheme. It is now:

"a house occupied during any period in Article 5 of this Order by more qualifying persons than the number specified in that article in relation to that period, being persons who are not all members either of the same family or of one or other of 2 families" (Scottish Executive,2000a: article 2(1))

3.20 In contrast to the discretionary scheme, the 2000 Order adopts a staged approach to the introduction of the scheme and sets a lower minimum threshold for mandatory licensing (Table 3.1). The threshold number of qualifying persons in an HMO that would require a licence drops to 3 over a three year, phased introduction, (as opposed to the discretionary scheme minimum of 5 persons, not all from one or two families). A minimum threshold of 3 encompasses HMOs such as those in which the 2 students died in 1999.

Table 3.1 Mandatory licensing phasing and thresholds (from Article 5 of the 1982 Act)

Source: Scottish Executive (2000b)

3.21 A " qualifying person" is a person whose only or principal residence is the HMO and a house is " any part of a building, being a part which is occupied as a separate dwelling and in particular, includes a flat" (Scottish Executive, 2000a: article 2(1)) and includes bedsits within a flat or house the occupants of which share cooking, toilet or washing facilities. A family is as defined in the Housing (Scotland) Act 1987, section 83 but extended to include same sex families. Licence applications are to be made by the owner of the HMO i.e. any person who " has a heritable right in the property" (article 2(2)d) including a corporate body as well as an individual. In the discretionary scheme, the responsible person in charge of the HMO was the applicant. Another change from the discretionary scheme is the power, with the approval of a sheriff, to allow designated local authority officers to enter suspected HMO premises. Previously this power was reserved to the police.

3.22 At its introduction (and since) the Executive emphasised that using the Civic Government (Scotland) Act 1982 also limited what could be done under a mandatory scheme. There had been pressure from some authorities for greater national consistency in standards and fees than resulted from the operation of the discretionary scheme. However, standards can only be recommended not imposed centrally; guidance can only be advisory; licensing fees cannot be set nationally; risk assessment cannot be the basis of licensing, and partial exemption from the standards is not permissible.

3.23 The Order adopts a policy of general inclusion of all types of multiple occupancy that fall within the general definition and then specifies excluded types of HMOs and tenures. Exclusions are:

• nursing homes
• residential homes
• school boarding accommodation
• monasteries and convents
• qualifying persons who each have a heritable right of ownership in the house (or a person who is part of the family of any such person)
• a house covered by a Control Order.

3.24 Term time accommodation for students is deemed their principal home and therefore licensable HMOs includes not only shared flats and bedsitters in the private rented sector but also university and college owned student blocks and halls of residence. Local authority and housing association hostels and shared accommodation are also included - unless registered under the Regulation of Care (Scotland) Act 2001. Woman's Aid refuges also have to be licensed but they are excluded from the newspaper advertising of applications and posting of site notices, although neighbour notification is still required. As well as covering premises rented as HMOs, the scheme is extended to include HMOs where occupancy rights only exist or residents pay no rent e.g. receive rent-free accommodation in return for labour.

3.25 It is the 1982 Act, not the Licensing Order that allows local authorities to set reasonable conditions to be met for a licence to be granted. As recommendations to local authorities, the guidance sets outs property and fire safety standards (the benchmark standards) and for the first time, standards for tenancy management, A further condition is that where planning permission for an HMO is required, a licence should not be approved until it has been confirmed that permission has been granted. The determination time for a licence application is extended to 12 months from 6 months under the discretionary scheme because it was accepted that, often, owners had to carry out such upgrading work to meet licensing standards that 6 months was an insufficient time allowance.

SUMMARY

3.26 Mandatory licensing evolved over the last twenty years from an intermittent concern by politicians, environmental health and housing professionals and some housing pressure groups about unsatisfactory living conditions in private sector HMOs. This concern culminated in the introduction of a discretionary licensing scheme for HMOs. With its limited uptake and limited success, the scheme was revised, improved and made mandatory by a Labour/ Liberal Democratic Administration in 2000. While the primary concern remained conditions in the private rented sector, the final form of the mandatory scheme encompassed shared accommodation in the public and voluntary sectors as well as the private sector.

3.27 The mandatory scheme was based on the Civic Government (Scotland) Act 1982. It allowed a staged introduction and adopted a lower minimum occupancy threshold, 3 persons, for licensing than operated with the discretionary scheme. It tightened up on a number of procedural weaknesses in the discretionary scheme, gave powers of entry to local authority officers and set out explicit property, fire safety and tenancy management standards. However, use of the Civic Government (Scotland) Act 1982 placed constraints on the extent to which fees and standards could be made mandatory.

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