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

CHAPTER TEN TENANCY MANAGEMENT STANDARDS

10.1 While securing satisfactory property and fire safety standards is a central feature of mandatory licensing, the Guidance accompanying the mandatory licensing scheme incorporates standards that focus on an owner's management of his or her tenancies. They address the provision of lawful, written tenancy agreements, good management practice towards tenants, whether the owner is a fit and proper person to hold a licence and whether there is evidence of anti-social behaviour by the owner's tenants. To assist local authorities in securing the best standard of tenancy agreements, a checklist is included of items that reflect the legal responsibilities, good practice and good behaviour of both landlords and tenants. Authorities are expected to ensure that as a condition of licence approval, the standards, or reasonable alternatives depending on the type of HMO occupancy, have been met. The Guidance presumes that authorities will give the tenancy management standards equal priority to the property and fire safety standards.

PRIORITISING TENANCY MANAGEMENT STANDARDS

10.2 Twenty-five authorities (78%) stated that equal priority was given to tenancy management standards in the assessment of licence applications. Seven (22%) gave less priority than the benchmark standards. Explanations offered in the postal survey by six of the seven authorities for according lower priority to tenancy management standards, reflected either organisational values or a view that the particular local housing environment did not justify equal priority with property and fire safety standards. For example, Falkirk Council stated that " social and tenancy problems have not been previously raised as an issue"; for Perth & Kinross Council it was " because of the nature of the HMOs in the area" and for East Ayrshire Council, tenancy management standards were:

" initially considered less of a problem because of the HMO types being dealt with (e.g. council's own accommodation and very sheltered housing) but anticipate this will change in the future" (East Ayrshire Council, postal survey quote)

Communicating with tenants

10.3 Assessing tenancy management standards involves communication: communicating with the owners and communicating with the tenants. Authorities were asked whether there was any contact with HMO tenants as part of consideration of the licence application and whether they thought tenants were aware of what was going on (Table: 10.1).

Table 10.1 Communication by local authorities with HMO tenants as part of the assessment of licence applications

Source: local authority postal survey

10.4 Only five (16%) authorities had any contact with tenants as part of the assessment of the tenancy management standards. Not surprisingly, they included no authority for whom tenancy issues had lower priority than the benchmark standards. It was not clear from the postal survey information whether the few authorities that had contact with tenants had done so formally by contacting tenants to talk about their lease, their landlord's style of management, etc., or whether it was as a result of incidental contact by officers carrying out property and fire safety inspections. However, the case study of Edinburgh City Council, presented a proactive style of working with HMO tenants (originally highlighted in the review of the discretionary licensing scheme (Currie et al, 1998)). From the case study interview, the lead housing officer explained that housing officers carried out stand-alone HMO visits separate from the inspections of the environmental health and fire officers as the owner would be present at these inspections. Visits aimed to speak to a tenant about how the property was being managed without the presence of the owner. Thereafter, a meeting was held with the owner who may be offered a model lease to adopt or requested to amend his or her own. The officer commented: " there has not been one lease not requiring some improvement". The terms of the model lease were adopted from the Guidance checklist and included an undertaking that the landlord would inform the council of any proposed changes to the lease and seek council approval (only if it was the council's lease). The final stage of the housing department input was a memo to environmental health HMO officers advising on its recommendation.

10.5 As so few authorities had communicated with tenants, it was not surprising that lead officers thought that the awareness of HMO tenants of the licensing process was very limited. Only seven authorities (22%) thought tenants were 'quite aware' of licensing (Table 10.1). The other 25, (78%), either did not know or thought they were 'not very aware' of what was going on for their ultimate benefit.

10.6 Interviews with the small sample of 13 private sector HMO tenants revealed that a majority, 10, knew that their accommodation was licensed. Five had moved in before licence approval and five after. In no case was the source of their knowledge, their local authority (Glasgow or Edinburgh). Six learned from their landlord, the others from a mixture of sources (making a housing benefit claim, a written notice in the HMO, the terms of their lease, their employer). The fact that no Edinburgh tenant identified the local authority as the source of information despite the input from the housing department was because 5 of the 6 Edinburgh tenants had moved in to their accommodation about, or subsequent to the date of the approval of the licence. When asked if they thought tenants in general, living in HMOs needed more information and advice, 11 out of 13 said yes.

Improving contact with HMO tenants

10.7 Compared with the extent of contact with tenants in the first year of the scheme, a more encouraging picture emerged on local authorities' plans to provide tenants with more information in the future. Thirteen authorities (40%) indicated this was the intention (Table 10.2). A frequent plan was for information leaflets dedicated for tenants (specific literature for tenants was virtually absent in any authority in the first year of the scheme). One or two authorities mentioned using the local press and council newsletters. A constructive approach proposed by Inverclyde Council was its plan to require the licensee to display the licence in the HMO. This would ensure that with tenant turnover, new post-licence approval tenants would be aware of the status of the HMO. This would have been a useful inclusion for the Guidance.

Table 10.2 Local authority plans for improved communication with HMO tenants

Source: local authority postal survey * percentages rounded to 100

LEASES AND TENANCY MANAGEMENT STANDARDS

10.8 From the case study interviews, it was not always clear whether some officers were checking the tenancy agreement (lease) which is a very specific legal document or wider tenancy management standards. In some cases, these terms were clearly distinguished. In others, lead officers used the 3 terms: tenancy agreement, tenancy management agreement and tenancy management standards almost interchangeably without any obvious distinctions drawn between them.

10.9 The Guidance advises local authorities: " tenancy management issues such as leases, can often be checked without a visit to the HMO" (Scottish Executive, 2000b: 14). Together with the fact that the owner has to submit a copy of the tenancy agreement (if one is used) along with the licence application may partly explain why so few councils had any contact with tenants. From case study interviews, the common practice for assessing the lease, other than in Glasgow and Edinburgh, was for it to be forwarded to a council solicitor or to a housing officer who consulted with the council's solicitors if necessary. Contact with the owner was only needed if problems arose or amendments had to be made. Lead HMO officers identified council solicitors and housing officers as " the experts" though the research did not explore their level of expertise in the Housing (Scotland) Act 1988 and common law. These are specialist fields of work in terms of assured tenancies, short assured tenancies and common law obligations.

10.10 In evaluating whether leases conformed to local licensing standards, Glasgow and Edinburgh city councils adopted very different approaches. The Edinburgh approach was described above. It involved a very active engagement with tenants by the housing department. Glasgow did not itself vet tenancy agreements or contact tenants. The responsibility for confirming that the lease conformed to the council's tenancy management standards lay with the owner's solicitor. If the owner used no lease, the council offered a model lease. The lead HMO officers, being environmental health and building control officers, had received only basic training in landlord-tenancy law and the housing department played no role in licensing at HMOs. The HMO unit liaised with Shelter if tenants contacted them about problems with their landlord. Officers considered this approach appropriate. There were limited staff resources available compared to the scale of the exercise involved in scrutinising so many leases and Shelter's aid centre staff were considered expert in dealing with landlord-tenant disputes. However, the lead officer acknowledged that transferring the responsibility to the owner and solicitor had not necessarily eliminated problems:

"At the outset, applicants and solicitors have shown a considerable degree of ignorance about drawing up tenancy management agreements in concurrence with the council's standards. Some solicitors sign happily, statements that their client's tenancy management agreements comply with requirements (though turns out this is not always true) while other solicitors engage in convoluted arguments with the Unit - all very time consuming" (Glasgow City Council, lead officer).

ACHIEVEMENTS AND PROBLEMS IN DELIVERING GOOD TENANCY MANAGEMENT STANDARDS

10.11 Although the preceding sections have shown that assessing tenancy management standards has not been straightforward, 19 authorities (59%) said they had no significant problems with establishing and applying tenancy management standards in the first year of the scheme (Table 10.3). However, eight of those authorities had approved no applications in the first year and 14 had made no contact with HMO tenants during the licensing process. (Overall, 27 authorities had no contact with tenants as part of the licensing process - see Chapter 5).

Table 10.3 Problems with assessing tenancy management standards

Source: local authority postal survey

10.12 Seven authorities (22%) reported that significant problems had arisen. Those identified were: lack of staff; lack of understanding of tenancy issues; the wide range of HMOs to deal with; standards for B&Bs; the unwillingness of owners to issue agreements guaranteeing minimum lengths of stay because of the short term nature of occupation and, " problem tenants".

10.13 The tenants provided a perspective on how tenancy management standards worked out in practice. When asked their view of their landlord's management, 10 of the 13 private sector HMO tenants rated it as 'good'. One tenant commented: " excellent - good at maintenance, keeps you in touch, tackles problems". Another said his landlord was " easily contacted", visited the property twice a week to do the cleaning and gave all the tenants his mobile and home phone numbers. For the remaining 3 tenants, their landlord's management was only average, one commenting that " getting things done was difficult".

10.14 The ten private sector HMO owners were asked what role tenancy management standards had played in the inspection and approval of their applications. The consistent thread across all the cases concerned inquiries about their tenancy agreement rather than broader management issues. Some had no problems having their tenancy agreement agreed by their council. Others said the council had made them introduce changes. For one Dumfries & Galloway owner who only provided a rent book, had to provide a " letter setting out their mutual rights and responsibilities". Conversely, an Edinburgh owner said no comments were made about the agreement he used but as no rent receipts were provided, he had to agree to change his practice but overall it was all " pretty low key". However, a property portfolio owner in Glasgow said the lease had been " the biggest hassle" with the council. A " licence agreement" had been in use but the council provided a "draft licence agreement" (the owner's term). Some parts of it were not applicable so she did an alternative version. The council would not approve it but her solicitor said it was not his responsibility to approve it for licensing requirements. Eventually " the council conceded" and accepted that the solicitor's version. Although having been in the residential rental business for many years, another Glasgow owner had not operated with tenancy agreements in any of her properties and was required to have one for all her HMOs. She said she had " no real dispute" with that, other than its length - eight pages.

10.15 Overall, the private owners, other than the Glasgow owner, had not found the assessment of the tenancy management standards a problematic area of licence approval. However, underlining the problem of translating legal commitments on paper to lawful management in practice and the need for follow-up monitoring of management practice, a Highland Council area owner whose tenancy agreement was approved without changes said that " problem tenants" would still be " chucked out" (implying no court procedures were likely to be followed).

SUMMARY OF KEY FINDINGS

10.16 In the first year of the mandatory licensing scheme:

• Over three-quarters of local authorities stated that they gave tenancy management standards equal priority to benchmark standards in the assessment of licence applications
• Nineteen authorities reported no significant problems when assessing tenancy management standards but only five of these authorities had any contact with HMO tenants
• 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
• Only 13 local authorities had plans to improve their communication with HMO tenants
• Edinburgh City Council had developed a proactive role in the assessment of tenancy management standards that could be considered good practice
• Checking tenancy agreements was the main focus of local authorities in assessing tenancy management standards
• Over half of local authorities reported no significant problems with establishing and assessing tenancy management standards
• Most private sector HMO tenants rated their landlord's management as 'good'
• The assessment of tenancy management standards had not proved very problematic for most private sector HMO owners
• HMO owners may use lawful leases but not necessarily operate lawfully.

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