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Part 3: ADMINISTRATION of REGISTRATION

3.1 Inclusions and Exclusions

This section is designed to help authorities correctly identify included and excluded properties. Only if all the properties that a private landlord lets are exempt from registration will the landlord not need to register.

In many cases this should be a straightforward decision, but there will inevitably be individual cases that prove more complex. Authorities should consult their legal services for advice or contact registration colleagues in other authorities who may be able to help. There will be benefits in sharing such information and decisions taken through the proposed network of registration officers.

If authorities establish a Landlord Registration Networking Group as suggested in section 3.2 Identifying landlords, this should prove a useful forum for clarifying or resolving any remaining uncertainties an authority may have about a particular application.

The scope of inclusions

In general terms, a person requires to be registered if he or she is the owner of residential property which is subject to a lease or occupancy agreement and is not specifically excluded. Local authorities and Registered Social Landlords ( RSLs) are not required to register under this legislation. The 2004 Act also exempted Scottish Homes, which had not been wound up at the time.

A lease or occupancy agreement will fall within the scope of the 2004 Act if the let is to an 'unconnected person'. An 'unconnected person' is defined by the Act as, 'a person who is not a member of the family of the relevant person'. The definition of a family member is to be construed in accordance with the Housing (Scotland) Act 2001 (the 2001 Act), section 108 ¹.

Where a property is let to a family member, this will fall outwith the scope of the 2004 Act.

An occupancy agreement has lesser force than a lease and is defined in the 2004 Act as ' any arrangement under which a person having a lawful right to occupy a house permits another, by way of contract or otherwise, to occupy the house or as the case may be, part of it: but does not include a lease'.

As stated, registration has wide coverage and applies to all let residential property not specifically excluded. It should be noted that the Crown is exempt from the requirement to register.

• Agents

The owner of a registrable property must also declare any agent who acts for him or her in relation to the letting. It is not compulsory for agents to register in their own right, but agents may find it more convenient for them and cheaper for their clients to do so. Local authorities may wish to actively encourage early registration by agents.

Where an agent registers, he or she will pay a principal fee. Where a landlord registers and includes the details of that agent with his or her application, there will be no additional fee payable for this. If however a landlord registers and lists details of an agent who is not separately registered on the application, an additional principal fee will be payable. Agents should therefore be encouraged to register separately to avoid an additional cost burden on their client. Landlords may wish to seek to recover from their agent the additional fee payable as a result of the latter being unregistered.

An agent may be:

• a commercial agency

• an organisation such as a charity
• an individual or individuals, for example, a couple who manage a rented house on behalf of a relative who is working abroad
• an employee of an owner organisation ( e.g. a factor for an estate that is a Trust or a company)

Agents named in an owner's application in relation to the management of a house listed in the application will be subject to the fit and proper test.

Agents can register independently of any owner to market themselves as 'available' for appointment by owners as their managing agent but must be identified in the registration application form of each owner who appoints them. It is clearly good business for an agent to register early and separately and so avoid the first among their clients who registers bearing the cost of the local authority having to check the suitability of the agent.

Agents who are licensed to manage HMO properties will be passported to registration.

• Tied housing

Owners of tied housing, where accommodation is linked to the occupier's employment, must also be registered (excepting the specific exemption for manses, rectories etc. defined later in this section). A tied housing arrangement would exist where, for example, an employee is required to live on-site or the provision of housing is a term of the employment contract.

• Bed and Breakfast establishments

There is no requirement for Bed and Breakfast establishments to register where the primary purpose is holiday accommodation. Those Bed and Breakfasts which are licensed as HMOs by virtue of having a dual purpose will be pass-ported to registration, as with all HMOs.

• Joint owners

Joint owners of rented residential properties require to be registered.

Where a house is jointly owned by more than one individual and they do not together form a 'legal person', (see the note at end of the section) each person will need to be separately registered, since either person could be unfit to let residential properties and either person could commit an offence of letting while unregistered.

Joint owners who are members of the same family should appoint from amongst their number a 'lead owner'. People are members of the same family if they fall within the definition given in the 2001 Act, section 108 ².

Each joint owner will complete a separate registration, but discounts will apply where a joint owner is not the lead owner but is a member of the same family as the lead owner ( see section 5 Fees and discounts). All joint owners will be subject to the 'fit and proper' test. There is a single additional fee for each property owned by those joint owners.

If one of the joint owners fails the fit and proper test, the expected outcome would be that the application is rejected. However, before finalising its decision, the authority should consider if the appointment by the joint owners of a registered agent under an acceptable management contract would provide sufficient confidence to allow the person who failed the test to be acceptable for registration (see section 3.4 The fit and proper test).

Where one of the joint, successfully registered, owners also owns and lets residential properties in his or her own name, these separately owned residential properties must be listed in the applicant's registration details. If the let of these properties commences after the applicant's initial registration, the applicant will be able to make the necessary amendments and fee payment online, or by contacting the local authority. Such an owner will have either already paid a principal fee, or been entitled to a 100% discount on the principal fee. The owner is registered and therefore not liable to pay an additional principal fee on the properties which are owned separately in that local authority area. Where let properties are separately owned in another local authority area, a principal fee will be payable in that area, subject to a 75% discount if registration is made online (see Section 3.2 Identifying landlords).

Exclusions

Exclusions from registration are limited but following the consultation exercise, regulations have been made that result in minor changes to the categories of property use in section 83(7) of the 2004 Act that are excluded from registration. Authorities need to be careful with judging some types of exclusion as there are 'boundaries' on the scope of the exclusion.

Types of exclusion include:

• lets to family members (as defined in s.180, Housing (Scotland) Act 2001)
• liferents
• houses for holiday use
• properties used by religious orders and organisations
• accommodation with care
• houses subject to control orders
• agricultural and crofting tenancies
• resident landlords
• transitory ownership

• Liferents

This is a recognised legal arrangement whereby a person does not own a property but retains a right to use it for the rest of his life; this use may commonly entail occupancy. Such a situation may arise for example where a parent continues to occupy the family home which has been inherited by his children.

• Houses for holiday use

Residential properties which are let or occupied for holiday purposes are exempt from registration. Distinguishing genuine from sham holiday use can be difficult, and the facts of each individual case must be scrutinised. It may be helpful to refer to the definition adopted by HM Revenue and Customs reproduced below. However, this is not specifically referenced in the registration provisions, and the particular details of each case must be considered.

"The conditions to be met are set out in ICTA88/S504 (3) and all three must be satisfied if a letting is to qualify:

• the accommodation must be available for commercial letting to the public generally as holiday accommodation for not less than 140 days
• the periods for which it is so let must amount (in the aggregate) to at least 70 days
• for at least seven months the property must not normally be in the same occupation for more than 31 days

A property that is let on a long-term basis cannot be regarded as available for holiday lettings. A property that is owner-occupied for part of the year cannot be regarded as available for letting while it is owner-occupied. Nevertheless, the words 'in the same occupation' should be interpreted as 'let in the same occupation' and do not preclude relief to an owner who moves out of his home during the holiday season and returns to live there when the season is over".

• Religious orders and religious organisations

Accommodation used by members of a religious order, the principal occupation of which is prayer, contemplation, education or the relief of suffering ³ is exempt from registration. Typical examples are a convent and a monastery. Registration is required if accommodation is occupied by persons who visit the order for a period of time, for example, to seek temporary accommodation or respite care, but are not themselves members of the order.

Religious organisations require to register and to list properties they own that are let or occupied except where the house is one which is occupied by a minister of religion and from which that person performs religious duties or pastoral care. Such use of the house is exempt from registration. Typical examples are a manse and a rectory. "Minister of religion" applies to faiths and denominations that may not use that term; it is the function, not the particular label, that matters.

• Accommodation with care

Accommodation providing care services is exempt from registration, where the Care Commission is responsible for regulating the property as well as the service, namely:

• a care home service
• a school care accommodation service
• an independent health care service
• a secure accommodation service

• House subject to a Control Order

A residential property, that is an HMO, which is in local authority management due to the service of a control order under section 178 of the Housing (Scotland) Act 1987, is exempt from registration.

• Agricultural, small holding and crofting tenancies

Residential properties which are subject to an agricultural or small holding tenancy and occupied by the tenant under that tenancy do not require to be registered. The exclusion applies to tenancies under the Agricultural Holdings (Scotland) Acts 1991 and 2003, the Crofters (Scotland) Act 1993 and the Small Landholders (Scotland) Acts 1886 to 1931.

All crofts are exempt from registration.

• Resident landlords

Where a resident landlord has lodgers living with him or her in his or her principal or only home under a tenancy or occupancy arrangement, that house is exempt from registration. Any resident landlord with more than two lodgers is covered by HMO licensing. Authorities should be wary of sham resident landlord arrangements designed to avoid registration. The exemption only covers the landlord's main residence; if the landlord lets any other houses he or she must be registered and the houses must be recorded.

Ministers have agreed to keep the position on resident landlords under review and to receive further evidence about how the resident landlord sector is operating, with the potential that it could be brought into the registration scheme. It is acknowledged this sub-market is informal, fluid and not very visible. It would however be helpful if authorities could maintain a record of any problems with exempt resident landlords that are brought to their attention and any knowledge they have about whether the sector is contracting or expanding.

• Transitory ownership

There are particular circumstances where the ownership of a house is short-term and part of a transitory process for which exemption from registration is granted:

• residential properties that are for the time being held by a lender regulated by the Financial Services Authority as a result of action for repossession to realise a debt secured on the house
• residential properties held for a period of up to six months by executors dealing with a deceased person's estate. Retention beyond that period for the purpose of renting or continued management ( e.g. of an occupancy by a minor) requires registration

Sharia compliant home ownership

There are several arrangements currently available to Muslims which help them to fund the purchase of a home without breaching the requirement of Sharia law that they should not make or receive interest payments. Some of these arrangements may appear to involve renting when on the face of it they are not situations that are intended to be regulated by registration. However, the variety of possible arrangements suggests that in some cases tenants who should be protected might not be protected if specific provision was made about Sharia-compliant arrangements.

Many Sharia-compliant arrangements involve an intermediary buying the house under normal lending arrangements and then selling it on at a specified price that covers their whole costs and is payable in agreed instalments. In other cases the ownership of the house remains with the intermediary until the instalments have been paid, when the ownership transfers to the occupant for a nominal sum. In this latter arrangement the instalments may be described as rent.

The existence in this situation of a contract which allows the occupant to live in the property is likely to be an occupancy arrangement for the purposes of registration. The landlord will have legal rights which affect the occupant's position and registration provides the occupant with protections. The variety of possible arrangements means that it would be inappropriate, on the basis of current information, to apply a blanket exclusion. It is for the local authority to make its own decision in the light of the legislation and the particular circumstances.

It would be helpful if local authorities could give the Executive details of any cases where there are difficulties over the interpretation of Sharia-compliant arrangements, so that consideration can be given to further regulation if necessary.

Prospective owners of rented property

Any person who intends to enter the letting market as a landlord should be advised to seek registration prior to purchase of a property to check that they are, or are not, judged to be a fit and proper person for letting purposes before they commit themselves to the investment. It would be helpful if that information was provided in local authority publicity material. Local authorities should seek to cooperate with local Buy To Let ( BTL) mortgage lenders, Independent Financial Advisors and solicitors to ensure their clients are properly briefed on the registration scheme and their future landlord responsibilities.

Companies, organisations, trusts and charities: the applicant as a 'legal person'

Registration is required by the 'relevant person' (section 83(1) of the 2004 Act). In that context, a 'person' denotes a 'legal person', which may be an individual or a corporation.

A corporation may be a company registered under the Companies Acts but it can also be a legal partnership. The key point to note is that a corporation is a legal person that can only act or form an intention through its directors or employees. A corporation can commit offences. Where the house is owned by a corporate 'person', the organisation or partnership should submit the application. It is the corporate 'person' that is registered and is subject to the fit and proper person test. In practice, there will normally be an individual who has responsibility for managing the tenancy on a day-to-day basis, whether that person is a director, an employee or a contractor. That person would be an agent who also requires to be fit and proper.

Similar considerations apply to trusts and charities, which again have the identity of a legal 'person'.

3.2 IDENTIFYING LANDLORDS

This section provides local authorities with guidance on the identification of landlords in their area.

Landlords are legally responsible for ensuring that they are registered and that any agent they use is also listed on their registration application form. The legal requirements on the local authority are to maintain the public register, to deal with the applications received and provide advice and assistance to landlords and tenants as required by the Private Landlord Registration (Advice and Assistance) (Scotland) Regulations 2005 ⁴ (see section 3.6 Provision of information and advice).

In practice, there are advantages to a local authority in adopting a more proactive stance by seeking to identify, support and advise landlords about the obligation they have to apply for registration.

The higher the application rate, the fewer problems authorities will face and the greater confidence tenants and prospective tenants will be able to have in their private landlord, and the private rented sector.

There are two major elements to ensuring a high application rate:

• promotion and publicity so that landlords come forward to register
• active searching of data sources and information sharing with local authority colleagues to identify landlords and inform them of their duty to register, and that they are committing an offence in operating without registration

Promotion and publicity

Each authority must decide how best to target its promotion and publicity work but it may be most effective to focus effort on all landlords. Thereafter, landlords with properties in exempt categories can be actively 'filtered out' of the process. Landlords who apply in error will be entitled to a refund of their application fee. This will need to be administered manually by registration officers.

The information made available at www.landlordregistrationscotland.gov.uk, the website through which landlords can register online, should be sufficiently clear to avoid unnecessary applications. Similar information will also be provided with the hard copy registration form.

Many amateur or 'informal' landlords, for whom renting is a small-scale activity incidental to their main occupation or business, and owner occupiers who rent their own home while they are living or working elsewhere may be unaware of their obligations as a landlord. The importance of raising awareness of those obligations and in particular the introduction of registration and its mandatory framework cannot be over-emphasised.

Local authorities have the major role in this promotional endeavour, but are supported by the Scottish Executive. Key routes to promoting awareness among landlords include:

• Scottish Executive
• local authorities
• landlord and agents' organisations
• mortgage and financial advisers and insurers
• tenants
• Private Rented Housing Panel (when it is established)

• Scottish Executive

The Scottish Executive is developing and will maintain web-based content to provide answers to a wide range of questions on registration, including information on the registration process and making contact with local authorities - www.betterrentingscotland.com.

The Scottish Executive is producing publicity material, a guide for landlords and a leaflet for tenants and neighbours. Local authorities have access to the electronic version of this information material and are encouraged to tailor it with their local authority specific information, print it and disseminate.

The support of organisations such as the Scottish Association of Landlords ( SAL), the Scottish Rural Property and Business Association ( SRPBA), the Association of Residential Letting Agents ( ARLA) and the Council of Mortgage Lenders ( CML) has been sought to assist in disseminating information on the introduction of the registration scheme.

• Local authorities

Publicity needs to reach everyone who is, or may be, a registrable landlord or agent.

A variety of methods of promotion are available to local authorities to reach out across the wide spectrum of private landlords and agents that are encompassed by the mandatory registration process. Authorities may find it helpful to contact organisations, such as those listed in Annex 5, for assistance in making contact with landlords in their authority area.

Not all landlords have computer/internet access. This should be recognised by local authorities and addressed through the provision of advice and information by a variety of methods.

It is strongly recommended that local authorities provide:

• written promotion material for distribution
• web based information

• opportunities for direct contact between landlords and the local authority
• encouragement for online applications for registration

Online applications by applicants entail a reduced resource implication for local authorities than the administration of paper applications. There are incentives to encourage internet applications.

Applications for registration by internet will attract a 10% discount on the total fee payable. Local authorities should also be aware that the 75% discount on the principal fee for applicants making simultaneous applications to more than one local authority can only be accessed by online application - this is the only means by which a 'simultaneous' application can be made. Landlords should be supported in accessing the internet and encouraged to make online applications with a view to accessing these discounts.

Written material should make clear where public access to computer/internet facilities can be obtained, for example in libraries. Landlords who struggle to access or use the internet should be encouraged to make use of such public internet facilities as are available. Landlords could also access support by contacting:

• any landlord membership organisations with which they have links
• advice and information agencies
• youth information services (for landlords within the relevant age group)

Landlords may be able to seek technical support from staff in internet cafés or libraries overseeing the use of internet facilities. Local authorities may feel there is benefit in offering support to landlords who are facing difficulties in making an online application for registration.

The production of promotional literature about the registration scheme is fundamental. Written material in the form of attractively designed, 'plain English' leaflets, pamphlets and posters is essential for distribution through as wide a range of relevant outlets as possible (see below).

The possible existence of private landlords from ethnic minority communities should be assessed. Where there is an identifiable issue, authorities should make available leaflets and pamphlets translated into appropriate languages and/or arrange for translators to be available in order to handle enquiries and concerns from members of ethnic communities - from tenants as well as from landlords. The Scottish Executive will arrange for translated material if there is sufficient demand at national level. Local authorities should identify and communicate their needs to the Scottish Executive in the first instance.

The Scottish Executive has produced leaflets for adaptation and use by local authorities. If authorities also wish to produce their own material, it is advisable that this is kept simple and not over-detailed. The Scottish Executive material may be used as guidance on content.

Local authorities should consider presenting information in such a way as to encourage landlords and agents to seek registration as a positive step. Emphasis could be placed on the benefits to landlords of removal of the worst landlords from the sector, and the credibility to be drawn from acknowledgement that they are fit and proper to be landlords.

Landlords of licensed HMOs should be informed of the passporting arrangements that are in place to deal with their registration (and what they should do if they also let non- HMOs).

Publicity distribution points need to be mapped out. Any point within the authority that a private landlord or tenant might access should display leaflets and pamphlets, such as:

• all local housing offices
• Housing Benefit and Council Tax offices
• planning departments
• development departments
• social work offices
• environmental health offices
• libraries
• information services (including youth information services)

The possibility of including a leaflet with a mail-shot that may be made by the Housing Benefit section to private landlords can be discussed with colleagues in that section.

Promotional literature could be supplied to:

• Citizens' Advice Bureaux and other advice and information services
• estate agents
• property agents
• letting agents and other factors
• solicitors
• local banks and insurance agents
• landlord organisations or forums - all members should receive a copy and be asked to 'spread the word' amongst other landlords

Advertisements publicising the registration scheme could be run in the lettings sections of local newspapers and property guides and the authority's communications office could produce articles to run in local commercial and free newspapers and newsletters. If private lets are advertised in any shop notice boards, an advertisement about registration can also be placed. Local radio stations could also be contacted.

Increasingly, house lets are advertised on the internet and authorities can run searches of formal (company) sites and informal sites set up by individual landlords for lets in their area. Authorities may also wish to consider making contact with the managers of such sites with a view to posting an advertisement or information on the site.

For authorities with landlord associations or joint landlord-council forums, registration officers can make presentations. In authorities with no associations or forums, it may be fruitful to hold one or more well-publicised public meetings to promote and explain the scheme.

Active searching of data sources

There is a variety of potential sources of information about private landlords that authorities can consider or request access to in order to identify landlords and their residential properties. Most are internal to the authority but some are external organisations.

For a variety of statutory and other purposes, local authorities hold a range of information about landlords, their residential properties and tenants. Information will be kept in formal registers as well as in more informal lists. Information will certainly be held by the housing service, but may also be held by other services and departments of the authority. Accessing such information to identify and contact landlords can assist in increasing compliance with registration.

The experience that all authorities have gained from HMO licensing should provide a useful lesson in terms of joint working on registration. There can be real value in setting up an officers' working group involving all the departments or sections with potentially useful data. Such a group, co-ordinated by the lead registration officer, could have a remit to:

• co-ordinate data identification
• discuss issues of data sharing in relation to Data Protection legislation
• facilitate cross-checking, matching and verification of information drawn from diverse sources

Progress in the development of Unique Property Reference Numbers ( UPRNs) for all residential properties may assist in the matching exercise. Even if this is not yet the case, authorities should cross-check to avoid either approaching excluded landlords or making multiple approaches to landlords who have already been contacted or even registered. This can occur because of data input errors or inconsistent approaches to spelling a landlord's name in different databases. Joint working will facilitate avoidance of these kinds of errors.

However, in accessing any personal information, authorities must satisfy themselves that the use of any personal data they hold complies with the Data Protection Act 1998 and other relevant legislation, subject to the effect of section 139 of the 2004 Act, and that any changes to the way in which data is used are covered by the authority's Data Protection registration. Section 139 makes specific provision which is intended to assist the exchange of information on matters relating to antisocial behaviour ⁵.

Potentially useful sources of information which officers might wish to consider include:

• Housing Benefit records
• house waiting list applications
• Private Sector Housing Grant applications
• temporary accommodation address lists
• housing advice centre records ( e.g. from private tenant complaints)
• antisocial behaviour files
• a rent deposit scheme list
• owners in receipt of a factoring service
• private sector leasing schemes
• consumer complaints records from environmental/protective services
• Council Tax records

Local authority officers should seek to establish the appropriate protocols for the access of such information, and seek advice from their solicitors to ensure that there is compliance with the detail of relevant legislation. Officers may wish to refer to Information Commissioner guidance: http://www.informationcommissioner.gov.uk.

It may also be helpful to discuss with area housing teams whether, through their estate management work, they know of private landlords of former Right to Buy stock located in multi-tenure estates.

Care must be taken to ensure that the effort involved in accessing any of these sources (assuming no Data Protection barriers) is commensurate with the benefit to be gained. Contact with other local authorities through the proposed network could be particularly valuable in this connection.

Council Tax records are an example where careful consideration is needed. Recent research ⁶ has shown that the register can be awkward and unreliable to use when there is inconsistent occupancy or owner data input, no reliable tenure code or input errors have been missed. Significant data 'clean up' may be required to provide confidence in the outputs. The detailed analysis of issues discussed in that report should be noted by authorities as well as the recommendations it makes to improve the relatively poor state of knowledge authorities have about the size, profile and dynamics of the private rented sector.

There are also potential external data sources that authorities can consider. While recognising that some organisations may be restricted by their confidentiality rules, authorities can discuss and explain the purpose and use to which any released data will be used and how its confidentiality will be preserved. It may be that certain organisations cannot release any information but they will agree to inform all their customers or clients about registration and its mandatory nature for almost all landlords. Leaflets about registration should be given to such organisations for distribution.

Some data sources will be found in the same locations or in the same organisations at which promotional material and publicity have been directed. Possible external sources include:

• university and college accommodation services
• letting agents
• property management agents
• estate agents
• local solicitors
• lettings sections of local newspapers
• internet websites
• shop window adverts
• Citizens' Advice Bureaux
• housing aid centres
• tenants associations

• Landlord and agents' organisations

Many landlords across Scotland may be affiliated to national or local organisations, or involved in landlord forums. National organisations such as those listed in Annex 5 will be able to provide assistance in making contact with local organisations, or in the dissemination to member landlords directly. Professional agents may be involved with associations such as ARLA.

An effective approach could be to encourage landlords and agents to spread awareness of the requirement on landlords to register within the sector, whether their engagement with other landlords or agents be formal or informal.

• Mortgage and financial advisers

The BTL market is a potentially difficult segment of the private rented sector about which to obtain information. Information on investors who have become, or plan to become, landlords is important.

The 'visibility' of such landlords is low; few will have had any contact with the local authority in the area, and their awareness of registration is likely to be poor. The best way to engage with this type of landlord (other than by the general publicity campaign work) is to make contact with local mortgage lenders, independent financial advisers and insurance providers who deal with BTL products. They are unlikely to provide client data as this would breach client confidentiality, but they are very unlikely to want their clients to commit a criminal offence by not being registered. They can therefore be expected to accept registration information materials to pass on to all their BTL clients. The Scottish Executive will also be providing information to lenders through CML.

• Tenants

The benefits of registration are ultimately to give tenants an assurance about the suitability of their landlords and to protect them from the worst landlords. Information and publicity about registration is entirely appropriate for tenants and could be provided on that specific issue with leaflets and posters distributed to similar outlets as those described above for landlords (with the addition of homelessness units). Such publicity should not be undertaken until after 31 March 2006 when the system will be operational.

An electronic leaflet for tenants and neighbours will be produced by the Scottish Executive for print by local authorities.

Tenants should be encouraged to recognise the benefits of registration, and to check whether their landlord is registered. A tenant who has concerns or complaints should be actively encouraged to make contact with the local authority (see section 4.2 Breaches for more information).

Authorities are encouraged to view individual tenants as a source of informal information when they seek advice or help from either a local authority or a voluntary housing agency. The vulnerability of private tenants must be recognised and the information they provide (possibly inadvertently) must be handled sensitively (see section 4.2 Breaches for more discussion of this issue).

Authorities may wish to bear in mind that there will be future changes affecting the overall rights and responsibilities of landlords and tenants as provisions in the Housing (Scotland) Act 2006 (the 2006 Act) are implemented. It may in the future be desirable to enhance registration material with information on these other changes in the law and with a reminder to tenants of their responsibilities as well as their rights.

• Private Rented Housing Panel

Once the Private Rented Housing Panel system, provided for in the 2006 Act and designed to help tenants in repair disputes with their landlord, is up and running, authorities will have a new source of information about landlords. A committee of the Panel will have a duty to notify the local authority of a landlord's failure to obey a Repairing Standard Enforcement Order, but it may be possible to obtain information from the Panel about landlords in cases that are resolved without the need for an Enforcement Order to be served.

Landlords resident outwith Scotland

Those landlords letting in Scotland but resident outwith Scotland may be more difficult to identify. As a group, they are therefore less likely to be aware of the obligation of registration.

Landlords living outside Scotland are most likely to manage their properties via an agent. If the agent has not already moved to act on the landlord's behalf with regard to registration, contact should be made with the landlord through the agent.

Landlords more generally should be encouraged to spread the word on registration to other landlords.

Tenants in turn should be encouraged to check that their overseas landlord is registered; where this is not the case, the local authority should be alerted. The local authority may be able to obtain the landlord's contact information from the tenant. If not, other investigations will be required.

3.3 INFORMATION FROM APPLICANTS

The assessment of whether an owner and a person who acts for an owner should be registered should be based on all available information.

The application must be made by the 'relevant person' who is defined widely as a person letting residential property, who is not a local authority, Registered Social Landlord ( RSL) or Scottish Homes.

The list of required information that the applicant must provide is restricted to the following:

• Applicant profile

• House information

• Judgments and adjudications

Relevant convictions and spent convictions

Relevant convictions are defined by section 85 of the 2004 Act as convictions relating to fraud, dishonesty, violence or drugs. Only convictions that are not 'spent' require to be declared, that is, convictions which are not disregarded according to the terms of the Rehabilitation of Offenders Act 1974.

Declaration

Applicants must be able to confirm that they comply with the legal requirements of landlord-tenant law and related obligations. Too many landlords, especially amateur landlords, however are not properly acquainted with lettings and rent legislation.

To assist applicants in correctly stating their position on meeting their legal obligations, the application form is accompanied by a summary of their obligations ( see Annex 1).

There may be situations in which it is reasonable and appropriate for an agent to sign the declaration on behalf of a landlord client. It is generally expected however that where an application has been completed by an agent on behalf of a landlord, the landlord will nonetheless sign the declaration. Any agent who signs on behalf of a landlord (under the general law on agency) takes on a significant responsibility, including the possibility of involvement in a criminal offence.

Additional voluntary information requests

The mandatory information list reflects the outcome of the Scottish Executive's consultation, and is a modified and expanded version of what was proposed in the consultation paper.

Authorities may request that applicants respond to additional voluntary questions. These questions would need to be issued separately, as it is not possible to include such questions in the online system. Any additional voluntary questions could be sent out with paper application forms to offline applicants or with confirmation letters to online applicants.

Given the nature of the registration process, authorities should consider very carefully whether any further information they may seek on a voluntary basis is really necessary or whether it will undermine the 'light touch' approach sponsored by Ministers.

It is recommended that additional voluntary information does not address further personal profile data such as National Insurance Number, driving licence details, passport number, UK banking arrangement and other such information. There may however be an interest for local authorities in seeking further information on:

• property size
• number of tenants
• type of tenancy

Voluntary information, if considered worth trying to obtain, is best linked to furthering an authority's strategic planning interests ( e.g. Local Housing Strategy) or to improving its networking with landlords and agents ( e.g. to develop landlord training programmes).

It must be remembered that any non-mandatory information does not need to be provided by the applicant and sporadic completion of such information may not provide authorities with the quality or quantity of data they desire. In any case, such information requests must be clearly identified as voluntary.

3.4 THE FIT AND PROPER TEST

In assessing whether an applicant (landlord or agent) is a fit and proper person, authorities must take account of the information prescribed in section 85 of the 2004 Act.

Paraphrased, section 85 covers:

• any material which shows that the individual has:

• any material relating to any action (or failure to act) in relation to antisocial behaviour affecting a house which the person lets or manages
• any material relating to an arrangement for an agent to act for the landlord in relation to the lease or occupancy arrangement
• any other material relevant to the question of whether the person is fit and proper

The legislation does not provide any automatic grounds for authorities to refuse to register a landlord or agent.

With material that falls within section 85, authorities must evaluate its strength, veracity and importance and, together with any other relevant information it holds (which may be favourable or unfavourable to the landlord or agent's position), arrive at a balanced judgment as to whether to accept or reject the application.

Without any negative information or legitimate concerns about an applicant, the application should be approved without further scrutiny. This is in the spirit of the legislation which has provided local authorities with registration as a means to identify and deal with the worst landlords, not to place every landlord under an initial presumption of unfitness or incompetence.

Unnecessary additional investigation for most or all applications will add unacceptably high costs to the system, draw resources away from pursuing the real problem landlords and ultimately fail tenants by undermining supply and, consequently, other key Scottish Executive policies in relation to homelessness and a thriving private rented sector.

Scrutiny of applications

The starting assumption is that the applicant is a fit and proper person.

Of course, if an authority identifies suspect information in the application form or holds other material that indicates the applicant may not be fit and proper to be a landlord or agent, it will have reasonable justification to challenge the presumption of approval. It can then carry out further enquiries to check not only the information about which it is concerned but any other information that it has collected.

Other than the fact that registration should be approved when no negative information is held about the applicant, there is no single 'rule of thumb' for making the decision to register or not to register an applicant.

Decisions about risk level and the relative importance of different types of negative information will involve a professional judgment by the officer or officers with responsibility for making decisions.

If an authority's detailed enquiries conclude, on reasonable grounds, that the applicant knowingly gave false mandatory information or knowingly omitted mandatory information ( e.g. an unspent relevant conviction), the applicant will, if subsequently found guilty , have committed a criminal offence in terms of section 83(4) of the 2004 Act. The authority might also consider that the applicant's actions justify the refusal or removal of registration. Such a step should not be automatic but instead should be based on professional judgment taking account of all the circumstances.

In the case of an applicant who has a relevant, unspent conviction which was correctly declared, a judgment must still be made taking account of other information available about the applicant and if necessary by interview to assess whether he or she is able and willing to operate in a manner regarded by the local authority as fit and proper. In considering past actions of the applicant, and the conviction, the local authority should consider whether any problems are likely to occur again, and whether they are likely to affect the applicant's letting activity. In particular, the nature of any agency arrangement should be taken into account. It is quite possible to conclude that if the applicant represents a low risk, registration is appropriate.

Local authorities will need to establish a decision-making process for applications which do not allow for a clear cut decision, but are encouraged to delegate routine decision-making functions to officers.

For further discussion of scrutiny of applications, see section 3.5 Processing and checking applications.

Cross-checking with other information sources

In order to determine whether the information provided by the applicant should be taken at face value or whether the application should be subject to further scrutiny, it is desirable for each local authority to identify relevant information in its possession relating to landlords, agents and residential properties which are thought to be rented.

Relevant information is information that represents reliable evidence of problems that have arisen with a landlord, his or her properties or with an agent.

It is expected that such information will encompass only a small minority of landlords and agents in relation to the overall number of landlords who will need to be registered. The evidence may be, for example:

• service of a Statutory Enforcement Notice (taking into account the reasons for serving it and whether the owner was at fault)
• record of complaints against the landlord

Local authorities are encouraged to establish a list of names and/or addresses of landlords, agents and properties for which there is evidence or information suggesting that the landlord may not be fit and proper. This will simplify and streamline the processing of applications. The Scottish Executive will provide a template for the list so that it is in a compatible format that will allow it to be uploaded directly into the electronic system. The value of this approach will be maximised if there is interdepartmental co-operation and all relevant departments participate fully in the exercise. A corporate approach will overcome the difficulties that will arise if departments have different computer software, use different address codings or operate different data access restrictions.

Whilst disclosure of names and addresses for the purpose of constructing the list must respect any inhibitions due to Data Protection requirements, there is specific provision in the 2004 Act for disclosure of otherwise confidential information if that disclosure is necessary or expedient for the purpose of any provision in the 2004 Act - registration of private landlords and agents is such a provision ⁷.

Information which is provided to the local authority for the purpose of seeking action to deal with a landlord's failings - a complaint from a tenant or a neighbour, for example- can be regarded as for a purpose relevant to registration. The applicant for registration will also be asked in the application form to give consent for officers to inspect relevant files about the applicant that may be held in other departments. Where consent is given, it should not be presumed to be used to trawl through files on every application. It is intended to be used where there is already an explicit suspicion giving rise to concern.

The types of relevant critical evidence held on file by an authority from which to identify the names and addresses of landlords, agents and residential properties include:

• statutory Nuisance Abatement Orders
• Antisocial Behaviour Orders ( ASBOs) or Interim Antisocial Behaviour Orders
• Private Rented Housing Committee referrals
• records of multiple complaints of landlord/tenant problems including but not exclusively, antisocial behaviour (records may be held by housing or environmental health services)

It is important to note that the collated list of names and addresses is no more than a trigger for scrutinising the information that the local authority holds on file. Any application which produces a match to any entry on the review list will be automatically diverted by the IT system for scrutiny by a registration officer. Inclusion in the review list must not in any way be regarded as being in itself the basis for refusal. It is only further investigation of the available information which could lead to refusal.

The information available to the local authority should be considered in the round with other information provided by the applicant, and a balanced conclusion made as to whether that person poses any risk as a landlord. Equally important is the need to make sure the evidence collated is as sound as possible, since a decision to refuse registration, based on such information, is open to appeal.

Local authorities may also wish to carry out more detailed investigation of a randomly selected sample of applications that would otherwise not be diverted by the system. This could be achieved by sampling applications which are provisionally approved by the system. Officers may find it helpful to base their sample of properties on the risk assessment framework outlined in Communities Scotland's ' National Core Standards and Good Practice Guidance for Private Landlords and for Local Accreditation Schemes' ⁸.

Landlords, agents and the fit and proper test

Section 84(4) of the 2004 Act is clear:

• both the applicant landlord and the agent must be classed as fit and proper in order for the landlord to be registered

While the legislation is clear, the decision on whether someone is fit and proper is a judgment and is not necessarily a clear cut yes or no. An assessment should be made on the risk that the applicant may fail to act properly in relation to future letting activity, and the local authority must judge to what extent problems from the past are then likely to recur.

There can be cases where the landlord as owner has failed a 'consideration' in relation to section 85 (or have been unacceptable on the basis of other material available to the authority) but such is the nature of the failure (or of any mitigating circumstances presented) that the authority can give the landlord the opportunity to take steps to avoid the application being rejected. These steps should ensure fit and proper letting for the future.

The appointment of a suitable agent is one such way of avoiding non-registration but that does not make the landlord now automatically fit and proper and registrable.

Where the landlord agrees to appoint 'a person who acts for a person' who is registered, the reassessment by the authority will pivot on whether there is an acceptable agreement in place. The 2004 Act has been amended by the Housing (Scotland) Act 2006 to require authorities to take account of any agreement between the landlord as owner and 'agent' in assessing whether the landlord is a fit and proper person.

If the authority believes the agreement to be satisfactory in terms of the power it vests in the agent to have effective control and responsibility for the letting and management activity, it should mean that the landlord who otherwise would have failed can be registered.

Assessing agency agreements

Some confidence indicators that can be used to assess whether an agreement is both suitable and genuine include:

• Is the agreement between the parties signed by both parties?
• Is the agreement based on established codes of practice from trade bodies such as the RICS, ARLA and ARMA?
• Does the agreement set out clear lines of authorisation to the agent to act in respect of the letting and management of the house?
• Are the responsibilities of the owner and agent clearly set out?
• Has the agreement given the agent effective responsibility over the main lettings and management activities where the landlord alone might not act appropriately, such as:

An authority may wish to seek answers to further questions not covered by the agreement, such as:

• Is the agent an individual, company, partnership or some other entity?
• Is the agent a member of any recognised trade body appropriate to letting or managing residential property?
• Does any such membership include external regulation of the agent's standards and performance?
• Does the agent operate to a recognised code of practice?
• Is there any personal or commercial relationship (other than the agreement) between the landlord and agent?
• Will the agent receive any benefits from the landlord other than the stated fees and commissions set out in the agreement?

It is the duty of the landlord to inform the authority if he or she terminates the agreement or appoints a new agent. In the latter case, the landlord will need to produce a new agreement and this will require to be assessed in the same manner as the previous agreement. An authority may find it useful (as could an agent) to advise registered agents to inform the authority if an agreement had been terminated.

Advice to applicants

A local authority is required to give appropriate advice to landlords (and agents) where there is a likelihood that if given that advice, they could become eligible for registration. In giving advice on what action to take, it is sensible to stress to the applicant that there is no guarantee of registration being achieved.

It should be noted that the same duty is placed on an authority when it is proposing to remove a registered person from the register. Further information on both of these scenarios is provided in section 3.6 Provision of information and advice.

3.5 PROCESSING AND CHECKING APPLICATIONS

This section describes the administrative arrangements for dealing with applications. Those arrangements need to be established within a broader policy framework.

Setting the framework

It is desirable that arrangements for registration should be placed in the context of the authority's strategic approach to improving the private rented sector and ensuring it plays a full part in providing for housing need. Registration has the potential to bring benefit to other service provisions such as homelessness and social work, and, by the same token, a corporate commitment and effort towards making registration work is desirable. This can be through, for example, the provision of information to registration administrators and joint cross-departmental working. On a basic level, officers should make sure that the local authority central switchboard is aware of where to signpost landlord registration enquiries from the public!

The departmental location for managing the overall registration operation is for each authority to weigh up in terms of the appropriate skills and resources. These are likely to be available in a housing or environmental health service.

It is important to ensure that officers maintain the major distinction that Ministers wish to be drawn between the 'light touch' of registration and the heavier regulatory touch of HMO licensing. They should not be seen as equivalent by officers. It may be that the Council would wish to keep registration organisationally separate from HMO licensing activity.

• Defining the level of authority to approve and reject applications

The level of authority required to approve and reject applications for registration is a decision to be taken by each local authority at its own discretion. Each local authority should determine its own procedures and protocols in respect of the delivery of landlord registration.

Routine decisions may be delegated to officers. Scrutiny of applications may be reserved for officers, with the final decision being made within the department with the lead management responsibility.

Rejecting an application or revoking a registration will have serious consequences for the owner or agent as well as for the tenant. It may be that a council considers that an appropriate committee or sub-committee of elected members should constitute the forum in which to assess the recommendation and strength of the supporting evidence presented by officers and make a decision accordingly.

The scheme of delegation will also need to take account of the online application system, which will recommend for approval applications which are not flagged for further investigation. This does not remove control from the authority as it decides which applications to flag and, in any case, the notification to the applicant is issued by officers, not the IT system, giving the opportunity for sample checks or for reconsideration of cases where necessary.

• Monitoring and review of performance

Officers have the responsibility to implement registration. It is expected that elected members will have a more strategic role in overseeing implementation. It may be that they would wish to be involved in the monitoring and review of performance, and possibly decision making on cases where applicants face non-registration or deregistration. Elected members may seek to be presented with regular performance updates. Officers will need to set up mechanisms for monitoring performance that are appropriate to the requirements of the authority.

The Scottish Executive expects to be able to use statistical data from the application system to monitor the implementation of registration, but may seek further information, particularly in connection with its management of grants to local authorities.

• Landlord Registration Networking Group

Experience from HMO licensing has demonstrated the benefit of local authority officers meeting together in a forum to share experiences, discuss problems and suggest solutions. The Scottish Executive welcomes moves for local authorities to form a Landlord Registration Networking Group of registration officers, and others who could usefully contribute. Scottish Executive funding aims to encourage this type of inter-authority working.

Processing Applications

It is important that a consistent approach to processing and deciding on applications is adopted across local authorities. As well as landlords owning properties across more than one authority area, there are letting and estate agencies with lettings departments operating in a regional context.

Although local authorities have diverse corporate management and organisational structures, the administrative process for registration should aim to follow the procedures and tasks recommended in this guidance.

Common to all authorities is the core of the application process, namely the central, internet-based, IT system provided by the Scottish Executive. It allows applicants in every local authority area to make an online application directly through the dedicated registration website at www.landlordregistrationscotland.gov.uk. Local authorities should provide a link to the application system from their own websites.

Where possible, applicants should be encouraged to use the online registration system. This will be more efficient in terms of local authority staff time, as well as more convenient and cheaper for applicants with internet access and multiple properties. Applicants should be informed of where they might gain access to the internet, such as local libraries and of any practical support with applications that the authority can give to people who have difficulty accessing or making use of the internet.

Local authority officers will be able to manage registration data for their authority from any computer with internet access. No additional software, connections or security settings are required. 'Role-based security' is used to assign appropriate privileges to each user, who will be recognised from their user account and password when they log in. Account details must be kept secure to prevent unauthorised use of the system.

Annex 4 provides more detail on the operation of the online system.

The main functions in processing applications from their point of receipt to the outcome decisions are:

• managing the workload volume effectively
• managing paper application form submissions
• ensuring valid applications have been submitted
• scrutinising the valid applications
• reaching the decision to register or not to register an applicant

• Managing the workload volume effectively

No-one is directly obliged to be registered by a particular date, but a person who lets a house after the relevant provisions come into force on 31 March 2006, without being registered, will be committing an offence unless he or she has made a valid application (see below) which has not yet been determined.

Local authority lead officers have already considered the likely volume of applications and related staffing implications in response to the Scottish Executive's letter of 11 November 2005. It is clearly difficult to estimate with any certainty the number of applications that will be received, their timing and the proportion that will be received online. Lead officers will therefore need to consider how to manage the resultant flow of work.

While the use of the web-based, centralised online system will automate a good part of the process, the authority will have to gauge the staffing levels required to manage the processing activities in the early months of registration.

The proportion of paper applications received and requiring data entry and the volume of enquiries made by applicants uncertain of whether registration applies to them will be particular factors at this stage.

Work on the identification of landlords and the investigation of doubtful applications is likely to build up after the initial stage of applications, together with more detailed advice and assistance for landlords and tenants. The fact that a landlord is not committing an offence by letting once he or she has made a valid application allows scope for the management of investigations and enforcement over a period of time.

The stages in processing applications are described below:

• validating
• scrutinising
• decision-making

The IT system will automate the validation checking procedure - all paper application information should be entered into the online system by the local authority, allowing the automated checking to validate paper-based applications alongside applications entered online by the applicant. A valid application is one that is complete and for which the correct fee has been paid, based on the information in the application. Validating all received applications is a first priority, since it allows landlords to operate legally.

For validated applications, where no grounds for concern are identified from the specific information in the form or from any matching test against critical information held on the on-line system, the registration for those 'clean' applicants will automatically be processed electronically. The system will notify the authority of a 'pending approval' which the authority can normally issue at that point, manually marking the application as 'approved'.

There should be no significant delays in the system of approval for these applications.

For those applications that have been diverted because of concerns, each authority should establish a clear basis for prioritising the scrutiny and possibly more extensive investigative work that could follow for some applicants. Such applications will be delayed, but for sound reasons.

It is suggested that decisions on the following diverted applications should be given priority:

• those owners or agents that officers judge give rise to the most serious concerns and which involve letting to sitting tenants (who are potentially at greatest risk)
• agents who give rise to any degree of concern, as they may be acting for, or intending to act for, a number of owners if they become registered
• prospective landlords or agents ( i.e. applicants who declare no houses) since their business decisions are likely to hinge on the authority's decision. Undue delays should be avoided to prevent any impact on supply

• Managing paper applications

An application can be submitted online or as a paper application. It is expected that only a minority of applications will be paper-based, but each authority should be geared to handle these efficiently.

The Scottish Executive will provide local authorities with a hard copy application form layout.

To minimise disputes over whether a paper application was posted, hand-delivered or undelivered (or lost in the internal administrative system), it is advisable to encourage the applicant to submit the application by recorded delivery.

The authority should avoid having two parallel data bases (paper and electronic) as this is a recipe for confusion, duplication and oversight. Paper application data should be entered into the online electronic system to create a single list of private landlord, agent and property information. This has the added advantage that the system will then check and process the application in the same way as for online applications.

Data inputting staff will need to transfer the information in a paper application to the online system and carry out procedures to accept payment by cheque or cash and mark that on the system.

Data inputting errors could have serious consequences for the applicant and waste officer time, so it is advisable to carry out a cross-checking exercise on the accuracy of the input data once a batch of manual data input work has been completed.

• Ensuring valid applications have been submitted

It is important to distinguish validation from scrutiny.

Validation is the basic process of checking that all the required mandatory information has been included in the application form and that the correct fee in relation to the number of correctly included properties has accompanied the application. This does not mean all the information is correct or accurate. There may be falsely declared information about the applicant's personal details, convictions, agent identity or number of let properties, in which case, an offence has been committed that could not only incur a fine, but would also stand as a contravention of housing law to be considered in the subsequent scrutiny involving the fit and proper person test.

No offence is committed if a property is let whilst the owner's application for registration is being considered. To be considered, the application must be valid. This means that an applicant will need to be notified promptly that their application has been received and accepted as valid.

The online system will not accept an application, and allow payment to be entered, unless all mandatory fields have been completed. Where the application is made online, once it is completed and paid, an electronic acknowledgement will be provided, confirming that the application is valid.

For paper applications, where there are omissions or errors, the applicant must be contacted (by letter, email or 'phone) requesting the outstanding requirements to be forwarded as soon as possible. It should be made clear that the application cannot be treated as valid (and therefore is not protecting the applicant against committing an offence by letting without a valid application) until all the outstanding data is provided.

If the wrong fee has been submitted due to the inclusion of excluded properties in the applicant's calculation, the overpayment will have to be returned to the applicant using the authority's internal repayment procedures. Early consultation between the registration officer and the finance department about this possibility should be carried out. If the applicant has underpaid then, similarly, the additional payment will have to be requested.

Once a paper application has been accepted as valid and paid, written confirmation should be sent by post.

• Scrutinising the valid applications

Scrutiny is the process whereby the person is assessed as fit and proper to carry out residential letting.

Ministers are clear that registration should be a 'light touch' process. It is recognised that the majority of landlords do provide a good service, and that many might leave the market if regulation is perceived as too onerous or expensive. Verification, particularly if it were to involve Disclosure Scotland, would increase costs and create delays.

A relatively straightforward 'check' is to match landlord applications against any information held within an authority on cases of antisocial behaviour, breaches of landlord-tenant law and complaints from tenants or neighbours. The authority must be confident that information used in this way is credible and not spurious or malicious.

The basic approach is:

• compile a list of the names of landlords and addresses of residential properties where such breaches and complaints have been recorded
• upload the list to the registration IT system
• where either a name or an address in this list matches those provided in an application, the IT system will automatically divert that application for individual processing

Any discrepancy between the information on the form and the information held by the local authority could prompt checks on other items as well. The authority may wish to seek a Basic Disclosure from Disclosure Scotland in order to be able to check the applicant's declaration about unspent convictions. This would normally only be worthwhile if the authority had reason to doubt whether the applicant's declaration was true.

The Scottish Executive is considering also making an amendment to the Rehabilitation of Offenders Act 1974 (Exclusions and Exceptions) (Scotland) Order 2003 which would allow the local authority to request that the applicant obtain a Standard Disclosure (which includes unspent convictions) if this seems necessary in an individual case. The application for a standard disclosure would be countersigned by a person in the local authority who is registered for this purpose. Both the applicant and that person would receive a copy of the certificate that is issued by Disclosure Scotland. It would be for local authorities to decide whether they or the applicant should bear the cost of making the application. A refusal by an applicant to obtain such a disclosure would be a factor in the local authority's scrutiny.

Some authorities may wish to carry out occasional spot checks by extracting a sample of applications at random and following up each of the mandatory answers for verification ⁹. When selected landlords are contacted they should be told that they have been chosen on a random basis, not on the basis of suspicions.

The key purpose of collecting the mandatory information is to confirm if the applicant is a fit and proper person to be engaged in residential letting. The next section provides guidance on how authorities should go about that task.

• Reaching the decision to register or not to register an applicant

There are no automatic or mandatory criteria for deciding whether to approve or reject an application. If the applicant is judged a fit and proper person for the purpose of registration, then that person should be registered. If not, the person should not be registered.

If it is possible that by taking certain specific actions a person could become acceptable for registration, then, on a balance of risk and benefit, the person could be registered. Such cases must be closely followed up to ensure that the required action is taken. If the landlord fails to act as required, registration should be removed. Guidance on how to approach the fit and proper person test is provided in section 3.4 The fit and proper test.

There is no mandatory timescale within which to decide on validly submitted applications. However, setting timescales in a new situation such as registration is recommended as this will provide both discipline and a structure within which registration officers and others who have an input into the process should aim to work.

Recommending timescales to local authorities from a national perspective on an untried process must be viewed as tentative. Only overall, indicative, processing timescales are sensible and these have to vary according to the process route an application follows. Authorities may wish to consider the viability of the following suggestions for target processing times by reference to the flowchart in Annex 7.

From date of validation of an application to:

• date of notification of approval of an application that is not on the local authority database: 1 month
• date of notification of the refusal of an application that is on the local authority database and from which there are sufficient grounds to refuse without further checks considered necessary: 3 months
• date of notification of approval of an application that is on the local authority database but for which there are no doubts about approving: 3 months
• date of notification of approval of an application that is on the local authority database and for which further checks are carried out including Disclosure Scotland results, but the conclusion from which is there are not sufficient grounds to refuse approval: 6 months
• date of notification of rejection of an application that is on the local authority database and for which further checks are carried out including any Disclosure Scotland checks, the conclusion from which is that there are sufficient grounds to refuse approval: 6 months

It should be noted that the maximum period for processing and deciding on the more onerous regulation of an HMO licence is 12 months, but that is to allow for possible physical alterations to be made to the property to meet licensing conditions. That does not apply with landlord and agent registration and the maximum timescale suggested above of 6 months corresponds with that used in most other types of licensing situations. However, the volume of cases will also be a factor for some authorities.

Amendments to an applicant's registration information

A registered owner who initially self-manages a house but subsequently decides to appoint an agent to take over the management function must inform the local authority of the change. An amendment must be made to the owner's application to ensure that the agent is listed with the owner on the register. Owners will be able to amend all their own information online.

If a registered owner cancels the appointment of an agent, the owner must inform the local authority. Agents could also perceive it as being in their best interests to ensure the authority is aware of a change, so that no future problems associated with the management of a particular house are attributable to them.

Where an applicant requires to add an additional property to his or her record, the additional fee would be charged for this.

The regulations do not specify a fee to be charged for other amendments, for example, for a change to a landlord's contact details. It is expected that no charge would be made for such amendments. Landlords using the online system will be able to update their own information online, with no resource implications for the local authority. Where any amendments require to be made by local authority staff, it is likely that the costs involved in seeking payment would negate any reasonable charge which might be made. This approach is therefore discouraged.

3.6 PROVISION OF INFORMATION AND ADVICE

This section details the responsibilities of local authorities as regards the provision of information and advice to landlords and tenants.

It has been recommended (section 3.2 Identifying landlords) that local authorities should mount a publicity drive as part of the introduction of mandatory registration.

In addition, local authorities are required by regulations to provide information and advice to landlords in particular situations.

Advice to landlords

• Good practice information to applicants

Information on what constitutes good practice in letting properties should be provided to each applicant at some stage in the process leading to registration or on registration. An appropriate stage could be the issue of the notification that the applicant's registration has been approved, if it has not been necessary to enter into dialogue with the applicant at an earlier stage of assessment.

This could be achieved by providing applicants with links to suitable advice on the internet such as sections 1, 2 and 4 of the ' National Core Standards and Good Practice Guidance for Private Landlords and for Local Accreditation Schemes' on the Communities Scotland website ¹⁰. This information is also available from Homepoint on 0131 313 0044 or by emailing homepoint@communitiesscotland.gov.uk. Other appropriate advice is available from organisations such as SAL or ARLA and other support services in the local authority area may be in a position to assist with suitable information.

As not all landlords will have internet access, authorities should consider providing hard copy extracts of guidance to applicants. The Scottish Executive also publishes housing information and rights guides for private landlords and tenants, copies of which can be obtained from the Scottish Executive Private Sector Housing Team (0131 244 5571) or by download ¹¹.

Some authorities may have their own 'good landlord' guidance as part of a local accreditation scheme or for their HMO licensing scheme. Any of these sources could be relevant to providing guidance on good lettings practice.

• Advice in relation to refusal of registration or de-registration

Where the authority proposes to refuse to register an applicant or to de-register an already registered person, and if it considers that the applicant or registered person may be able to take steps to achieve registration or to prevent de-registration, then it must provide appropriate advice on what steps could be taken.

The advice will of course depend on the basis on which non- or de-registration is being considered but could cover failings in relation to tenancy or property management. In such a case, the applicant could be pointed to the good practice guidance produced by Communities Scotland (as detailed above).

The best advice may be that the person seeks legal assistance, for example, to draw up a legally correct tenancy agreement (though a model short assured tenancy is available at section 4 of the National Core Standards guidance).

In other cases, the best step may be to employ a suitable agent and hand over management responsibility to that agent. Although this may involve extra cost it may be the most appropriate way to ensure that the tenancy is handled in a fit and proper manner and that the tenant's interests are properly protected.

Landlords who face de-registration should be made aware of the consequences of this for their legal situation in the letting market, as well as resultant issues, such as insurance cover on the property.

Advice to tenants

There is also an obligation on local authorities to provide tenants and other occupants with advice and assistance in particular situations.

There may be an impact on a tenant's continuing security of tenure where a local authority:

• rejects an applicant's registration
• removes a registered person from the register
• applies a Rent Penalty Notice

None of these three types of action by an authority gives a landlord or agent grounds to evict a tenant. However, if occupation is on the basis of a Short Assured Tenancy (which is the predominant form of tenancy in the private sector) the landlord is entitled to end the tenancy at its proper term without specifying grounds, instead of rolling it forward to the next rental period (by "tacit relocation"). The same may apply to an Occupancy Arrangement, depending on its terms. The local authority's action might result in the landlord ending such a Short Assured Tenancy or Occupancy Arrangement earlier than might otherwise have been the case.

Information to tenants should emphasise that the action taking place relates to the landlord, not to the tenant. The tenant's security continues until the tenancy ends (or there is a breach of the terms of the tenancy during the tenancy allowing the landlord to seek a court order to remove the tenant), and the landlord or agent must use lawful means only to bring the tenancy (or occupancy) to an end; otherwise a criminal offence will have been committed.

The landlord should not assume that eviction is the only route if registration is refused or removed. One option is to sell or otherwise transfer ownership to a person who will be judged fit and proper, whilst the sitting tenant remains in place. The local authority will need to be satisfied that control of the property has been genuinely transferred and that the previous owner is not acting as an unfit agent. There may be other options by which the landlord could become registered (see section 3.4 The fit and proper test - landlords, agents and the fit and proper test).

Not all landlords are aware of the law; some may look for 'shortcuts' to the legal process. It is therefore essential that all tenants and occupiers affected by decisions not to register an applicant, to de-register a registered person, or to apply a rent penalty, have clear, easily understood information and advice on their housing options. They may also need assistance should the landlord attempt to remove them from the property illegally.

Where a rent penalty is imposed, the landlord may seek to obtain money from the tenant(s) despite the suspension of the legal liability for rent. The local authority should monitor situations where this penalty is used, referring any evidence of harassment or illegal eviction to the Procurator Fiscal and providing advice and assistance to tenants as appropriate. This is particularly important when tenants are from vulnerable groups.

When a local authority refuses or removes registration from a landlord or agent, notification must be sent to the occupants of the properties involved. With a rent penalty notice, the local authority should serve the Rent Penalty Notice on the occupants of the house or residential properties to which it applies, provided it knows them, but failure to do so will not invalidate the notice.

A local authority that has rejected an applicant's registration or removed a registered person from the register is obliged provide to the occupants in each house that is identified in the application form or on the register, advice and assistance on:

• security of tenure
• sources of money and benefits advice
• homelessness services
• the homelessness duties of the local authority

The requirement is to provide the information to the occupants of the house. The local authority will therefore not be in breach of this requirement if it is unable to establish who is formally the tenant in a given situation.

Advice and assistance must be provided to tenants and occupiers as soon as is practicable after the decision is taken by the authority. That advice and assistance should also be relevant to their circumstances. General materials which include the particular circumstances may be suitable, but the local authority should take steps to make sure that this is so, as those who have difficulty in using complex material can be the most vulnerable.

The Scottish Executive is developing materials that should be suitable as the core of such information provision.

The same advice and assistance should be provided to occupants when the landlord is served a notice that no rent is payable on a residential property. The details about the service of Rent Penalty Notices are covered in section 4.3 Sanctions which also deals with the need for advice on setting aside money if the landlord appeals.

3.7 PASSPORTING APPLICATIONS AND AVOIDING DUPLICATION

This section deals with the management of applications in respect of HMO-licensed and accredited properties.

With the implementation of registration, there are three main means by which the quality of private landlords is recognised or regulated by local authorities:

• registration
• HMO licensing
• voluntary accreditation schemes

Although these three methods of improving the quality of management and property in the private rented sector are inter-related, they are not equivalent. It is therefore important that a consistent approach is adopted across these regulatory regimes to avoid duplication that wastes effort and time for both landlords and the authority.

The key point for consideration is whether a landlord has already been recognised as fit and proper to be letting houses. Where a landlord holds an HMO licence or has been accredited through a scheme which is recognised by the local authority in which it is run as requiring a fit and proper test, the landlord will be fit and proper for the purposes of registration and will be passported to the system. This passporting means that the landlord will not require to pay the principal fee in that local authority area. The additional fee will not be payable on HMO licensed properties.

• HMO licensing and landlord registration

HMO licensing has been in operation since October 2000 and incorporates an assessment of whether the owner, as applicant, is a fit and proper person to hold a licence.

HMO licensing is a stricter regime than registration and focuses on the house as well as its management by a fit and proper person. In contrast to registration, an HMO licence is specific to the house. 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.

The linkage and information transfer between HMO licensing and landlord registration is crucial to the success of both systems of regulation. Details of the procedures to be followed are included in Annex 2.

• Accreditation schemes and landlord registration

Voluntary accreditation schemes have developed in recent years and represent a high standard of validation of a landlord (or agent's) property and tenancy management practices. Pilot schemes are operational in a number of local authorities across Scotland. More information is available on www.betterrentingscotland.com.

Schemes can accredit the landlord and property (the preferred type of accreditation), the landlord only or the property only. Accreditation is voluntary for landlords to join and the accreditation criteria are decided by those who have established the scheme. These are usually local authorities in partnership with private landlord organisations, but there is scope for 'industry' schemes that operate independently of central or local government. The National Core Standards issued by Communities Scotland are the baseline for accreditation schemes involving local authorities, but although they recommend adoption of a criterion that ' the landlord should not have a conviction within the last three years for a criminal offence, or offences that are relevant to carrying out residential letting' ¹², this does not equate to the fit and proper test set out in the 2004 Act and elaborated on in this guidance. Some accreditation schemes may use or go beyond that criterion but others may not even adopt it as a test.

If a scheme applies a fit and proper test that equates to the test required under landlord registration, those who have passed it should not be required to undergo another similar test and should be passported to landlord registration. Local authorities should identify the accreditation schemes which they will accept as demonstrating the required fit and proper standard for registration in the area. It would be sensible for local authorities involved in the development of local accreditation schemes to coordinate and harmonise accreditation and registration such that there is no duplication over the basic fit and proper test and accreditation offers additional benefits over registration for those who join the scheme. It would also be sensible for local authorities to liaise through the proposed network for registration lead officers in order to exchange information on the nature of any fit and proper test applied by accreditation schemes so that an authority can decide whether to approve, for their own registration purposes, accreditation schemes that operate in other areas.

For other accreditation schemes, it falls to the local authority to consider the standards required for entry to accreditation and the mechanisms for verification of those standards, as well as to decide whether these are sufficient to satisfy the requirements for registration in all cases, or whether they should simply be taken into account as evidence for the authority's decision.

Details of the procedures to be followed in respect of accredited landlords and properties are included in Annex 3.

• Passporting registration information between authorities

The landlord register is the responsibility of each local authority in relation to its area. Whilst there is a centralised IT website, there is no national register. Where an applicant (or a person already registered by one authority) owns or manages rented property in other areas, officers in different authorities can communicate with each other directly about application information, the fit and proper person test and decisions (while respecting any data release restrictions that may apply with certain types of information).

Each local authority must make its own decision on each application for registration which it receives. Local authorities may however make use of all information available to them, including that shared with them by other local authorities, in reaching that decision.

3.8 THE REGISTER

This section deals with the content of the landlord register and the release of information.

Local authorities are required to maintain a register of landlords and agents who are considered fit and proper persons to let a house under a lease or occupancy arrangement.

Registration lasts for three years and information on the person and their residential properties for let is held on the register (see Section 3.3 Information from applicants).

The release of information to members of the public is circumscribed to ensure that the information is not used for malicious or commercial marketing purposes or would not, if released, represent an unacceptable intrusion in a registered person's private life.

Access to the register in a local authority's area is, in legal terms, by application to the local authority. In the great majority of cases this is done by accessing the website, without any need for the involvement of local authority staff. A member of the public can request information with respect to a particular residential property or a particular person. Application cannot be made to obtain information on all registered houses in the local authority's area.

• where information is requested about a particular property, the website will automatically provide:

• where information is requested about a particular person, the website will automatically confirm whether that person is on the register

A member of the public is entitled to ask for more information than listed above, by application to the local authority. The local authority must think it appropriate to release the information, taking account of the reason for the request. It is not obliged to release any further information if it does not think this appropriate. Such further information can only be the information specified in section 83(1) of the 2004 Act (as amended) and cannot be the additional information required by regulations. It can comprise details of the landlord's or agent's home address (where, for example, the person requires to serve a notice on the landlord) or of the landlord's properties (for example a full list of those properties where there is a genuine reason for needing that information).

Additionally, where the authority is concerned that release of any information on the register about a property or registered person may jeopardise the safety and welfare of any person, or the security of any premises ( e.g. a landlord's home as well as any listed house), then it can decide to release no information or only information it considers will not give rise to these concerns. This means that information can be flagged in the IT system so that it does not appear as a result of a web-based enquiry. The types of cases where this approach is desirable include, for example, women's refuges and halfway housing, where the identity if the owner would indicate the nature of the accommodation and could lead to harassment by, for example, estranged partners or prejudiced neighbours.

Local authorities may feel that this approach is appropriate in some other cases and should be prepared to consider restricting information in this way on the application of an individual, if they feel that the case merits such a restriction. The legal test relates to whether provision of that information would be likely to jeopardise the safety or welfare of a landlord or tenant, or the security of any premises.

Local authorities should seek to ensure that all relevant staff are properly trained to avoid any inadvertent disclosure of inappropriate information by telephone or other means.

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