The Scottish Government

« Previous | Contents | Next »

Listen

3. Application Process

Issues regarding the effectiveness of the application process have been raised by almost every authority. Therefore, before examining good practice it is essential to address a number of underlying application process issues. These include:

• assistance with the application process;
• discounts;
• payment process;
• contact information;
• incomplete applications;
• joint owners;
• address software;
• activation codes; and
• receipt /acknowledgment procedure.

Please note that recommended improvements to the IT system are included in Section 9 of this report.

3.1 Assistance with the Application Process

As with any new process, assistance and advice is often required to guide users through the process. Despite efforts to ensure that the application process is comprehensive, a clear finding has been that landlords have required considerable assistance to complete the process, particularly in applying online.. In authorities where few staff are assigned to the registration function, this has taken resources away from other processing tasks.

Local authorities reported that the particular areas in which landlords and agents required intensive support were as follows:

• some landlords had limited IT skills but applied online to claim an online discount;
• some landlords were unable to identify their properties on the online system;
• some landlords could not register properties, as they were already registered by another landlord who failed to input the correct flat position;
• some landlords failed to input all of their details in one session and therefore lost their consecutive discount; and
• some letting agents registered landlords on their behalf, but input details incorrectly.

Good Practice Recommendation

The online application should be an easy and straightforward mechanism by which to submit and pay for landlord registration. Therefore, it is recommended that nationally the Scottish Government should coordinate consultation with users (landlords, agents and local authorities) to provide suggestions for improving the user friendliness of application forms both on paper and online. It is recommended that this would also produce comprehensive advice notes, written in simple terms to accompany each stage of the application process. This advice should be devised from the perspective of different types of landlords and agents to avoid any confusion.

In order to ensure everyone is treated equally, authorities should plan for the provision of advice and assistance to enable new landlords and agents to apply as easily as possible. This includes applications and advice being available in alternative formats or languages and a range of assistance being available to ensure landlords comply.

It is also recommended that local authorities consider how landlords, agents and tenants get in touch with the landlord registration team. A dedicated phone number, email address and web-link within the Council's own website are relatively simple and cost effective methods of ensuring queries can be dealt with quickly.

In addition, the area of online application discounts requires to be revised. Full recommendations regarding payment options are contained in section 3.3 of this report.

Good Practice Examples

East Lothian Council set up a number of registration sessions where computers were made available to landlords in local housing offices. Landlords were encouraged to attend and a registration officer was in attendance to provide assistance with the application process if necessary. Where requested, the team also carried out home visits and attended local landlord forums. The team places local adverts in papers, promotes the online system and also advises of public access to PCs in local libraries and area offices.

East Renfrewshire Council makes all leaflets available in different languages and also has a BME outreach worker who has close links with the Jewish community in the area. Home visits are also available to help fill out applications.

Dundee City Council have a dedicated email address and telephone number and therefore a single point of contact for landlords, agents and the public to contact the team.

Edinburgh City Council has a dedicated generic e-mail address and telephone number. It also promoted the scheme using local radio adverts, posters on buses and in adverts in local papers.

Highland Council application guidance includes advice to applicants that internet access is available free of charge at all Highland Council libraries and a landlord training day was organised by Housing Services where presentations were given on the legal aspects of registration and the application process.

3.2 Discounts

Among authorities, there is a general view that the current discount process is too complex and should be simplified. A number of specific concerns were raised including online application discounts, consecutive area discounts and cost implications.

3.2.1 Online Application Discount

As mentioned in section 3.1, landlords with relatively limited IT skills are applying online to receive a discount whilst also requiring intensive support to complete application forms. In addition, local authorities have reported that landlords are receiving discounted fees whilst incurring additional costs to the authority by requesting an invoice prior to payment.

Good Practice Recommendation

It is our strong recommendation that payment, wherever possible, should accompany an application.

It is therefore recommended that online discounts should only apply to applications that are paid online ( i.e. not when an invoice is raised). However, in order not to discriminate against Companies who require invoices the online system should be amended to provide payment by credit card and the facility to printed invoices or receipts retrospectively (many UK Government sites do this, including HM Customs & Revenues). The industry standard practice of a small percentage charge for credit card payments should be adopted.

3.2.2 Consecutive Area Discount

Some authorities reported that, in order to qualify for consecutive discount across local authorities, applicants are required to complete their application in the same session. However, it appears that this may not be consistent across Scotland and requires to be addressed.

Good Practice Recommendation

It is recommended that the online application should either;

• make it clear to users that they are required to complete their applications in the same session; or alternatively
• the online system is adapted to include an option for users to save their details as draft, to enable them to return to complete and submit their application at a later date. This would require reminders to be sent to the user to complete and pay for their application within a specific timeframe before a late application fee applies. This may be particularly useful to agents or landlords with large portfolios.

3.2.3 Cost Implications

In some instances, where discounts apply, the amounts to be paid or invoiced are lower than the cost of processing the payment. Also, some authorities have invoice thresholds (for example £10) below which they will not generate an invoice. This is particularly the case with charities, HMO landlords with one other property or where landlords have submitted paper applications with inaccurate fee calculations. Costs identified for creating and distributing invoices have ranged from £8 - £12 per invoice. Therefore there are significant cost implications for local authorities around the discounting and invoicing process. An exception to this may by where landlord registration teams have issued letters rather than invoices with debtors numbers attached (as is the case in Highland Council), containing fee summaries as produced from the end of day files and stating that applicants are not registered until applications are paid.

Good Practice Recommendation

The cost implications of generating invoices and associated follow up procedures, has been significant. It is our recommendation that payment should accompany application and where possible an invoice should be issued as a last resort.

It is also recommended that the whole area of discounts, be revised and the Scottish Government should consult with local authorities on this matter.

Originally discounts for HMO landlords and accreditation status related to schemes that were in existence prior to registration being introduced. However, as registration is now operational, it is a requirement for both HMO landlords and accredited landlords to now be registered the area of passporting should be revised. Our full recommendations on this are included in section 5 of this report.

3.3 Payment Process

3.3.1 Payment with Application

As is discussed in section 4, a valid application is one that is made and is paid. Therefore the process of payment should be made as simple as possible for landlords, agents and local authorities. However, the payment options available to landlords and agents are not consistently applied across local authorities as each tend to have different arrangements in place. This is mainly because the online system does not have the facility to pay by credit card or to print an invoice or receipt suitable for business records. This has resulted in a large number of invoices being requested across Scotland, with a significant amount of additional administration being created. As a result, local authorities have attempted to simplify the process by;

• requesting payment upfront (by cash or cheque) with all paper applications; or
• where invoices are requested, giving landlords access to the full range of payment options available locally within the Council, for example payment over the phone or at service desks and also enables credit card payments.

Good Practice Recommendation

It is strongly recommended that where possible, payment should accompany application. This is standard practice in most other licensing functions and therefore the payment options currently available as part of the online system should be revised to reflect standard business practice.

Good Practice Example

Highland Council requires payment to accompany application where paper applications are submitted.

3.3.2 Payment via Credit Card

At present there is no credit card payment facility on the online system. Instead there is the option to pay by debit card or request a local authority invoice. Typically most businesses do not have access to debit cards and therefore a large proportion of landlords, by default, have had to request invoices.

However, once an invoice has been raised, a landlord/agent is provided with a debtors number, which enables them to access the wide range of payment options available at local Council offices or via the phone. Where payment by credit card is available, some authorities add an additional surcharge to cover costs.

Good Practice Recommendation

It is essential for the credibility of the registration process that the payment options match standard business practice for online transactions. For the online payment system to work effectively, the options for online payment require to be expanded to recognize standard business practice i.e. credit card payment, BACS transfer etc.

Good Practice Example

East Lothian Council: When a landlord receives an invoice, they have a whole range of payment options via the Council's finance section. Where payment by credit card is chosen, it is standard practice for the Council to add a 2% surcharge to the fee to cover processing costs.

3.3.3 Payment via Invoice

Landlords and agents have the option to request an invoice prior to paying for registration. As most registration teams do not include finance staff, this means that arrangements are put in place with separate finance sections in the Council. Typically, in order to raise an invoice, registration teams require finance to create a debtors number for the landlord/agent. Either the finance staff or the registration teams, create, issue and follow up on payment of the invoice. In general, the finance section deals with the returned invoice and payment. They then inform the registration team, of which landlords have paid and which are outstanding. Overall, this whole process is time consuming and resource intensive.

Please note that the above is a typical example of how the invoicing process should work, however it is noted that in some authorities communication between landlord registration teams and finance teams can be limited or there are issues regarding competing priorities. Where this has been the case, some registration teams have paid for additional support to the finance team or have taken on some parts of the finance process themselves, for example checking for debtors numbers, issuing the invoices and also following up on non payment.

As a result, authorities have raised serious concerns about the cost implications of issuing and processing invoices to landlords and agents. Typically, landlords or agents applying online, receive a discounted application fee but also request invoices, which are estimated to cost between £8 and £12 to generate in most cases.

The volume of invoice requests has also had implications on resources, particularly where registration teams have few full time staff or this has added to competing priorities within finance departments.

Good Practice Recommendation

Raising an invoice should be considered as a last resort. Therefore, a wide range of payment options should be made available to landlords and agents at the point of completing the registration.

It is recommended that a facility to print a VAT receipt or confirmation of payment online should be introduced.

Given the cost of producing a paper invoice the online discount should not be applicable where there is a request for a paper invoice.

By improving the options for payment online, the need for invoices and the resource implications they create should therefore be limited.

Good Practice Example

Dundee City Council: An arrangement is in place with the finance section that the registration team can check for debtors numbers. Only where a landlord does not have an existing debtors numbers are they referred to finance.

3.3.4 Monitoring Payments

The process of monitoring payments made by landlords and agents is complex and inconsistently applied across Scotland. Linked to the issue of invoices, monies can therefore come into the Council from a variety of sources, i.e. via the online system, cash or cheque direct to the team or through local area offices/cash desks. Therefore determining whether a landlord has submitted a valid application is currently very difficult unless the landlord has paid at the point of application.

There is also a concern that as renewal dates for landlord registration are linked to when a landlord is approved, the process of ensuring payment is made without any unnecessary delays is important. The longer it takes an authority to issue and deal with an invoice, the longer the landlord has before they require to renew their registration.

Good Practice Recommendation

It is recommended that local authorities have robust procedures in place to ensure a landlord's application is validated as soon as it is paid. This includes effective monitoring of when applications have been made, when invoices have been issued or payments have failed. Where payment methods involve finance sections it is essential authorities clearly define where responsibility for each part of the process lies. Therefore effective job monitoring is essential in ensuring compliance.

Good Practice Example

Appendix A illustrates a good practice example by North Lanarkshire Council where they have utilised and adapted standard job tracking software for the landlord registration process.

3.3.5 Refunding Landlords

A common issue where landlords apply on paper is that they may have miscalculated the amount payable. All authorities had standard refunding procedures in place with their finance sections however, it is essential that applications are checked to ensure that the payment provided matches the details contained in the application form. Where applications have been made online, the online system calculates the appropriate amount payable based on the information provided. It is important therefore that the online application is able to ensure all the appropriate mandatory information has been input prior to accepting payment.

Good Practice Recommendation

Where paper applications are received, it is important to check the amount payable matches the information provided on the application form. If a landlord had over-paid then a refund should be issued as soon as possible.

If a landlord has paid too little, the application and monies should be returned, by recorded delivery, with a letter outlining the accurate amount payable. This letter should include a reminder of the landlord's legal obligation to register, which includes the correct payment and the penalties available if they fail to comply.

3.3.6 Non Payment of Fees

A valid application is one where all the required mandatory information has been provided in the application form and that the correct fee has been paid, therefore where no payment is made a landlord is not legally able to let property. However, it is important to note that there are two main reasons why landlords/agents fail to pay;

• an invoice has been requested and not received; or
• a landlord/agent has not responded to an invoice.

A number of authorities reported significant delays in issuing invoices for a variety of reasons including lack of staff to deal with the backlog of requests or competing priorities within finance sections.

In addition, authorities also stated that a number of landlords/agents had failed to respond to invoices and follow up reminders being issued. Only one authority interviewed (East Lothian Council) had linked enforcement action to ensure payment, to the rent penalty sanctions available. Although some authorities had written to remind landlords that late application fees could apply, no authority at the time of interview had applied late application fees.

Good Practice Recommendations

The current Scottish Government guidance does not specifically address the issue of non payment of fees and appropriate enforcement action to take, with the exception of late application fees.

The current guidance enables local authorities to apply a late application fee provided an application has been submitted after an authority has made two separate requests for an application to be made.

It is our recommendation that late application fees could therefore be applied in relation to non payment of an application, in that if an application is not paid, then it is not valid and as a result the landlord has not fully completed their application. After two attempts to requests payment are unsuccessful, a late application fee will apply.

If after a late application fee is applied and there is still no response, a valid application has not been made. Therefore, the landlord has failed to register and is not legally permitted to let property. The penalties available for failure to register are:

• Guilty of an offence. Report to the Procurator Fiscal.
• Rent Penalty Notice may be served.

Further recommendations on issuing notices are contained in the sanctions section 7 below.

Good Practice Example

East Lothian Council: A landlord/agent is given one month to pay an invoice which is in line with the Council's standard terms for other outstanding payments. A reminder letter is then sent to state that a rent penalty notice will be served if the landlord continues to fail to pay. If there is no response after two weeks, the landlord will be contacted to state when a rent penalty notice will apply. This notice will be post-dated by one month to give the landlord/agent every opportunity to make payment before the notice goes live. At the time of interview 33 impending rent penalty letters had been served. Of those, 26 paid before the rent penalty notice went live, 7 rent penalty notices went live but were resolved within a week and only 1 was still in place. There were plans to issue an additional 90 notices due to non payment of fees in the near future.

3.4 Contact Information

A common issue is that applications are submitted without key contact data such as a telephone number or email addresses. As these are not mandatory requirements within the legislation they are not included as part of the application form.

However, authorities have stated that the lack of email address or telephone number as an either/or mandatory field adds to the difficulty in contacting landlords where changes or clarification is required and also slows the registration process. This also has implications in contacting landlords where there may be enforcement issues.

There are also issues where the landlord is not resident in the UK and does not have a letting agent in place.

Good Practice Recommendation

It is recommended that the application, both paper and online, requires a telephone number and/or an email address, as mandatory fields. Paper applications submitted without this information should not be deemed valid and the landlord will not be operating legally until such information is submitted. Similarly it should not be possible to proceed with an online application until at least one of these fields has been completed.

Where a landlord applies online, it should a mandatory part of the process that an email address is provided so that an activation code can be automatically issued.

If a landlord does not have an email address, it may be appropriate to provide guidance on how to set up a basic email account.

Where email and home addresses are provided local authorities can begin to compile mailing lists to send good practice, advice, information and reminders to local landlords, agents and their tenants. The application form may require to be amended to ensure that landlords/agents agree to being contacted with additional information regarding good practice. However, it should be made clear that local authorities may use this information to contact the landlord/agent at any point, regarding any issue regarding their portfolio.

Good Practice Examples

Falkirk Council: has created an email mailing list to distribute regular reminders and good practice information and advice on behalf of landlord registration and other Council departments and agencies.

3.5 Incomplete Applications

A general finding was that all applications require to be checked prior to processing as a number of landlords and agents are submitting incomplete applications. In particular,

• 'dummy' dates of birth are input (for example 01/01/2001 or 01/01/1901);
• contact information is not supplied (addresses, postcode);
• landlord address and public contact address are both business addresses and no personal contact details are supplied by the landlord; and
• details of joint owners.

Local authorities stated that where information is missing from an application form, in the interests of simplifying the process, it would be cost effective to contact the landlord by telephone and email. At present, however this type of contact information is not mandatory.

Good Practice Recommendation

The application form should have the provision of a contact telephone number and/or email address, as a mandatory requirement. This would make it easier to contact landlords and agents to clarify application details. Writing to landlords and agents should be used as a last resort.

Application forms and any accompanying guidance information should make it clear that it is a landlord's legal obligation to provide a date of birth and appropriate contact information.

3.6 Activation Codes

When a landlord or agent applies for registration online, an activation code is generated to enable them to continue processing their application. If an email address is provided the activation code is then emailed immediately to the user. However, if an email address is not provided the activation code is sent out by letter from the authority.

Most authorities stated that as requests for activation codes are included within the end of day report, they are posted daily to landlords. However, others do not issue activation code letters regularly and are therefore delaying a landlord/agent from completing their submission of a valid application.

Good Practice Recommendation

It is good practice that activation codes are issued automatically to landlords. It is recommended that users should be encouraged to provide a valid email address in order to ensure they submit a valid application as quickly as possible.

Built within the online system, there requires to be an activity tracking process that identifies when an activation code has been used to complete an application. Thus, if an activation code has not been used, a follow up procedure should be in place to ensure landlords and agents submit a valid application.

3.7 Receipt/Acknowledgment Procedure

At present applicants do not receive any notification that their application has been submitted and paid.

Good Practice Recommendation

Where a landlord has applied and paid online, they should receive an acknowledgement email to confirm the details of their application and an application/registration number. They should be informed that their application is being processed and be advised of their legal obligations to keep their records up-to-date, should their portfolios change, including information on how to do this. As stated previously, a landlord choosing to apply online will be expected to submit a valid email address in order to do so.

Once an application is paid online, there should be the facility for landlords/agents to print a record of payment suitable for tax purposes. It should be very clear to users when they go to pay for their applications that this facility is available. Where a landlord has applied by paper, payment should accompany the application. Where an email address has been supplied, it is recommended that the landlord receives an acknowledgment/receipt by email. This acknowledgement/receipt email should also contain an activation code and instructions on how a landlord can keep their records up to date online. If no email address is supplied, the landlord should receive a simple acknowledgement letter, to state that their application is being processed and also contain information on how to keep their records up to date.

As this requires an amendment to the current IT system, it is recommended that the acknowledgement/receipt facility apply during the renewal phase.

Good Practice Example

Dumfries & Galloway Council issues an acknowledgment letter to landlords to state that applications have been received and are being processed.

« Previous | Contents | Next »