Scottish Landlords Registration Scheme Fails and Implications for the Rest of the UK

David Lawrenson of PRS consultancy www.LettingFocus.com shows how government seems to be failing to learn from past experiments to control the private rented sector – and calls for more robust analysis.

Landlords have paid £11.2m in fees since the introduction of the Landlord Registration Scheme in Scotland. But the scheme has resulted in only 11 people being reported to the procurator fiscal in the last two years.

Altogether 200,000 landlords have registered for the scheme (for which the cost of registration is £55 every three years plus an additional £11 for every rental property).

According to responses to questions from Scottish Conservative housing spokesman Alex Johnstone, in total nearly £18m has been spent on the scheme, including a start-up grant of over £5m from the Scottish Government.

Johnstone says, “The scheme was set up to root out rogue landlords but so far it has cost over £400,000 for every landlord who has been refused registration. Also, according to the scheme, since 2006, there are (supposedly) only 40 rogue landlords operating in Scotland, however many tenants will have had an altogether more negative experience. This farcical programme, introduced with the best of intentions, is failing to deliver at a tremendous cost to the taxpayer. And responsible people with aspirations to get into the property business are being hit in the pocket because of this inadequate scheme.”

At LettingFocus, we agree – a million pounds in fees for each landlord reported to the Procurator does not seem good value for money.

In an earlier blog post, in December 2011, entitled, “Scotland Landlord Registration Scheme Review Makes Grim Reading” we reported on the damning assessment of the scheme by consultants DTZ, who were bought into assess how the scheme was faring.

Kid Gloves

Normally, when a public body brings in a consultant to assess a scheme, if the scheme has been a disaster, the kid gloves are usually put on by the consultant in an attempt to sugar the pill (which is why public bodies sometimes favour hiring consultants who used to work for them.)

But, here there was little that even DTZ could do to sugar the pill in their report.

It’s not quite a waste of money of “Darien” proportions – (Scots who know their history will be familiar with the Darien disaster of 1698/9 which had a huge part to play in leading to the eventual Union) – but this wasteful scheme is not the Scottish government’s finest moment.

Lessons Learnt

But are the lessons being learnt south of the border?

Well, in the same week, Labour’s Jack Dromey had called for a national register of landlords too, though to give him credit, at the same time he also called for local authorities to be empowered to improve standards and deal with rogue landlords.

And in a welcome move, at a recent Westminster parliamentary debate, the  Under-Secretary of State for Communities and Local Government, Don Foster announced that caps on the level of fines for lettings offences were to be lifted. We wait for more details on this.

Raise Fines and Give Local Authorities the Resources

We think this is the direction of travel that should be followed as a priority and we have always said that current levels of fines applied to rogue letting agents and landlords are too light, especially when compared to the amount of resources a local authority has to expend on achieving a prosecution.

At LettingFocus, we say government must make the deterrents far stronger and allow the local authorities ample resources so that they can properly investigate and take action to drive the rogue operators out of business. But this must happen before launching expensive and expansive registration schemes which may just miss the point and miss the target.

The fact is that local authorities already have the powers to close down the rogue operators in the PRS – government must give them enough resources now, to use these powers and raise the penalties for those bad operators who get caught.

Proper Analyses and Learning from Experience Still Lacking

A year ago, some Newham landords called on me to attend a meeting with Newham council officers before that council went ahead with their own licensing scheme. (At the time, the Newham scheme was still open to discussion, but it was clear that the decision to go ahead had already been taken).

However, I was interested to learn that most of the Newham Council officers and members I spoke to had never heard of the Scottish Registration scheme or the DTZ report on it.

This is a problem that must be addressed. In the local authorities, in the CLG, at the major housing charities and in central government I see this kind of thing too often – either 1) there is a  lack of awareness of other similar schemes that have been tried and failed or, 2) past schemes have not costed so we do not really know how they fared.

The latter criticism is one I regularly make of those who advocate private rented sector access schemes – too many of the schemes that are claimed to be a success have not been costed to prove the “social business case”.

To see this in action, take a look at the great compendium of private rented sector access schemes and other initiatives compiled by Crisis at PrivateRentedSector.org. It’s a great resource but you can quickly see that too much of what’s been tried has ever been evaluated on a proper robust business case.

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