Scotland Landlord Registration Scheme Review Makes Grim Reading

A new report on the Scotland Landlords Registration Scheme confirms what we have long suggested – that the scheme has failed on many of its objectives says David Lawrenson of LettingFocus.

Many people, in government and elsewhere, would like to see the private rented sector “regulated” more.

Of course they often have different ideas about exactly what sort of regulation they have in mind.

The now much forgotten, but generally brilliant, Rugg Review recommended that private landlords should be regulated via a very low cost scheme and broadly we welcomed the recommendation and the way Julie Rugg envisaged it working. (Most landlords associations were not so convinced, but as an independent expert I always take the line of “what’s best for society / the taxpayer” and I found myself agreeing with Rugg.)

However, one regulation scheme that I have been a constant critic of is the Scottish Landlords Registration Scheme.

Scotland’s Landlord Registration Scheme

In Scotland, just about all private landlords have to pay to be registered. The origins of Landlord Registration in Scotland are contained within the Antisocial Behaviour etc. (Scotland) Act 2004, which required almost all private landlords to apply for registration with their local authority.

So, what were the objectives of the scheme?

The Scottish Government Leaflet ‘Landlord Registration’ (2006) stated that:

‘All private landlords must register with their local authority. This gives tenants assurance that landlords are fit and proper people to let property, and gives the local authority a full picture of the private rented sector in their area. The requirement (to register) will help local authorities to remove disreputable landlords from the market, protect tenants, and protect communities from the impact of antisocial behaviour and mismanaged property.’

My Past Criticisms of the Scheme

Over the years, my main criticisms of it have been that

1. That it has cost far too much money

2.  It singularly achieved very little in bringing rogue landlords “to book”

3.  Landlords in Scotland tend to see it as a bureaucratic hassle (especially as they need to register in each local authority where you have a property) and that it acts as a tax on good landlords

4. There is little evidence that it has raised standards in the private rented sector in Scotland

Now the Scottish Government has reported the results of DTZ’s review of the Landlord Registration Scheme. We think this review makes pretty grim reading in terms of effectiveness in meeting objectives and budgetary accountability. In other words, it confirms most of the things we have been saying.

These are some quotes from the paper:

Extract of DTZ’s Findings for the Scottish Government

1. At this stage, it continues to be difficult to quantify exactly how many landlords have not yet registered and whether they do not register because they are unaware of the requirement to do so or because they ignore this requirement.

2. The research findings reveal that landlords are now more likely to have access to information and advice provided by local authority Landlord Registration teams. However, there is no guarantee that management of property among private sector landlords reaches a specified standard.

3. Many local authorities do not have a performance and monitoring system in place for Landlord Registration.

4. While feedback from the survey of local authorities, case studies and stakeholder consultation indicates that the IT system has improved, there continue to be many frustrations with the system and suggestions for improvement.

5. Problems with the user friendliness of the website are evident and a clear picture of the problems which landlords have in using the system is required before any changes are made.

6. The problems associated with the landlord website (such as user difficulties, labeling, joint applications and reporting tools) and associated administrative systems add to the administrative burden within local authorities.

7. Within the central administration of the scheme, there is scope for improvements in relation to the administrative process associated with fee payment, reporting and governance.

Fees and Admin

8. The fee payment system generates delays in payment processing and failed payments are resource intensive and take a long time to rectify. If timescales are improved, local authorities will be able to more effectively plan resources and reconcile the data with their records, which should be standard practice.

9. In the main, fees do not cover local authority costs, many being supplemented from other budgets. This lack of income means that resources are focused on the administration of the scheme rather than investigation or enforcement activity.

10. Many local authorities do not have a performance and monitoring system in place for Landlord Registration.

11. There is evidence that the sector is now more aware of its obligations when acting as a private sector landlord and there have been some improvements in landlord behaviour. However, the evidence collected suggests that Landlord Registration has not removed the ‘worst’ landlords from the sector.”

12. At present, there is no clear understanding of the overall administrative costs of Landlord Registration and this is not taken into account in any of the fee structures. Local authorities need to improve budgetary practices, so that they are aware of the income and expenditure associated with Landlord Registration.

13. There is little or no appetite for the administration of Landlord Registration (those functions currently undertaken centrally) to be carried out locally. Indeed, it may be more complex and resource intensive to deliver the system in this way. An alternative, which merits consideration, is the external administration of the scheme by an independent party or regulatory body.

Not pretty reading is it?

Benefits of the Scheme

OK, there have been some improvements in Scotland but reading the DTZ report, they seem few and far between and remain unquantified.

In conclusion, we think the costs of this scheme far outweigh the benefits achieved.

What’s needed for the PRS is sensible regulation, fairly enforced with real teeth to focus on and drive out the rogue landlords – the sort of operator that most in the PRS do not want to have in the sector. The worst indictment is that the costly Scottish scheme has failed to do this and we suspect rogue landlords continue to operate with impunity.

I fear that some of the “Regulate the PRS” lobby would like to bring in a similar system in England and Wales. I hope they will now stop and learn from the Scottish experience and design better and more efficient ways to control the sector.

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