Scottish Government

Lead Tenancy Schemes in Scotland

Julie Rugg and David Rhodes
Centre for Housing Policy, University of York

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Main Findings

Introduction

The Lead Tenancy Scheme (LTS) was introduced by Scottish Homes in 1992. It seeks to bring dilapidated property - which can sometimes constitute a conspicuous urban disamenity - (into residential use), and provide an addition to the affordable housing stock for short-term use by non-priority homeless households.

The LTS was a concept borrowed from the Head Tenancy Schemes used by the universities of Edinburgh and Glasgow. These schemes brought private rented property into use as student accommodation, with the universities acting as the 'head tenant' and ensuring the payment of rent to the landlord from their 'sublets' to students. The LTS was based upon a recognition of the value that an intermediary offering a rental guarantee could prove an effective inducement for property owners to let to specific tenant types.

LTS in operation

A total of ten Registered Social Landlords (RSLs) have set up LTS. These tend to be concentrated in the north east of Scotland, reflecting the strong commitment of that Communities Scotland regional office to the initiative. Under LTS, 28 properties have been brought into use, accounting for a total of 252 separate units of living accommodation.

More than half the LTS properties were in Aberdeen, Dundee, Dunfermline, and Stirling. LTS developments in smaller, rural areas appeared to be the exception rather than typical of the way in which the initiative has been used. Twenty of the LTS developments involved ten or fewer living units. There were also some larger developments, including 21 units over shops in the centre of Stirling, and conversions of the YWCA and a disused church in Aberdeen into 28 and 35 units. Most living units are one bedroom flats that are let partly furnished.

The RSLs in the scheme were generally positive in their views on the attraction of LTS to property owners if they were taking a long-term view. For such property owners, the initiative was thought to be favourable in providing a steady income and in guaranteeing them possession of the property in good repair at the end of the term.

Although LTS had been intended as a means of increasing the supply of short-term accommodation for non-priority homeless households, its use has been wider. If households had become settled then the issue of moving them on was often shelved. Most of the RSLs indicated they would be happy for the same households to be living in the LTS in several years time, and often pointed to the beneficial impact of this approach on stabilising communities.

LTS Administration

RSLs indicated that take-up of the scheme had been low largely due to what they viewed as problems with its administration. Many indicated that they thought LTS to be significantly more costly and time-consuming to set up than expected. Others thought that insufficient information was available on the scheme, whilst others pointed to insufficient support being available from Communities Scotland.

Some of the experiences of the RSLs underlined the difficulties that can arise with administration of the initiative. Problems had been experienced with negotiating a satisfactory lease that was acceptable to both the property owner and the RSL, as well as to Communities Scotland. RSLs characterised the legal aspects of developing LTS as a 'bonanza' for solicitors, indicating that the legal costs usually spiralled way beyond expectations. There was a view that the legal requirements of LTS were onerous and overly complex, especially since it was thought that little more than a simple lease was required.

Local housing markets

A large minority of RSLs indicated that they had been unable to progress with establishing a LTS because there were no suitable properties available. Picturesque rural areas especially had limited property available because the demand for holiday lets had absorbed all properties capable of cost-effective conversion. The requirement for RSLs to offer sub-market rents meant that property in such areas would be unavailable unless the owner had a 'social conscience'. In other instances, RSLs were finding some LTS units hard to let due to the collapse of local employment opportunities.

The low level of take-up in the Highlands was thought to be related to the level of LTS grant available, which is set at two thirds of HAG for new build, with a benchmark cost of 1,100 per unit per year. For RSLs in the Highlands an alternative, more generous, grant system was available through the Empty Homes Initiative, which ultimately allowed more severely dilapidated properties to be brought into use.

RSLs were concerned that too many LTS developments for non-priority homeless households in specific areas or smaller settlements could lead to a 'ghettoising' effect. Thus in some areas LTS was thought to have achieved its objective, and was the reason why some RSLs were not planning further such developments.

Cost and quality

RSLs had several concerns over cost effectiveness and quality of LTS property. In the short-term, it was hoped that the high set-up costs of the initiative could be offset by a series of lets with low management costs. Several RSLs also had concerns over the longer term costs that might arise from the use of older properties with high future maintenance requirements.

The on-going management and maintenance costs of LTS lettings were concerns for RSLs. In some cases 'good' tenants required little support, but in others the management costs were much higher due to the support needs of tenants. There were also examples of void rates and maintenance costs being significantly higher than expected.

Although the RSLs indicated that the properties had been acquired at a lower cost to them than new build, the standards of accommodation often fell below that of their mainstream properties, frequently due to the elderly nature of the LTS property. As a result, space standards had sometimes not been met, and in other cases listing regulations prohibited the use of double glazing, for example. Some RSLs also had concerns over the quality of the development work that had been completed where it had been arranged by the property owner.

Recommendations for improvement

Despite problems with LTS, many RSLs valued the initiative as comprising an important 'arrow in the armoury' of providing affordable housing. It was thought that with certain improvements, RSLs would be more likely to consider developing LTS. There were several ways in which it was thought that the scheme could be improved:

About the research

The research was completed during 2003 by the Centre for Housing Policy at the University of York. The aims of the research were to evaluate past and present LTS; assess their usefulness in improving the supply of and access to rented housing for young people, and in preventing and reducing homelessness; make recommendations on whether and how the LTS should be expanded; and consider how future LTS should be designed and implemented to maximise effectiveness.

The research included in-depth contextual interviews with individuals who were involved with the development of the initiative, and a review of literature on the LTS held by Communities Scotland. A postal survey of all RSLs within Scotland was conducted to ascertain take-up of the initiative and experiences of its operation. The survey achieved a response rate of 46 per cent (104 responses). Following the survey, eight in-depth interviews were held with RSLs that were involved with the scheme. In-depth interviews were also achieved with two LTS property owners. Finally, a focus group was convened to consider how the scheme might be taken forward. The group included four RSLs with experience of LTS, and two local authorities that had shown an interest in developing similar work with the private rented sector.