Scottish Government

5. Supporting the Professionalism and Reputation of the Sector

Introduction

5.1 This chapter considers how the professionalism of private landlords and letting agents could be further supported and developed, thus enhancing the reputation of the sector. It looks at the views and experiences of tenants and landlords as regards regulation and at specific initiatives to improve standards in the sector. It considers tenancy deposits (one of the main issues identified by tenants), rights and responsibilities of tenants and landlords, and training and advice.

Tenancy Deposits

5.2 A landlord can require a new tenant to pay a returnable deposit (of no more than two months' rent for an assured or short assured tenancy), all or part of which may be legitimately withheld at the end of the tenancy if the tenant has failed to meet his or her obligations, e.g., having caused damage or left bills unpaid. However, there are concerns about some tenancy deposits being unreasonably withheld, in total or in part. If this happens, the former tenant is entitled to seek recovery of the amount concerned in the sheriff court. Although the small claims procedure will be applicable in most cases, some tenants are not confident about taking legal action. Furthermore, if the landlord does not accede to the court decree, the responsibility to enforce it lies with the former tenant, which involves the trouble and expense of engaging a sheriff officer. If the landlord has insufficient assets, it may be that no money can be recovered. Concerns about wrongly withheld deposits led to Ministers being given powers under Part 4 of the Housing (Scotland) Act 2006 to bring forward regulations to establish a mandatory tenancy deposit scheme. It was made clear that these powers would not be used if the resulting costs were disproportionate to the scale of the problem.

5.3 A stakeholder working group, representing tenants, landlords, agents and other interested bodies was set up to assist in considering how to improve tenancy deposit practice. The stakeholders all agreed on the importance of developing a more robust evidence base on the issue.

5.4 A range of evidence was collected ³⁶ over the course of this review on tenancy deposits through primary research (the Landlords Survey, Tenants Survey, Scottish Opinion Survey) and secondary analysis. The surveys included questions on tenants' experiences of deposits and whether they were unfairly withheld, and questions on whether landlords currently follow good practice in deposit management and whether they have experienced any disputes with tenants about the return of a deposit. The extent to which tenancy deposits are unfairly withheld, and their monetary value, are crucial factors in deciding what sort of action would be justified to improve practice in this area. Therefore, analysis of the evidence has been undertaken to produce a range of statistics presented below, using maximum and minimum figures from the surveys. It is important to bear in mind that these are estimates only.

The majority of tenancies require a deposit

5.5 There are approximately 233,000 households living in Scotland's private rented sector. According to the primary data collected, about three quarters of these households will have paid a deposit at the outset ( TS:59 and LS:44). The amount of deposit charged was most commonly equal to one month's rent, which we took to be between £364 (the median rent in the tenants survey) and £403 (the mean level). Estimates of the total amount of deposits held at any one time thus range from £63.6m to £74.2m, with the amount of deposits paid by tenants each year (given that 43% of tenancies end each year) ranging from £27.4m to £31.9m.

5.6 Urban, student, and younger households were more likely to have paid a deposit. Around one in fourteen tenant households had problems finding PRS accommodation because of the need to fund a deposit.

Although evidence is conflicting, it would appear that a significant minority of tenants have deposits withheld, in full or in part, at the end of the tenancy

5.7 The review found that reasons given for not returning deposits were primarily damage to property, furnishing or fittings, property left inadequately clean or rent arrears, but tenants did choose the option 'other reasons' a significant number of times for which no further detail was available. There are also a considerable number of tenants who said that they were not given any reason for the deposit being withheld ( TS:57 and LS:48).

5.8 Evidence collected for the review is contradictory on the extent of the withholding of tenancy deposits. In the landlords' survey, where a deposit had been paid and the landlord knew whether it was returned or not, landlords at one in three properties said that they had withheld some or all of the deposit. This is a high proportion and may be influenced by the problem with tenants not paying a final month's rent discussed in an earlier chapter.

5.9 In the tenants' survey, a much smaller proportion, one in eight tenants who had lived in the Scottish PRS previously, had had some problems with withheld deposits at some time. In order to examine the difference between the two surveys further, the review team commissioned a set of questions in the Scottish Opinion Survey. This found that around one in four tenants had had a problem with some or all of their deposit being withheld in their previous tenancy - a higher proportion than the tenants' survey, and more similar to (if still lower than) the levels suggested by the Landlords Survey. While this contradictory evidence cannot therefore reach a firm conclusion on the extent of withheld deposits, it nevertheless suggests that a significant minority of tenancies do end with some or all the deposit being withheld ³⁷.

5.10 The evidence suggests that approximately one quarter to one third of households seeking return of their deposit have some or all of it withheld - that is, 18,000 to 26,000 tenancies per year. It is estimated that the value of the withheld deposits is in the range from £5.3m to £8.4m per year (taking partially withheld deposits as 50% of a whole deposit, based on the average amount of partial deposit withheld according to the Tenants Survey).

5.11 The Scottish opinion survey, which asked about experience in the last rented property, suggests that younger tenants are far more likely to have had a tenancy deposit withheld than older ones. It also suggests that people currently in the highest occupational category, AB, are less likely to have had a deposit withheld than other groups. However, data gathering of this kind cannot reach robust conclusions on whether deposits were wrongly withheld.

Most tenants whose deposit has been wholly or partly withheld consider this to be unfair

5.12 Where deposits are withheld, evidence suggests that approximately three quarters of tenants consider that the landlord (or agent) behaved unfairly in withholding some or all of the deposit. This would suggest that £3.7m to £6m is considered by tenants to be unfairly withheld each year, affecting between 13,000 and 19,000 tenants.

5.13 However, a major caveat regarding these figures is that they depend on self-reporting by tenants. These are tenants' perceptions of unreasonableness rather than objective assessments. It is therefore impossible to tell how many deposits were actually unfairly withheld in objective terms; but these amounts are likely to be overstated to some degree, given differing interpretations of such matters as the need for cleaning, where it is likely that the problem appears more serious and costly to a landlord than a tenant.

The amount of wrongly withheld tenancy deposits may be between £2.2m and £3.6m per annum

5.14 In England and Wales, since April 2007, all landlords letting properties on assured shorthold tenancies (the equivalent of the Scottish short assured tenancy) are required to register with one of three approved tenancy deposit schemes (one custodial and two insurance-based schemes).

5.15 One of the arguments in favour of such schemes is that tenants have an easier means of redress and are therefore more likely to take action if they feel they have been unfairly treated. It is therefore worth looking at the experience of the English schemes. We understand that between 50% and 60% of tenants disputing the withholding of deposits in two of the schemes are successful. (In the third and smallest scheme the figure is 91% of cases going to formal adjudication.) This would tend to suggest that between 40% and 50% of complaints may be unjustified.

5.16 Assuming a similar situation in Scotland and applying the 60% figure to the numbers above would suggest that the actual amount of wrongly withheld deposits in Scotland may be between £2.2 million and £3.6 million per annum, due to between 8,000 and 11,000 tenants (ie, between 3.4% and 4.7% of all tenants). Even with these figures, there is still the possibility of overstatement, since not all the Scottish tenants who feel aggrieved might feel sufficiently confident of their case to take action if there were a tenancy deposit scheme in place.

Many tenancy disputes are resolved satisfactorily

5.17 It could be argued that tenants who have genuine grounds for believing that money was wrongly withheld are more likely actively to dispute the landlord's or agent's decision. The review found widely divergent evidence on the extent to which households dispute their deposits being withheld - from around one in ten of those households whose deposits were not returned in full (according to the Landlords Survey LS:48) to around one in two (according to the Tenants Survey TS:57). This difference in view is reflected in the fact that only one in seven landlords agreed with the statement that 'Landlords have lots of disputes with tenants over the return of deposits' ( LS:60). The Tenants Survey asked tenants about any experiences of unfairly withheld deposits in their renting history. It is probably also the case that the tenant may have forgotten about times when the deposit was withheld but they thought it was reasonable because negative experiences tend to be more memorable.

5.18 This disparity has a strong influence on the estimated maximum and minimum amounts disputed: from £0.4m to £2.9m. The number of disputes that resulted in tenants being repaid all or part of the disputed amount ranged from around 2,000 to around 13,000. Where tenants did dispute withheld deposits, levels of agreement between landlords and tenants was relatively high, with between two-fifths (Tenants Survey) and half (Landlords' Survey) of disputes ending in agreement between tenant and landlord. This demonstrates that the present system contains some flexibility when tenants feel so strongly that money has been unjustifiably withheld that they challenge the decision.

5.19 In an attempt to gather additional evidence, the Scottish Government asked all local authorities about the number of complaints from tenants about landlords withholding tenancy deposits. The number of cases reported was small; varying from a handful in Angus, Orkney, North Lanarkshire and Inverclyde to 12 in the last year in Stirling. Edinburgh noted 700 enquiries last year but made clear that these were often in relation to advice rather than complaints. Local authorities on the whole did say that if a case of a landlord unreasonably withholding tenancy deposits was upheld in a small claims court then they would take this into account when deciding whether a landlord was fit and proper for registration. No action has so far been taken against a landlord for poor tenancy deposit practice under the landlord registration provisions.

Conclusions

5.20 The Scottish Government wants to ensure that tenancy deposits are safeguarded as far as possible without incurring disproportionate costs to the public finances and to the private rented sector (where costs falling on landlords might well be passed on to tenants in the form of higher rents). The principal objective is to reduce the number of deposits that are unjustifiably withheld, in whole or in part. The underlying intention is to help the private rented sector to function more effectively and to improve its public image and attractiveness to tenants.

5.21 There are a number of approaches that could be considered to improve tenancy deposit practice in Scotland. The Scottish Government identified three broad options:

1. to continue and develop existing initiatives, some of which have been introduced only relatively recently, to raise standards in the PRS (such as landlord registration, HMO licensing, the national accreditation scheme for landlords, which includes standards relating to deposits, and work to make private tenants more aware of their rights) and to repeat the Tenants Survey in two years or so to establish what impact initiatives such as these have made on the issue. If there was not found to be a significant improvement in the situation, further action would have to be considered.
2. to provide a broad regulatory framework and leave it to the market to meet the requirements; for example, landlords and agents could be required to have client money protection insurance in place and to be a member of an Alternative Dispute Resolution ( ADR) scheme. These could be requirements of landlord registration, brought into effect by regulations, so compliance would be monitored by local authorities.
3. to use regulations under the 2006 Act to require deposits to be protected by a scheme or schemes (custodial or insurance based) developed for Scotland.

5.22 The Scottish Government made the evidence on tenancy deposits gathered in the review available to the stakeholder working group, which met to discuss it and to try and reach a consensus on the best way of improving tenancy deposit practice in Scotland. There continued to be conflicting views among the stakeholders on the significance of the problem and how it should be addressed. However, there was general agreement that the second option should be ruled out. Most stakeholders favoured either the first option, with additional initiatives, or a statutory scheme, and all of them were interested in exploring the possibility of using some form of ADR to deal with disputes over tenancy deposits. ADR could help tenants and landlords resolve their disputes without needing to go to court.

5.23 ADR mechanisms could range from the use of separate existing or new schemes (used either voluntarily or by a legal requirement) up to a mechanism forming part of a tenancy deposit scheme. The Scottish Government will work with stakeholders in exploring dispute resolution options in detail, including establishing likely costs and effectiveness, before coming to a final decision on the most appropriate method to improve tenancy deposit practice.

5.24 Whatever other action is taken, it is crucial that tenants and landlords are aware of good practice in relation to tenancy deposits. This includes tenants being made fully aware of reasons why deposits might be retained and receiving explanations if they are; the use of accurate inventories and photographs; and so on. Work done for the stakeholder group recommended carrying out an audit of existing good practice, such as websites and guidance materials for both tenants and landlords, advice and support services for tenants, and training for landlords on good deposit management. Some measures, such as providing more training or guidance for landlords as part of the national accreditation scheme, may avoid many disputes from arising in the first place, and the current review of the civil courts may result in procedural changes that make it easier to take legal action in relation to small sums of money.

Rights and Responsibilities

A substantial minority of tenants do not understand their housing rights

5.25 The review found that, although there is generally good communication between tenants and landlords on tenant rights, there is still work to be done to make sure tenants understand these fully ( TS:72-75). Around one in five tenants said that they did not understand their rights, despite a majority of tenants agreeing, via a separate question, that their landlord had made their rights (and responsibilities) clear at the start of the tenancy. This apparent disparity is difficult to unpick: it might suggest that most landlords do a good job of explaining the basics, but that a minority of tenants still feel they lack the wider understanding of housing rights. This is supported by the low levels of tenant awareness of housing management developments like HMO licensing, landlord registration and accreditation and the Repairing Standard, which are discussed below.

Many tenants do not seek advice or actively find out about their housing rights

5.26 The majority of tenants did not report receiving any advice or support in private renting ( TS:45). Those that had received information quoted friends and family, Citizens Advice Bureaux and student accommodation offices. Despite this, only 4% of tenants reported having had a problem in finding out about their rights while 78% had said that they had never needed to find out about their rights. The few who did have problems often did not know where to get information, felt that the legislation was complex or had language difficulties. When this is compared to the low levels of awareness of rights described above, it suggests that many tenants may be assuming that their rights are more limited than they are.

Tenants are largely not aware of key housing management initiatives

5.27 The review also found that the levels of tenant awareness of key initiatives to raise the professionalism of the sector and protect tenants are low ( TS:75-76). Only around one in ten tenants had heard of the Repairing Standard and the Private Rented Housing Panel ( PRHP) through which it is enforced. This is despite the facts that, since September 2007, landlords have had a legal duty to inform new tenants of the relevance of these to the tenancy and that the Scottish Government has issued statutory guidance on the form that this written information should take. Levels of awareness were slightly higher than the average for young tenants (16-21 years old), and were lowest among tenants who did not have a written agreement and those born outside the UK.

5.28 Awareness of landlord registration is slightly higher but still low, at around three in ten tenants, although many who said they were aware did not know whether their landlord was registered or not. Those of 'other' ethnic origin and those born outside the UK were less likely still to be aware of the scheme. Just under half of all tenants said that they would check whether a landlord was registered for their next tenancy or were in the process of doing this, but while this suggests an appetite for landlord registration, it also makes clear that there is a job to be done communicating effectively about the scheme.

5.29 The level of awareness of landlord accreditation appeared to be slightly higher - around two in ten tenants reported that their landlord was a member of a scheme, while seven in ten did not know whether their landlord was accredited. However, membership of accreditation schemes (whether national or local) is currently not high, so it may be that tenants were confusing accreditation with registration. The Tenants Survey was unable to clarify this point further. Nevertheless, what is clear is that tenants generally seemed to be thinking about accreditation for the future (Chart 5.1). Overall six in ten felt it would be important to look for an accredited landlord in the future as a way of ensuring higher standards of property and management ( TS:48). Younger tenants were more likely to feel accreditation was important; rural tenants were less likely to feel it was important ( TS:48).

Chart 5.1 Importance of Landlord Accreditation: Tenants' views

Source: 2008 Tenants Survey

5.30 In the Tenants Survey more than one in three tenants living in an HMO did not know whether their landlord had an HMO licence. The lack of awareness of HMO licensing was also raised by the NUS report which suggested that almost one in two students renting an HMO property were unaware whether that property was licensed.

5.31 This lack of awareness is perhaps not surprising, considering that these initiatives are reasonably new, but it is nevertheless concerning.

Some landlords are uncertain about housing management law

5.32 The review found that a small, but substantial, minority of private landlords is not well informed about the residential lettings market or about landlord-tenant law. One in three agreed it was difficult to find out how the law affects them. Further, landlords have a legal duty to inform tenants about the Repairing Standard (as well as ensuring that the property complies with it at the start of and during the tenancy), yet two fifths of landlords were not sure whether "The requirements of the statutory Repairing Standard are reasonable"( LS:60). Surprisingly, in focus groups across Scotland, hardly any landlords had come across the Repairing Standard ( LS:82).

5.33 Private individuals and couples, part-time non-investors and those with only one property to let appear most uncertain about the range of housing management issues. Clearly, there remains a job to be done communicating effectively to these landlords, ensuring they understand their rights and their responsibilities under the law.

Conclusions

5.34 A recurring theme of this review is the need for more information to be available to both tenants and landlords on their rights and responsibilities (and other aspects of private rented sector legislation and procedures), in order to address a lack of knowledge. This also applies to agents, given their important role.

5.35 The Scottish Government will consider how this could best be achieved; it may be that a strategic approach to improving the dissemination of information about and within the sector is required. The local authority role in providing housing advice and assistance to private tenants and landlords under section 99 of the Antisocial Behaviour etc. (Scotland) Act 2004 is potentially of great importance. Some local authorities already produce a tenants' handbook or advice pack and some also provide landlord packs; an additional possibility could be the publication of a national version, clearly setting out the relevant material. As previously mentioned, more translations of key leaflets could be provided. The landlord registration database is a key source of access to the sector, both in terms of registered landlords, but also the properties registered on the system in terms of households living in the sector; this route could potentially be used to distribute information.

5.36 Training provided by LAS (not just to its members) is another method of promoting knowledge and good practice among landlords and agents, and local authorities can work in partnership with LAS to agree a training programme tailored to the individual circumstances of their area.

5.37 Tenant awareness of landlord registration is likely to increase as local authorities take enforcement action and publicise the system. Awareness of landlord accreditation is also likely to rise as LAS promotes its activities across Scotland, including in rural areas; the development of market recognition by tenants will be important for the scheme's success. It is encouraging that tenants already find accreditation to be an attractive idea. Housing advice agencies and other organisations also have a key role to play in advising tenants and landlords of their rights and responsibilities.

Advice and Training

Many landlords receive no professional advice or training

5.38 The review found that very few landlords use professional organisations for advice, information or support in relation to difficulties such as disputes about repairs, tenant behaviour, deposits, or evictions ( LS:62-65). Fewer than one in ten had contacted local councils, landlords' fora, accreditation schemes, landlords' associations, agents' associations or mediation services. Six in ten had sought advice from managing agents, almost half had used solicitors, but more than four in ten had looked to friends for advice.

5.39 Where landlords are part time, and have small portfolios, they are more likely to rely on friends for advice. Longer standing business landlords with larger portfolios are more likely to use their solicitors and accountants.

5.40 Just under half of all Scotland's private rented dwellings belong to landlords who are not members of any organisation related to letting residential accommodation ³⁸. Business and organisational landlords and those with large portfolios were most likely to belong to at least one of these organisations.

5.41 The review also found that only a small number of landlords (representing around one in ten PRS dwellings) had undertaken any training in any aspect of managing accommodation. Moreover, tenants living in more than half of PRS properties have landlords who said they were not interested in training ( LS:66). Larger landlords were more likely to be interested in training.

Conclusions

5.42 It is concerning that so many landlords are not interested in training. The Scottish Government will encourage LAS to try to target their services and training at smaller landlords.

5.43 The Good Practice Resource Pack gives details of ways in which local authorities (who have a statutory role in advising landlords) can get information to landlords, such as newsletters sent to those on the Landlord Register. The Resource Pack makes the interesting point that information sessions are more attractive to many landlords when they are labelled as development rather than training. More details of the important local authority role in providing advice and training to landlords are given below.

Local authorities have an increasingly important role to play in supporting the PRS

Landlords accept the case for Landlord Registration but are critical of some aspects

5.46 The review found that the majority of landlords accepted the principle that standards should be raised and that risks to tenants should be minimised but they were highly critical of specific schemes such as Landlord Registration ( LS:82) and HMO licensing. This is a relatively new scheme and, as with any change in regulation, needs time to 'bed in'. However, there were a number of specific criticisms raised in the focus groups ( LS: 81):

Landlords are critical of local authorities' approaches to HMO regulation

5.47 The review found landlords very critical of local authorities' approaches to HMO regulation, particularly in relation to the standards applied and an apparent lack of consistency in applying standards both between and within councils. Landlords complained that local authorities did not appear to be adopting a risk-based approach to HMO regulation and landlords were critical of what they saw as unnecessarily high standards being set, including, in some cases, smoke alarms in every room, which, because tenants regularly disabled them, now required the additional expense of hard wiring ( LS:82). It should be noted that fire safety measures in HMOs are now regulated by Part 3 of the Fire (Scotland) Act 2005 as amended, which is enforced by the Fire and Rescue Service. The licensing authority can take into account information about premises supplied by the Fire and Rescue Service. Part 3 of the Fire (Scotland) Act 2005 requires a risk-based approach and the level of provision of smoke alarms to comply with the legislation depends on an assessment of the risk in individual premises. Relevant guidance for fire safety in HMOs has been published by the Scottish Government and is available on the Firelaw website ( www.infoscotland.com/firelaw).

5.48 Other landlords complained about standards where safety features were not in their view crucial, for example changing the beading around sinks, and also the consistency of standards on such matters.

5.49 There were additional concerns about delays in getting approvals and the time and expense tied up in application processes and approvals as well as in the costs of the works needed.

5.50 There was a strong suggestion from the focus groups that some landlords were avoiding buying property of a type that was likely to be used as an HMO, although it appeared that there was some confusion about whether properties were in fact HMOs ( LS:73). However, applications to local authorities for licences still appear strong, with 7,200 applications received in 2007-08, 28% more than the previous year.

5.51 As discussed in Chapter 3, some councils have introduced planning policies to control the density of HMOs in a given area, where planning permission for the HMO is needed. It should be noted that not all properties require planning permission to be used as HMOs. This is dependant on whether or not a change of use is considered to constitute development. In many instances, change of use to an HMO in a flat will not be regarded as development. Planning authorities may establish their own planning policies (through, for example, a Local Plan or Supplementary Planning Guidance) which establish local criteria against which the need for planning permission will be judged.

Local authorities have a crucial role in enforcing standards

5.52 Local authorities play a crucial role in enforcing these provisions - HMO Licensing and Landlord Registration - and other standards in the sector, including, for example, taking action to tackle sub-standard housing. It is the local authority's responsibility to ensure that all private landlords apply for registration and then to check that the applicant meets the requirement to be a fit and proper person to let a house. Local authorities should use their powers to take action against landlords who operate without being licensed. Similarly, local authorities consider applications for HMO licensing, taking into account the condition of the house and whether the landlord is a fit and proper person. Local authorities should use their enforcement powers against anyone operating an HMO without a licence or in breach of licence conditions.

5.53 Local authorities have powers to require work to be done on private houses, including rented properties, which are in serious disrepair or below the Tolerable Standard. They may carry out work not done by the owner and recover their costs. They may also decide to carry out work to bring privately rented houses up to the Repairing Standard, where a Private Rented Housing Committee has notified a local authority that a landlord is unable to do so or has failed, or is unable, to comply with a repairing standard enforcement order.

Local authorities have a central role in planning for private rented housing need and demand and providing advice and assistance to landlords and tenants

5.54 Under the Antisocial Behaviour etc. (Scotland) Act 2004, local authorities have a duty to provide advice and assistance on housing matters to landlords and tenants. However, local authorities' role in engaging with the private rented sector goes beyond this statutory duty and includes others, for example, planning for housing need, demand and condition in the Local Housing Strategy. The review has noted how the diversity of the PRS means that the focus of local authorities' engagement with the sector will vary according to local circumstances, including, for example, concerns about community safety, neighbourhood management, housing need etc. A first step for local authorities is therefore to acquire robust information about the range and type of landlords in an area, and the tenant groups for whom they cater ( GPRP:19).

5.55 The review also noted that there are still some barriers to engagement between landlords and councils. Councils' traditional link with landlords has been through enforcement, whereas recent legislation and future requirements need authorities to play a much more supportive and enabling role, while continuing to enforce against landlords who breach the law. Likewise, landlords' links to councils have often been due to regulation, which means that they may see a local authority as bureaucratic and with little understanding of the context within which landlords operate, including their business needs. The review found that engagement is necessary at both a strategic and practical level and that this engagement is likely to be much more effective if councils recognise that working with the sector is a corporate responsibility and requires a united 'voice' with significant and visible support from elected members. In this context, local authorities work with landlords and agents as willing partners. The aim is to encourage improved property and tenancy management standards through self-regulation.

5.56 The review found that substantial steps forward have been made by local authorities and the Good Practice Resource Pack has been developed to help share good practice among them. It recommends that local authorities develop a range of methods of engagement, which provide the best arrangements for the circumstances in the area. These methods include:

Conclusions

5.57 There are important strategic reasons for all local authorities to increase and enhance their engagement with the private rented sector. The sector is economically important in the provision of short and medium-term accommodation for such groups as workers moving to an area, including young professionals and migrant workers, and students. It can also play an important role in providing accommodation for low-income families and individuals, including people who are homeless or at risk of homelessness. In some areas local authorities need to engage with the sector in order to address issues such as housing quality, community safety, neighbourhood amenity and regeneration projects.

5.58 When drawing up its Local Housing Strategy, a local authority has to consider the supply and condition of all sectors of the housing market in its area, and to deal with the requirements for housing in all tenures. Where necessary, it will want to plan to meet the demand for private rented housing from different types of tenants. Local authorities also have a key role to play in raising standards in the sector through the enforcement of legislation and also through the provision of advice, information, training and assistance.

5.59 We encourage all local authorities to use the Good Practice Resource Pack to develop an appropriate range of activities. The Scottish Government will work with local authorities in the development of its policies on improving information for tenants, landlords and agents, and will take into account their role in this regard.

5.60 Local authorities play a key role in improving standards in the sector. The fact that the majority of landlords accept the case for registration suggests that there is widespread support for increasing professionalism and management standards in the sector. The criticisms are perhaps not unexpected, given the problems with the initial implementation of the system. However, there has been a process of improvement in the past year or so and we can now see the benefits of the scheme.

5.61 A Good Practice Review of the implementation of the scheme was undertaken in 2007-08 and resulted in a number of recommendations, aimed at improving delivery. These have been or are in the final stages of being implemented. Following on from this, a review of the legislation underpinning the scheme was carried out in 2008. The results of this review fed into a consultation and subsequent amendments to the secondary legislation. These amendments, designed to improve efficiency and prepare for the start of the registration renewals cycle in March 2009, came into force on 12 February 2009. In addition, significant improvements have been made to the IT system through a series of developments.

5.62 There was a significant improvement in local authority approvals of applications in 2007-08. The approval rate now stands at 88%. At the end of February 2009 a total of 138,194 landlords and agents had applied for registration, including joint owners, and 193,170 properties were included in their applications. Using the number of estimated households in the PRS as a proxy for the number of properties (233,000 - Scottish Household Survey) we estimate that the scheme has achieved coverage of 83% of private rented housing in Scotland. Clearly, there is work still to be done to ensure that all landlords comply with the requirements and councils are starting to use their enforcement powers.

5.63 A number of landlords have been refused registration or had their registration revoked. Councils are also issuing late application fees and rent penalty notices and are inviting landlords in for interview or to appear before Council Committees where there are concerns. Evidence collected also shows that councils are dealing with an average of 6000 enquiries a month from landlords and tenants, providing advice and assistance to the sector.

5.64 The Scottish Government has committed to an evaluation of the registration scheme in 2010.

5.65 The Scottish Government will also consult with the relevant stakeholders, including landlord groups and local authorities, before implementing Part 5 of the Housing (Scotland) Act 2006, which will replace the existing system of HMO licensing with one that is designed to be more suitable for the licensing of houses (the scheme is currently provided for under the Civic Government (Scotland) Act 1982 which regulates local authority licensing activities). This will provide an opportunity to address the problems raised by landlords above. Statutory guidance might be able to bring about some streamlining in the system and consistency in the application of standards. The option will also exist for licensing conditions to be set centrally by regulations, which might lead to greater consistency across local authorities. There is also a need for more information about HMO licensing for both landlords and tenants.

5.66 The Scottish Government expects all local authorities to make full use of the entire range of their statutory powers to enforce standards in those cases where a minority of landlords fail to comply with the law.