Scottish Government

BUSINESS AND REGULATORY IMPACT ASSESSMENT

1. Title of proposal

PRIVATE RENTED HOUSING (SCOTLAND) BILL

2. Purpose and intended effect of proposals

2.1 Objectives

The Private Rented Housing (Scotland) Bill will strengthen the regulation of the Scottish private rented sector to address problems caused by rogue landlords and support responsible landlords by; making improvements to the systems of landlord registration and licensing of houses in multiple occupation (HMOs); introducing powers to help local authorities address problems of overcrowding; and, amending the legislation on the private tenancy regime and related matters to help the sector grow and improve.

2.2 Background

The Scottish Government's extensive Review1 of the Scottish private rented sector was published in March 2009. Ministers established the Scottish Private Rented Sector Strategy Group, which represents leading stakeholders in the sector, in October 2009 with the initial task of considering how to take forward the conclusions of the Review and to make recommendations on proposals for primary legislation. The Group published its report on 14 December 2009 making recommendations for what should be consulted on for inclusion in a proposed Private Housing Bill and this formed the basis of consultation for the Bill.

The Bill includes many of the measures recommended by the Group and sets out to improve the effectiveness of the regulation and operation of the private rented sector. This is explained in more detail below.

Landlord Registration

The system of landlord registration was established by Part 8 of the Antisocial Behaviour etc. (Scotland) Act 2004. Registration is designed to protect tenants by ensuring that only people who are fit and proper to let out residential property can operate legally as private landlords. The operation of landlord registration is the responsibility of local authorities. In addition to increasing the penalties for landlords acting unlawfully, the measures in the Bill will support local authorities by enabling them to improve on the functions and mechanisms in operating and managing enforcement of the regime effectively.

In 2008 the consultants Arneil Johnston carried out a review of the legislative framework of landlord registration for the Scottish Government, following an earlier review of good practice. This led to of the identification of possible amendments to the 2004 Act to strengthen existing powers and clarify the legislation, which are included in the Bill.

1 Scottish Government Review of the Private Rented Sector - http://www.scotland.gov.uk/Topics/Built-Environment/Housing/PrivateRenting/prsreview

Subsequently, the Scottish Private Rented Sector (PRS) Strategy Group recommended further proposals for legislative change on landlord registration for consultation. The results of the consultation have been taken into account in this document.

In addition to this, in a drive to improve standards across the sector, taking in to account increasing concerns of stakeholders, extra measures have been included to support local authorities in addressing issues in relation to dealing with bad landlords and protecting the reputation of good landlords.

The Bill improves landlord registration by: clarifying what should be taken into account in applying the fit and proper person test; allowing local authorities greater powers to request and verify information; allowing a local authority to charge fees for certain agents; broadening the information the public can access on the landlord registration database; introducing tougher penalties for the worst offenders; introducing statutory guidance; making it a requirement to include registration numbers on advertising and requiring agents to provide local authorities with a list of properties that they manage.

A second review of landlord registration will complete in spring 2011 and may result in recommendations for further improvement to the system; however we believe that the problems caused by the worst landlords means that it is necessary to bring forward the provisions outlined in the Bill rather than wait for the outcome of the review.

HMO Licensing

Houses in multiple occupation (HMOs) are currently required to be licensed by the Civic Government (Scotland) Act 1982 (Licensing of Houses in Multiple Occupation) Order 2000, as amended. This legislation will be replaced by Part 5 of the Housing (Scotland) Act 2006, when it is brought into force in August 2011.

An HMO is a house that is occupied by three or more people who are members of more than two families. Under the 2006 Act, the house has to be the only or main residence of occupants for them to count towards the occupation level.

Local authorities have raised a number of concerns about the operation and enforcement of the HMO licensing regime. The Bill amends the system by: giving local authorities powers to address the issue of HMOs operating in breach of planning permission, allowing extension of the licensing regime to other types of multi-occupancy dwellings which present problems; increasing the maximum fine for the worst offenders; removing the requirement for an automatic statement of reasons for all local authority decisions; and, requiring a local authority to take account of guidance issued by Scottish Ministers on its information gathering powers.

Overcrowding

Overcrowding is a problem in some parts of the private rented sector. The Scottish Government's Review highlighted that there are particular problems of overcrowding among migrant workers. In some cases there is exploitation by rogue landlords. The landlord focus groups who participated in the Review showed that, in other cases, the overcrowding is not due to the landlord, but to the tenants bringing in additional occupants, often to save money.

There are a number of problems associated with overcrowding. Along with the profound detrimental effects on the health and welfare of the occupants, overcrowding can cause nuisance to neighbours and social problems in the wider community.

The Bill will enable local authorities to serve an overcrowding statutory notice on the landlord of a house which is overcrowded, where the local authority considers that the overcrowding is having an adverse effect on the health or wellbeing of the occupants, neighbours or others or on the amenity of the locality. This will require the landlord to take steps to reduce occupancy within a specified time period. The power will be discretionary, with no obligation on a local authority to use it in any particular case.

Tenancy Regime and Related Matters

One aspect of the private rented sector that was examined in the Review was the tenancy regime and related matters. The Review concluded that the regime seems to be operating satisfactorily, as regards the short assured tenancy (by far the most common rental contract in the private rented sector).

There were some problems highlighted by tenants in the study; in the main around getting repairs done and retention of tenancy deposits. The latter issue is being addressed separately by the Scottish Government. For landlords there were some concerns about rent arrears, gaining access to carry out repairs, and the lack of clarity in the procedures to regain possession of their properties. The Review recommended that policy development should focus on issues of tenancy sustainment; i.e., helping to prevent tenancies breaking down by addressing these problems, rather than on the length of the tenancy offered.

The Review also found that there is a lack of knowledge of rights and responsibilities among many tenants and landlords. It identified this as a major problem, which could be addressed in legislation and in other ways.

The measures in the Bill are intended to address some of these issues by, making it easier for a landlord to enforce the right of access to carry out Repairing Standard work by seeking assistance from the Private Rented Housing Panel; requiring landlords to provide pre-tenancy information to a tenant; allowing specified, reasonable pre-tenancy charges by landlords and agents; and, clarifying the notices to be served when a landlord seeks possession of a house after a short assured tenancy has reached its contractual end.

2.3 Rationale for Government intervention

The consultation on the proposed Private Rented Housing Bill was formed from the recommendations of the Scottish PRS Strategy Group. Additionally, during Stage 1 evidence of the Housing (Scotland) Bill, stakeholders and MSPs pointed to the continued problems with unregistered and rogue landlords and called for further action to be taken to deal with them. The majority of the PRS Strategy Group recommendations that were consulted on are included in this Bill, along with a small number of additional measures aimed at tackling bad landlords. The provisions from the consultation along with these additional measures will present a targeted approach to dealing with landlords who operate outside of the law or offer sub-standard accommodation.

2Private Sector Housing Issues: Housing (Scotland) Bill: An Analysis of Consultation Responses December 2009 - http://www.scotland.gov.uk/Publications/2009/12/02095414/0

3 Proposed Private Housing Bill: Analysis of Consultation Responses - 28 June 2010)

The Scottish Government has made clear that it recognises the importance of the private rented sector in the housing market. It wants to support the sector and its many good landlords to continue to provide good quality accommodation to meet a range of housing needs. As part of this, there must be sufficient safeguards for tenants, which is why landlord registration and HMO licensing were put in place. The Scottish Government considers that further adjustments to these systems are necessary to improve their effectiveness. It also believes that measures to address overcrowding in the sector will benefit vulnerable tenants by giving local authorities more power to provide protection. Amendments to the tenancy regime and related matters will help landlords to exercise their rights of access to carry out repairs and maintain good standards. Other amendments will clarify processes for the benefit of both tenants and landlords. The provision of additional information will increase tenants' and landlords' awareness of their rights and responsibilities, which the Review found to be very low.

3. Consultation

The Housing (Scotland) Bill introduced on 13 January 2010 included some measures on the regulation of the private rented sector. The intention was to take forward some relatively straightforward proposals as quickly as possible, while more complex measures were developed in discussion with the PRS Strategy Group. However, the Local Government and Communities Committee expressed the view in its Stage 1 Report that it would be better, since a further bill dealing with the private rented sector was proposed by the Scottish Government, to have all the private rented sector provisions in one bill. The Private Rented Housing (Scotland) Bill therefore incorporates the four provisions on landlord registration (with an amendment) and the two on HMO licensing that were included in the previous Bill.

A consultation on private sector housing issues for possible inclusion in the Housing (Scotland) Bill took place between 6 July and 27 September 2009. The consultation paper was published on the Scottish Government website, with links sent to more than 200 stakeholders, including local authorities, professional and representative bodies and voluntary organisations. The consultation paper included questions relating to landlord registration, licensing of houses in multiple occupation, and local authority powers to deal with disrepair in private houses. The Government received 117 responses from individuals as well as a range of organisations. There was a majority (on many questions large) in favour of all the proposals. A detailed report 2 on the consultation responses has been published on the Scottish Government website.

A further public consultation on the proposals recommended by the PRS Strategy Group was carried out between 8 March and 19 April 2010. The results of the consultation 3 were taken into account in finalising this Regulatory Impact Assessment. A total of 85 consultation responses were received, 73 of which were submitted by groups or organisations and the remaining 12 by individual members of the public

Following the conclusion of the latter consultation Ministers decided that, in addition to the existing proposals, further measures were needed to address the serious problems caused by rogue landlords and unscrupulous agents, such as those

highlighted during Stage 1 of the Housing (Scotland) Bill. Some of these proposals had been raised by stakeholders; such as encouraging better joint working within some local authorities.

Given the tight timetable for the Bill there was unfortunately insufficient time for full public consultation on the additional measures being considered. The Scottish Government therefore canvassed the views of the PRS Strategy Group on; the deliverability of the additional options; how effective they were likely to be; what the cost implications are likely to be; and, whether there were any unintended consequences for good landlords. The Group's comments and suggestions helped shape the final provisions in the Bill. In addition, the HMO proposals have been subject to discussion and correspondence with a subgroup of the Local Authority Scottish Housing in Multiple Occupation Network Group (SHMONG). This has been supplemented with discussions and correspondence with other relevant stakeholders.

4. Options

4.1 Option 1: Do nothing

Landlord Registration

There remain a number of challenges with the implementation of landlord registration. Although local authorities have made significant progress since the introduction of the scheme, in particular in relation to the approval of registrations, the use of enforcement powers is still very underdeveloped.

Despite a large number of good landlords across Scotland, who have been registered, there are a significant number who are under review because of local authorities' concerns about their practices, and also a number of bad landlords who choose not to register and make a conscious effort to maintain their practice under the radar. However, there is reluctance amongst some local authorities to use the powers they have to refuse applications for registration because of concerns about the difficulty in gathering evidence. Local authorities also have some difficulty in trying to trace the small number of suspected landlords who choose to avoid registration. This has led them to seek additional powers in order to ensure that robust cases against problem landlords can be developed where there are concerns, and seeking support to help identify unregistered landlords.

Doing nothing would mean allowing the landlord registration system to continue functioning as it is presently without addressing the specific concerns raised by local authorities and others about the effective enforcement of landlord registration, relating to; the declaration of offences; obtaining criminal record certificates; requiring the Private Rented Housing Panel (PRHP) to check landlord registration numbers; requiring landlords and agents to include registration numbers in advertisements; and, requiring agents to provide local authorities with a list of properties they manage when requested to do so.

There are also increasing concerns expressed from the public, stakeholders and MSPs in relation to specific geographical areas where landlords may be operating illegally. Addressing the issue of rogue landlords will go some way to helping resolve some of the serious issues in problem areas and protect the reputation of the many good

landlords across Scotland. Doing nothing could have repercussions for public health and safety and increase wider housing deprivation.

Whilst agents are not required to be registered in their own right, landlords must nominate an agent acting on their behalf and local authorities are required to carry out a fit and proper person test on all nominated agents, which incurs expense. Local authorities can charge a fee when an agent is nominated as part of the original registration application or when an agent voluntarily registers, but they cannot charge a fee when a landlord who is already registered subsequently nominates an agent who is not registered. Local authorities have pointed out this loophole.

Doing nothing would mean that these issues were not addressed, so that the registration system would not be operating as effectively as it could. Given this, and the fact that there are no benefits identified in relation to this option, it is rejected.

HMO licensing

Local authorities and other stakeholders have concerns about the effectiveness of the enforcement of HMO licensing. Doing nothing would mean that an opportunity to improve this would be missed.

Some local authorities and others have expressed concern that some landlords are avoiding HMO licensing because - or because they are claiming that - occupants are living in the premises for only a short time and that they have a principal residence elsewhere. There are particular concerns that this could be the case where migrant workers are living in sub-standard and overcrowded conditions, and that landlords may frequently move them about among different premises, each being described as a short-term let. Doing nothing would mean that certain categories of multi-occupancy accommodation where there are problems would continue to be denied the protection afforded by HMO licensing.

A local authority cannot take planning issues into account in deciding whether to grant an HMO licence. Not all HMOs require planning permission. There have been complaints that some HMOs which meet licensing requirements and have licences do not have planning permission and are operating in breach of planning law. They have either been refused planning permission, or would have been refused planning permission had an application been made, for example because of their effect on the local amenity. Doing nothing would mean that there would continue to be the anomalous situation where a local authority cannot refuse to issue a licence for an HMO on the grounds that it is operating in breach of planning control, which disadvantages neighbours and responsible landlords who comply with planning requirements.

Local authorities have advised that complying with part 5 of the Housing (Scotland) 2006 Act would require them to provide a detailed statement of reasons for all HMO licensing decisions which would prove cost intensive. Doing nothing to amend this requirement would create needless expense for local authorities.

There are no benefits identified in relation to this option, and it is rejected.

Overcrowding

Doing nothing would mean that the most serious current problems of overcrowding in the private rented sector, which particularly affect migrant workers and other vulnerable groups and have a range of detrimental effects, personal and social, could not be addressed so directly and effectively by local authorities. There are no benefits identified in relation to this option and it is rejected.

Tenancy Regime and Related Matters

Doing nothing would mean that landlords would continue to experience delays in trying to exercise rights of entry to carry out repairs, which could result in the condition of houses deteriorating further. This problem was identified in the Review as a reason for landlords' reluctance to grant longer tenancies.

Tenants would not benefit from the provision of more information and the resulting increase in consumer awareness. Landlords would not benefit from the clarification of the forms required at the end of certain short assured tenancies. Tenants would still be likely to be subject to unfair pre-tenancy charges. There are no benefits identified in relation to this option and it is rejected.

4.2 Option 2: Adopt the proposals for primary legislation on the private rented sector

Landlord Registration

Expanding and clarifying the list of offences to be declared by an applicant for landlord registration

Local authorities are required to form a judgement on whether a landlord is a fit and proper person. Regulations require an applicant to declare spent or unspent convictions for a variety of offences, and court or tribunal judgements under discrimination legislation.

In addition to the inclusion of firearms and sexual offences, which were originally consulted on, the Scottish Government is further enhancing the consideration of whether a person is fit and proper to act as a private landlord to help address landlords who are damaging the reputation of the sector. However, in order not to impose additional duties on local authorities where not required, but at the same time to offer additional support to make it easier for them to gather evidence and make an informed decision about someone being fit and proper, we have given specific examples of the information that should be considered as a matter of good practice. Drawing the following elements to the local authorities' attention by including them on the face of the Bill will support stronger links between the fit and proper test and the quality and management of accommodation:

• Convictions and disqualifications relating to landlord registration and HMO licensing
• Breaches of the Repairing Standard
• Complaints and information from tenants, neighbours and others, to the effect that the landlord has not paid his or her share of the cost of communal repairs, or made payments due to property managers
• Antisocial behaviour by the landlord, the tenant or at the property

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• Information which comes to the attention of the local authority in the exercise of any of its functions in respect of the property included in the registration
• Failure to produce a criminal record certificate when the local authority requires it.

Allowing a local authority to require a criminal record certificate to verify information

The local authority is required to form a judgement on whether a landlord is a fit and proper person. Currently a local authority cannot insist that an applicant for registration provides a disclosure check.

The Bill adds a provision to the 2004 Act, so that if a local authority considers that a criminal record certificate in terms of Part 5 of the Police Act 1997 is required in order to verify information in relation to the fit and proper person, the local authority may ask that person to provide a certificate. The local authority must have reasonable grounds for suspecting the information inaccurate. Refusal can be used as evidence that the person is not fit and proper as outlined above.

Enabling a local authority to charge a fee when a registered landlord subsequently nominates an unregistered agent

A landlord must include any agent in an application for registration and a fee is paid for this. Where a landlord has been registered and then subsequently adds an agent, there is currently no power for the local authority to charge a fee for this addition. This does not matter if the agent is already registered, which many professional agents are, but, if the landlord nominates an unregistered agent, the agent will have to be assessed as fit and proper, which will involve expense for the local authority. The Bill therefore amends the 2004 Act to allow a local authority to charge a fee, to be prescribed by regulations, in this situation.

Increasing the information available to the public through the landlord register database

The Bill provides for two additional categories of information from the landlord register to be available to the public. The first is an indication that an application has been received but has not yet been decided. This will be helpful if a member of the public or a tenant is concerned that a landlord may be unregistered, since a landlord may legally rent a property if he or she has submitted an application for registration, which has not yet been decided. It will also be useful for landlords in that position to have this information publicly available, as proof that they are operating legally, despite not yet being registered.

The second type of additional information is where a landlord has been refused registration or has been de-registered because of failure to meet the legal requirements. This information will alert tenants and members of the public to the fact that someone has been found to be not fit and proper to be a landlord, if he or she is attempting to let a property, thus increasing the protection provided by the registration system.

Requiring landlord registration numbers in advertisements of properties to let

Local authorities constantly attempt to identify unregistered landlords. One means of doing this is through checking advertisements for properties for let, but this is often impractical as full addresses are not given.

The Bill requires advertisements for properties to let should be accompanied by the landlord registration number of the owner(s) of the property. This will support local authorities in the identification of landlords who operate without being registered enabling them to take enforcement action as appropriate. There will be an exception for "To Let" boards which are reused. If an application for landlord registration has still to be determined with no number having been allocated, the advertisements will be required to include the words "landlord registration pending."

Enabling a local authority to require a person associated with a house to provide information relating to landlord registration

Enabling a local authority to require persons associated with a property to provide information will make it easier to gather evidence in relation to landlord registration. This requirement covers persons who own or occupy the house concerned or who act for the owner. On request, they must confirm to the local authority the nature of their interest in the house, provide details of others with an interest and their relationship with them, and also provide the local authority with any other information about the land or premises that it may reasonably request. As with the similar powers in section 186 of the Housing (Scotland) Act 2006, failure to provide information without reasonable excuse or providing false information will be criminal offences, subject to a fine not exceeding level 2. The basic intention is to protect tenants from landlords who are not fit and proper to let property.

Enabling a local authority to require an agent to provide a list of properties managed

The Bill carries forward a provision from the Housing (Scotland) Bill, enabling local authorities to require people associated with a property to provide information to enable or assist the local authority to carry out its landlord registration function. Failure to do so is an offence. However, this does not extend to requiring an agent to provide details of non-specified properties they manage and of their owners, which is a power sought by local authorities.

The Bill therefore enables a local authority to require an agent or a prospective agent to provide a list of all properties they manage along with the owners' contact details, registration number, the number of tenants and nature of the tenancies, with failure to do so being an offence.

Requiring a local authority to take account of guidance on its enforcement functions issued by the Scottish Ministers

The management of non-compliance with landlord registration varies immensely across local authority areas. This is due in part to the volumes of private rented properties and the high level of enforcement activity required in some larger authority areas. The location of landlord registration staff within a local authority can also have a bearing, with areas of good practice developing for example where landlord registration and environmental health work in liaison. However this is not replicated across Scotland and local authorities have varying commitment to the landlord registration regime.

The Bill gives Ministers a general power to issue statutory guidance which local authorities must have regard to in relation to carrying out its landlord registration functions.

Requiring the Private Rented Housing Panel to pass details of landlords to local authorities so their registration status can be checked

The PRHP receives referrals from tenants and landlords; however it does not check whether a landlord is registered when it receives an application relating to the Repairing Standard. It is considered that the PRHP could play a more supportive role in facilitating the detection of unregistered landlords, strengthening the enforcement of the regime.

The Bill amends the Housing (Scotland) Act 2006 to require the PRHP to pass on details of the landlord and property, and any agent acting on their behalf, and the landlord registration number if known, to the relevant local authority. This will enable the local authority to search the register for the landlord and property and verify registration, taking appropriate enforcement action if the landlord or property is not registered.

HMO licensing

Giving Ministers power to designate by order additional categories of multi-occupancy accommodation as licensable HMOs

The Bill amends the 2006 Act to provide for an order-making power, allowing Ministers to designate specified additional categories of multi-occupancy accommodation as licensable HMOs. This means that Ministers will be able to extend the benefits of HMO licensing to other types of multi-occupancy property where there are problems. These types of property must meet the usual requirement of a licensable HMO that there are three or more occupants being members of more than two families, but they do not necessarily have to be a house or premises nor the only or main residence of the occupants. It will be possible to focus local authority resources on situations that present a particular problem that can be addressed by licensing, including those that may arise in the future, without bringing types of accommodation that are not considered to require regulation within the scope of licensing, which was a concern of respondents to the consultation.

Enabling a local authority to refuse to consider an application for an HMO licence if it considers any requisite planning permission has not been obtained

As explained above, some local authorities have stated that they are experiencing the problem that some HMOs which meet licensing requirements and have licences do not have planning permission and are operating in breach of planning law. They have either been refused planning permission, or would have been refused had an application been made, because of their effect on the local amenity. It is clearly anomalous that a local authority has to grant a licence to premises that are operating in breach of planning control, because the licensing legislation does not allow planning considerations to be taken into account. HMOs operating without planning permission can adversely affect neighbours and their owners have an unfair advantage as compared to landlords who comply with planning requirements.

The Bill therefore amends the 2006 Act to empower a local authority to refuse to consider an application for an HMO licence if it considers that any requisite planning permission has not been obtained. This power is discretionary, giving a local authority the flexibility to respond to local circumstances, including any local planning policies that it has chosen to adopt. It will be able to decide whether to adopt this approach, depending on whether it has a problem with HMOs operating without planning permission. This responsible approach will prevent landlords and local authorities from being burdened unnecessarily and will avoid a possible increase in homelessness. It accords with the Scottish Government's guidance that local authorities should ensure that there is a sufficient supply of HMO accommodation.

Removing a requirement for a local authority to issue a statement of reasons for every HMO licensing decision it makes

Local authorities have raised concerns that when the HMO licensing provisions in Part 5 of the Housing (Scotland) Act 2006 come into effect on 31 August 2011 they will impose a new burden on local authorities to provide a detailed statement of reasons for all their decisions under section 158(1). They argue that this would entail detailed input by a solicitor, the costs of which would ultimately be borne by landlords through their licence fee. This amendment therefore amends the Housing (Scotland) Act 2006 so that a local authority is required to provide a statement of reason on application to recipients of a notice of decision, and not automatically for all such decisions.

Overcrowding

Giving local authorities power to serve an overcrowding statutory notice

The intention of overcrowding statutory notices is to enable a local authority, in cases where statutory overcrowding in a privately rented house is causing or contributing to an adverse effect on the health or wellbeing of any person or on the amenity of the house or its locality, to compel the landlord to reduce occupancy of a house to the statutory level within a time period to be specified by the local authority. It would be a discretionary power and there would be no obligation on the local authority to use it in any particular case. A notice would apply for up to five years.

The local authority would be able to give information and advice to the occupants where it considered it appropriate. The local authority must have regard to guidance issued by Ministers, which could cover seeking tenants' views and considering the wider implications of any enforcement action proposed, including potential homelessness.

Tenancy Regime

Clarifying that all pre-tenancy charges are illegal apart from those specified as reasonable

There have been complaints that some tenants have to pay unreasonable pre-tenancy charges, partly because of confusion about the current legislative position (in the Rent (Scotland) Act 1984 and the Housing (Scotland) Act 1988).

The Bill therefore makes clear that all pre-tenancy charges are illegal (i.e., are premiums), apart from those specified in legislation. The Bill gives Ministers power to make regulations on such charges, which could set out permissible types of charges and set maximum levels for them, following consultation with stakeholders. This would enable greater clarity and better regulation.

Requiring a private landlord or agent to issue specified documents and information to a tenant at the start of the tenancy

The Review of the Private Rented Sector showed a low level of knowledge of legal rights and responsibilities among many tenants and some landlords. It is important for the proper working of the laws relating to the sector that tenants should be well informed, so that, for example, they can avoid unregistered landlords.

The Bill therefore places a statutory duty on landlords to provide tenants with specified documents and information (a tenant information pack) at the start of the tenancy. Ministers will have power to prescribe the documents to be provided. This could take pull together all the mandatory and other specified documents. Such a pack would help to inform tenants of their rights and responsibilities.

The pack could include, for example, details of the number of occupants permitted, a formal tenancy agreement, details of legal requirements including the repairing standard, the landlord registration number, etc.

Clarifying whether Notices of Proceedings must be issued as part of possession procedures

The tenants survey in the Review of the Private Rented Sector shows that a significant proportion of tenants said they did not understand the legal processes that a landlord would have to go through to end their tenancy. The landlord survey showed that many landlords have concerns about regaining possession of their properties. A particular problem in this connection is that some doubts have been raised about the circumstances in which Notices of Proceedings are required to be issued to tenants with a short assured tenancy.

The Bill therefore makes the situation absolutely clear by stating that sections 18 and 19 of the Housing (Scotland) Act 1988 do not apply to proceedings under section 33 of that Act. This clarifies that, when a short assured tenancy has reached its contractual end date (its ish) and the other conditions of section 33 are met, it is not necessary for the landlord to have issued a Notice of Proceedings in order to obtain possession of the house in the sheriff court. It is explicitly stated that this amendment is for the avoidance of doubt, since it does not change the current legal position.

Allowing a private landlord to apply to the Private Rented Housing Panel for assistance in exercising the right of access in relation to the Repairing Standard

Landlords often express concern about difficulties in obtaining entry to their properties in order to carry out repairs or inspections, despite their having a statutory right of entry in relation to the Repairing Standard. Many landlords consider it unfair that tenants can enforce the landlord's Repairing Standard duty through the Private Rented Housing Panel, but landlords have to have recourse to the courts.

The Bill gives a landlord the right to apply to the PRHP for assistance in exercising the right of access in relation to the Repairing Standard, with the PRHP being given powers to help landlords to gain access. There does not have to be a dispute with a tenant about gaining access to the property; for example, the tenant may not be responding to requests.

Applications will be considered without having a full hearing by a Private Rented Housing Committee. One member of the PRHP will consider a written application from a landlord and, if he or she decides to assist the landlord, will try to arrange access. The tenant would have the opportunity to make representations. The member of the PRHP could accompany the landlord to the property, if requested by the landlord or tenant, to ensure that the work or inspection was carried out. If the tenant still refused access, the PRHP member would be able to obtain a warrant to enforce entry.

5. Costs and benefits

5.1 Sectors and groups affected

The categories of people affected will be:

(i) local authorities, who administer and enforce the systems of landlord registration and HMO licensing, and would use the overcrowding power;

(ii) private landlords, who are subject to registration and, where relevant, HMO licensing, and would be subject to new requirements;

(iii) private tenants and potential tenants;

(iv) agents of landlords;

(v) neighbours of those living in privately rented accommodation;

(vi) the Private Rented Housing Panel.

5.2 Benefits

5.2.1 Landlord Registration

Expanding the list of offences to be declared by an applicant for landlord registration

The addition of offences, as listed at section 4.2, to the categories of offence mentioned at section 85(2) of the 2004 Act, would make sure that local authorities knew about convictions for these offences when considering whether a potential landlord is fit and proper. Applicants would be under a duty to declare them. The new declarations highlight the importance of not over-emphasising convictions in determining whether someone is a fit and proper person to be a landlord and that other factors should also be taken into consideration in forming part of the registration process.

These wider elements for consideration, combined with the proposed ability for a local authority to require a disclosure check and to check registration against

environmental health and antisocial behaviour complaints, will significantly improve the ability of local authorities to consider effectively whether a potential landlord is fit and proper, thus greatly improving protection for private tenants across a broader remit.

Enabling a local authority to require a criminal record certificate to verify information

Giving a local authority the ability to request that an applicant for landlord registration provides a disclosure check will allow the local authority to verify information in relation to whether the landlord is a fit and proper person. This will only be requested to verify the accuracy of the information provided in an application for registration if the local authority has reasonable grounds to suspect the information provided may be false or inaccurate. As this information can also be requested after registration if appropriate this will enable the local authority to take enforcement action if new information comes to light.

Combined with the proposed additions to the fit and proper criteria mentioned at section 85(2) of the 2004 Act, this will significantly improve the ability of local authorities to consider whether a potential landlord is fit and proper, thus improving protection for private tenants.

Enabling a local authority to charge a fee when a registered landlord subsequently nominates an unregistered agent

There is no requirement for agents to register in their own right (although an agent may do so voluntarily). However, a landlord must include any agent in an application for registration, so that a fit and proper person test may be carried out on the agent. A fee of £55 can be charged for this. Where a landlord has been registered and then subsequently adds an agent, there is currently no fee-making power within legislation for a fee to be charged for this addition. Although many professional agents will have registered, landlords sometimes nominate unregistered friends or relatives who are managing properties for them. If the agent is unregistered, he or she will have to be assessed as fit and proper, which will involve unrecoverable costs for the local authority. In order to address this anomaly, which is also unfair to landlords who nominate an agent when they first register, we intend to amend the Antisocial Behaviour etc. (Scotland) Act 2004 to allow a fee to be charged to a registered landlord who subsequently nominates an unregistered agent. The fee could be set at the same rate as for the registration of a landlord or an agent, i.e. £55.

Increasing the information available to the public through the landlord register database

Local authorities are required to maintain a register of landlords and agents who are considered fit and proper persons to let a house under a lease or occupancy arrangement. Information on registered persons and their residential properties is held on the register. The release of information to members of the public is circumscribed to ensure that the information is not used for malicious or commercial marketing purposes or would not, if released, represent an unacceptable intrusion in a registered person's private life.

Access to the register in a local authority's area is, in legal terms, by application to the local authority. In the great majority of cases this is done by accessing the landlord

registration website. A member of the public can request information with respect to a particular residential property or a particular person.

The review of landlord registration recommended that a change to legislation was needed to allow additional information on applications to be given out, and major stakeholders agreed. The new provisions mean that the information available to the public will also include:

• where an application has been received but has not yet been decided; and
• where a landlord has been refused registration or has been de-registered for failing to meet the required standards.

This additional information will benefit neighbours, tenants, potential tenants and other members of the public. At the moment, if someone is concerned that a landlord is unregistered, there is no way of telling from the register whether the landlord has not applied for registration (and is breaking the law by letting property) or has submitted an application that has not yet been decided (meaning that the applicant can legally let property). The change will help people to find out about the situation, which will inform decisions about becoming a tenant or complaining to a local authority. Allowing tenants to find out that a landlord has been refused registration or has been de-registered for failing to meet the required standards will help to protect tenants and to remove the worst landlords from the sector.

Requiring landlord registration numbers in advertisements of properties to let

Amending the Antisocial Behaviour etc. (Scotland) Act 2004 to remove landlords from the register who fail to advertise their property without providing a registration number, or who provide a false number, would significantly assist local authorities in identifying unregistered landlords.

This means that enforcement action can be taken against unregistered landlords but equally if the landlord is found not to be displaying the registration number when advertising, but is registered, they can be given the opportunity to rectify the situation before the sanction of revoking their registration is carried out.

Unregistered landlords are initially likely to be unaware of the requirements, so it may be easier to identify them. In time this measure will raise awareness of landlord registration amongst landlords and tenants.

This proposal will improve protection for tenants. Also, increasing the coverage of landlord registration and removing bad landlords will improve management standards in the sector.

Enabling a local authority to require a person associated with a house to provide information relating to landlord registration

When a landlord or agent breaches the terms of the 2004 Act, authorities can apply sanctions which can lead to criminal prosecution or a cessation of the rent payable. However, some local authorities have said there are difficulties in gathering evidence to ensure that robust cases against landlords can be developed where there are concerns.

The review of landlord registration recommended that the Scottish Government should consider local authorities' ability to obtain information. One of the key issues for local authorities is proving that a tenancy is in place. To help local authorities to establish this, and to gather other evidence, the Bill gives them power to require persons associated with a property to provide information to enable or assist the local authority to exercise its landlord registration functions under the Antisocial Behaviour etc. (Scotland) Act 2004. This is in line with similar provisions in section 186 of the Housing (Scotland) Act 2006 relating to HMO licensing and other local authority functions in that Act.

The ability to obtain more evidence in relation to contraventions of landlord registration requirements will allow local authorities to take more effective action, which will extend the protection that landlord registration gives to tenants.

Enabling a local authority to require an agent to provide a list of properties managed

Enabling local authorities to require an agent to provide a list of all properties they manage along with the owners' contact details, with failure to do so being an offence. This will significantly assist local authorities in identifying landlords who have failed to register for landlord registration.

This will benefit landlords who have already registered for landlord registration and increase protection for tenants. It should also encourage agents to check that landlords they are acting for are registered. Increasing the coverage of landlord registration and removing bad landlords will significantly improve management standards in the sector.

Requiring a local authority to take account of guidance on its landlord registration functions issued by the Scottish Ministers

The aim of landlord registration is to raise standards of accommodation and management in the private rented sector and assure private tenants that their landlord is a fit and proper person to let property. Responsibility for administering and enforcing the regime rests with local authorities who are responsible for identifying landlords who are required to register and ensuring the registration process, including the fit and proper criteria is met. Local authorities currently have a range of powers available to them, further enhanced by the provision in the Bill.

Currently however, the effectiveness in managing the enforcement functions varies immensely across local authority areas. The range and number of sanctions applied, as reported by local authorities, supports this. This will address the concerns about not tackling rogue landlords' ineffective property management and concerns about lack of commitment to enforcement by some local authorities. The key benefit in introducing this as a guidance power is that Ministers will be able to take account of the outcome of the landlord registration evaluation and design the guidance based on evidence and examples of good practice.

Requiring the Private Rented Housing Panel to pass details of landlords to local authorities so their registration status can be checked

Amending the 2006 Act to require the PRHP to pass on details in relation to the landlord and property to the relevant local authority when it receives an application

relating to the repairing standard, will enable the local authorities to improve their detection of unregistered landlords and subsequently take appropriate enforcement action. If these landlords are subsequently refused registration, they will have to cease operating or face prosecution.

This proposal will benefit landlords who have already registered for landlord registration, by increasing the credibility of the system, and will increase protection for tenants. Increasing the coverage of landlord registration and removing bad landlords will improve management standards in the sector.

5.2.2 HMO Licensing

Giving Ministers power to designate by order additional categories of multi-occupancy accommodation as licensable HMOs

Giving Ministers a power to designate by order specified categories of accommodation as licensable HMOs means that the Scottish Government will be able to extend the benefits of HMO licensing - which can set conditions for physical conditions, safety and tenancy management - to types of multi-occupancy property that fall outside the current definition of a licensable HMO, but which demonstrate problems in relation to these features. The Scottish Government will use this power to focus regulation on types of multi-occupancy property where intervention is justified and where occupants require more protection. The power may only be used after consultation with stakeholders.

Enabling a local authority to refuse to consider an application for an HMO licence if it considers any requisite planning permission has not been obtained

Empowering a local authority to refuse to consider an application for an HMO licence, if it considers that use of the accommodation as an HMO would be a breach of planning control means that before dealing with an HMO licence application, the licensing section could liaise with planning colleagues (which is already good practice in some local authorities). If there were no planning concerns, the application would be dealt with. If there were planning concerns the local authority could refuse to consider the application for a licence. The applicant would have to go through the planning process to obtain either planning permission or a certificate of lawful use and development before submitting another licence application. A second fee would not be required. The application would then be considered by the local authority in relation to the other licensing requirements.

This process will filter out the significant proportion of cases where an HMO is not a matter of planning concern, without the additional cost and burden for landlords and planning authorities of a formal certification process to confirm that this is the case. This approach will allow local authorities to deal with cases where HMOs are operating in active breach of a planning decision and with the anomaly that a person can obtain an HMO licence without having gone through any requisite form of planning process. It will avoid the unfair situation where a landlord who has done the right thing by applying for planning permission, but had then been rejected, would be at a disadvantage compared to one who had not bothered to apply. Neighbours would benefit, since it would be less likely that HMOs would operate in breach of planning control.

As this is a discretionary power it means that local authorities will have the flexibility to be able to decide, depending on local circumstances, whether and how to use the power. Where there is no problem with HMOs and planning permission there will be no need to use it.

Removing a requirement for a local authority to issue a statement of reasons for every HMO licensing decision it makes

Removing the automatic requirement for a local authority to provide a statement of reasons for all decisions will allow the local authority to focus their resources more appropriately, i.e., on effective enforcement work to address the problem of bad landlords and to improve compliance across the sector.

HMO licensing currently operates under the Civic Government (Scotland) Act 1982 (Licensing of Houses in Multiple Occupation) Order 2000, as amended. Local authorities are required to set their fees to recover the costs incurred in administering HMO licensing. Therefore the costs are fully met through HMO licence fees paid by landlords. It is expected that this situation will continue under the 2006 Act regime. Avoiding unnecessary expenditure will therefore benefit landlords.

A statement of reasons will still be available on request, so those with an interest will not be disadvantaged.

5.2.3 Overcrowding

Giving local authorities power to serve an overcrowding statutory notice

Overcrowding can lead to problems in relation to health, living conditions, nuisance, noise, etc. It will be at the discretion of a local authority whether to use an overcrowding notice, so these could be used sensitively to alleviate overcrowding in cases where overcrowding was causing harm to the amenity of the house or locality or adversely affecting the health or wellbeing of occupants, neighbours or others. The local authority will be able to set an appropriate timescale for reducing occupancy. Tenants (particularly vulnerable tenants, including migrants), other occupants and neighbours will benefit from the resulting reduction in overcrowding and the problems it causes.

5.2.4 Tenancy Regime

Clarifying that all pre-tenancy charges are illegal apart from those specified as reasonable

There are concerns about a lack of clarity regarding charges made to tenants by agents or landlords to set up a tenancy. There are reports of excessive charges being made in some cases. The proposed change will provide protection for tenants from excessive charges and help responsible agents and landlords to know what they can legally charge.

Requiring a private landlord to issue specified documents and information to a tenant at the start of the tenancy

The provision of information on the specific house and landlord and on the general private rented sector will improve knowledge of rights and responsibilities among tenants and among landlords as well, since it will be able to provide a compendium of relevant facts and forms. The Review of the Private Rented Sector found low awareness among both groups. Consumer awareness among tenants, which is necessary for the proper operation of the Repairing Standard, landlord registration, landlord accreditation and other measures, will be improved.

Clarifying whether Notices of Proceedings must be issued as part of possession procedures

Making it quite clear that a landlord does not have to have issued a Notice of Proceedings in order to obtain possession of a house in the sheriff court, when the house has been let on a short assured tenancy that has reached its contractual end date and the other conditions of section 33 of the 1988 Act have been met, will make it easier and cheaper for the landlord to obtain possession in such cases. The Review of the Private Rented Sector showed that worries about gaining possession of a house if the tenant refused to leave was one of the barriers in the way of landlords offering longer tenancies, so this change will provide landlords with some reassurance, which may encourage them to provide longer lets.

Allowing a private landlord to apply to the Private Rented Housing Panel for assistance in exercising the right of access in relation to the Repairing Standard

The right for a landlord to seek assistance from the PRHP to gain access in relation to the Repairing Standard, where this is being prevented, would make it more likely that the landlord could get necessary work done. This would improve physical conditions in the sector, which is the aim of the Repairing Standard. It would also protect the landlord's investment in the property.

5.3 Costs

5.3.1 Landlord Registration

Expanding the list of offences to be declared by an applicant for landlord registration

There will be no additional costs for landlords and a negligible cost impact on local authorities in relation to increased administrative enforcement activity.

Enabling a local authority to require a criminal record certificate to verify information

The landlord will bear the cost of applying for a disclosure check. The cost of Standard Disclosure (termed as a "criminal record certificate" under Part V of the Police Act 1997) is £23 for each application. The Scottish Government recognises that this is an additional burden on landlords, but it is relatively modest compared to the average rent of £2,400 accrued from a six month tenancy in the private rented sector (especially as many landlords have more than one property). This is envisaged as a one-off cost and the local authority would need to have reasonable grounds for wanting the information relating to a particular landlord. This power could not be used to require a disclosure check for every applicant.

The Scottish Government asked a sample of local authorities and COSLA what the anticipated numbers might be to calculate the number of cases expected nationally. A response was received from one of the largest local authorities who already conducts such checks and who stated that it would carry out 25 to 30 Disclosure Scotland checks on landlords in these circumstances per annum on average. The Scottish Government estimates a total of 150 cases per annum which would mean a total approximate cost of £3,500 spread amongst the relevant landlords.

Allowing a local authority to charge a fee when a registered landlord subsequently nominates an unregistered agent

At the moment there is no charge for a landlord who adds an unregistered agent to the registration (unless the agent then registers, in which case the fee of £55 has to be paid by the agent), although the local authority has to carry out the fit and proper test. The Bill will mean that, in this situation, where the agent declines to register, the landlord would have to pay a fee, which might also be £55.

Based on information from a sample of local authorities, we estimate that there may be about 100 cases per annum nationally in which a registered landlord nominates an unregistered agent. In many of these cases, the agent will register voluntarily, so the local authority will already receive the £55 fee. All of the local authorities that supplied us with information said that all such agents did register, but this may not be the case everywhere. Assuming that the maximum percentage of cases across Scotland in which the agent does not choose to register is 10%, there would be up to about 10 cases annually in which a local authority will be able to apply the new charge to a registered landlord for adding an unregistered agent to a registration. This suggests the total additional annual cost to landlords would be nil or negligible.

Increasing the information available to the public through the landlord register database

There may be a small amount of extra work for local authority officials as a result of the inclusion of additional information in the landlord register and database. This could arise from the time taken to deal with an increase in enquiries from the public about the additional information available, although the costs of dealing with telephone calls from the public might decrease, since they would be able to obtain more information about applications, refusals and deregistrations online. Based on information from local authorities, we consider that any additional costs would be negligible. There will be no additional costs for landlords.

Requiring landlord registration numbers in advertisements of properties to let

There would be modest additional costs incurred by landlords seeking to advertise their properties through the addition of the landlord registration number. However the Scottish Government notes that only a small percentage of tenants find their property via newspapers and expects this percentage to drop, because of the increasing use of the Internet. Feedback from local authorities has confirmed that the majority of advertising is indeed now taking place via the web. Other means of advertising properties for rent would be less likely to incur a significant additional expense as a result of an increased word-count.

Again the financial impact on local authorities would be negligible; the fact that the registration number will be included in advertisements will make the task of trying to identify unregistered landlords easier and less resource intensive, as the checks required can be carried out against the landlord registration database.

Additionally, in this case there will be the benefit of the fee income generated from registering previously unregistered landlords. Although on occasion there will be subsequent enforcement action required which may incur some additional administrative costs, this would be offset by the increased income generated.

There is an exception for "To Let" boards having to include the registration number as they are reused.

Enabling a local authority to require a person associated with a house to provide information relating to landlord registration

The requirement to provide information to a local authority in order to help it to carry out its landlord registration functions will apply to persons connected to the relevant premises, such as owners, landlords, tenants and agents. Responsible landlords and agents already provide much of the information requested by local authorities. The Scottish Government considers that any additional costs of complying with this requirement, where this would otherwise not have been done and where landlords are not in breach of the law, would be negligible particularly since the type of information required is likely to be very straightforward. Since local authorities will be able to exercise their functions more effectively, their costs might be reduced, depending on the use that is made of the power.

Enabling a local authority to require an agent to provide a list of properties managed

In relation to local authorities, the negligible cost implications are similar to that of identifying unregistered landlords from advertisements and notification by the PRHP. Local authorities will carry out the same search on the landlord registration database to check that the properties managed belong to a registered landlord.

There will be negligible administrative costs to agents in supplying the details to local authorities as the information required by the local authority will already be held by the agent.

Requiring a local authority to take account of guidance on its enforcement functions issued by the Scottish Ministers

There will be no immediate cost implications for local authorities or landlords. Before any future guidance is devised, further consultation with organisations which are representative of landlord registration interests will be undertaken. This, coupled with the fact that the guidance will be drawn up following the evaluation of landlord registration will enable the guidance to be based on areas of good practice which have been evidenced as working effectively. It is therefore anticipated that if there were any future cost implications they would be offset by increased efficiency.

Requiring the Private Rented Housing Panel to pass details of landlords to local authorities so their registration status can be checked

This is a discretionary power and so the costs will only be incurred when and if local authorities choose to use them. Local authorities will carry out the additional checks against the landlord registration database. There might be some administrative costs to check the validity of the information supplied by the PRHP; however the numbers involved will be low so costs will be negligible.

5.3.2 HMO Licensing

Giving Ministers power to designate by order additional categories of multi-occupancy accommodation as licensable HMOs

If a category of accommodation that is not currently covered by the HMO licensing regime were deemed by order to be a licensable HMO, there would be additional costs for local authorities for processing applications and for enforcement, although local authorities would also receive additional fees from the owners of such properties. Fees are currently set to meet the costs of the licensing system.

There would also be additional costs for owners of such properties, particularly the costs of obtaining a licence and possibly of carrying out work to meet licensing conditions. It is very difficult to estimate both of these costs. Every local authority has a different level of application fees; licences may last for one year or three years; there are often different rates for applications for new licences and for renewals; and some local authorities charge a flat fee, while others use a sliding scale, depending on the number of occupants in the HMO. For example, the City of Edinburgh Council, which has the largest number of licensed HMOs, charges up to £585 for an application for a new one year licence and up to £410 for a renewal. The amount of work required for an HMO to meet licensing standards will also vary considerably, but could be several thousands of pounds in some cases.

It is not known at the moment what types of property would be brought into HMO licensing by use of the order-making power nor the numbers of such properties, so additional costs and income for local authorities and costs for owners would depend on the use that was made of the order-making power. The Scottish Government will consult with stakeholders before using this power and a Business and Regulatory Impact Assessment, including more detailed costings, would be produced for any such order.

Enabling a local authority to refuse to consider an application for an HMO licence if it considers any requisite planning permission has not been obtained

This is a discretionary power which has been requested by local authorities who will have the flexibility to decide whether to use it. The discretionary nature of this provision means that it is difficult to estimate the number of cases per annum where it may be used and therefore the costs to local authorities. Empowering a local authority to refuse to consider an application for an HMO licence, if it considers that use of the accommodation as an HMO would be a breach of planning control, should not involve a local authority in significant additional work - i.e., co-operation between licensing and planning sections to establish the planning position - than current good practice. Local authorities would have to take into account any possible increase in the resources required when deciding whether to use the power, particularly as there is

no legal mechanism for recovery of costs incurred in investigating whether or not a planning application would be required.

Where landlords are already legally required to obtain planning permission for an HMO, or where they are required to obtain certification that planning permission is no longer required because the premises have been in use for a sufficiently long period, the Scottish Government do not consider that it is an additional cost on them as they are complying with existing planning requirements in order to obtain an HMO licence.

Many HMOs do not require planning permission. If an owner is in any doubt about whether use of his or her accommodation as an HMO complies with planning legislation, he or she may seek advice from the local authority, which is already the responsible course of action where there are such doubts.

In deciding whether to use the power, a local authority will need to balance the possible reduction of supply of such accommodation in a particular area against the amenity benefits. However, any HMOs affected should not, in any case, be operating in contravention of planning legislation.

Removing a requirement for a local authority to issue a statement of reasons for every HMO licensing decision it makes

Removing the automatic requirement for a statement of reasons may lead to minor costs where applicants or concerned individuals would now have to request a statement of reasons, where before it would have been provided automatically. However these costs would likely be limited to postage and a slight delay factor. These costs are felt to be negligible.

5.3.3 Overcrowding

Giving local authorities power to serve an overcrowding statutory notice

In most cases it is expected that the landlord, following service of an overcrowding statutory notice, would serve the usual notices on the occupants. There could be a very few cases in which it would be necessary for the landlord to take eviction action through the courts, which are estimated to be £700 to £800 per undefended case by landlord representatives. If the tenant chose to defend the case, the costs would be higher but would be very difficult to quantify as there are many factors affecting the nature of the case and how it might be considered in the courts. In cases where landlords were permitting or causing overcrowding any costs would equate to the cost of complying with the statutory occupation level and therefore would not be seen as additional.

Whether to issue an overcrowding statutory notice will be at the discretion of a local authority. If a local authority chose to do so, it would incur some administrative costs. There would also be costs if information and advice were provided to occupants. However, it is likely that few notices would be required to be issued, since the overcrowding would have to be serious enough to be adversely affecting the health or wellbeing of the occupants, neighbours or others or the amenity of the house or its locality. Costs would therefore be very low. Ministers will be able to issue

guidance in relation to notices, to which local authorities must have regard, and it is intended that this will include taking into account possible effects on homelessness from issuing a notice. In addition, dealing directly with a serious case of overcrowding could lead to savings in not having to deal with other problems that could develop as a result, such as noise and other nuisance.

5.3.4 Tenancy Regime

Clarifying that all pre-tenancy charges are illegal apart from those specified as reasonable

There could be a loss of income for some agents and landlords, but it is likely that the part of their income concerned is currently not legally justified. The clarification of pre-tenancy charges will help responsible agents and landlords to be in a better position to know what they can legally charge.

Local authorities currently have a role in reporting for prosecution breaches of the law on the charging of premiums in relation to private tenancies. Clarifying that all pre-tenancy charges are illegal, apart from reasonable charges that are exempted, should make it easier for prosecutions to take place where agents do not comply with the law, although the changes could also make it easier for some agents to work within the law. Additional costs for local authorities will depend on how many cases they decide to take forward.

The costs associated with this measure will be considered in more detail when a BRIA is prepared for the regulations on reasonable charges.

Requiring a private landlord to issue specified documents and information to a tenant at the start of the tenancy

Additional costs on landlords of issuing the documents are expected to be very low, since it is likely that some of the documents are already required to be issued and any new ones could be provided at the same time as these.

There would be a minimal cost for local authorities in bringing the requirement to issue the information and documents to the attention of landlords (which should be part of the normal process of communicating with landlords registered in each local authority's area). A more detailed Business and Regulatory Impact Assessment (BRIA) will be produced before the order-making power specifying the details of the information and documents is laid.

Allowing a private landlord to apply to the Private Rented Housing Panel for assistance in exercising the right of access in relation to the Repairing Standard

There will be costs incurred by the PRHP in undertaking this additional work. The Scottish Government estimates that there would be about 150 cases each year; this figure gives indicative additional costs of about £30,000 per annum, or an average of £200 per case. It is expected that these costs will be passed onto landlords, the beneficiaries of the new procedure, in the form of application fees. Set against the cost of these fees would be possible savings on taking court action (which can cost hundreds of pounds) and the protection of the value of a landlord's property by possibly being able to carry out repair work faster than would otherwise be the case.

6. Scottish Firms Impact Test

Many private landlords are small businesses (although many do not function as businesses, e.g. letting out a family home while working abroad). The Landlord Survey carried out as part of the Scottish Government Review of the Private Rented Sector found that almost 95% of landlords are individuals, couples or families, with an average of 1.3 properties per landlord.

Option 1 would disadvantage private landlords and HMO owners who are obeying the law, since there would be no additional measures to improve enforcement against those who obtain an unfair advantage by not doing so, including dealing with deliberate overcrowding. There have been complaints from landlord organisations and individual landlords about the lack of enforcement of landlord registration in particular.

This option would also mean that landlords would continue to be subject to the costs and delays of taking court action to enforce the right of entry in relation to the Repairing Standard, instead of having the easier option of seeking assistance from the Private Rented Housing Panel. This could lead to deterioration in the condition of houses. Responsible agents and landlords would not benefit from the clarification of pre-tenancy charges and the clarification of the forms required at the ish of a short assured tenancy.

Option 2 means there will be some additional costs on landlords and agents, including small landlords and agents, arising from the changes. The additional costs are very low and the Scottish Government considers them to be proportionate to the benefits from the changes.

We consulted on a draft RIA as part of our Bill consultation. We received responses from a number of individuals (the majority were from private landlords) and 2 landlord representatives along with 6 agents and 27 local authorities including COSLA. In addition, we have consulted members of the Private Rented Sector Strategy Group throughout the preparation of the Bill which includes landlord and tenant representatives and it was their recommendations which formed the basis for most of the Bill's provisions.

7. Legal Aid Impact Test

The Bill contains some new or extended offences (see section 10 below). The Legal Aid team advises that the numbers of prosecutions that have been assumed in relation to these are not significant enough to cause the Legal Aid Board any notable concern in terms of the overall impact on the Legal Aid Fund.

8. Test run of business forms

For any new or revised statutory forms resulting from the provisions, the Scottish Government will carry out a test run with businesses and individuals who will have to use them. The Scottish Government will first discuss the details of how to do this most effectively with members of the Private Rented Sector Strategy Group.

9. Competition assessment

Landlord registration already applies to all private landlords in Scotland, with a small number of exemptions. The proposed changes in Option 2 will allow local authorities to enforce the registration system more effectively, helping to ensure that landlords comply with the existing legal requirements. Landlords have to be judged to be fit and proper to let property in order to obtain registration. Better enforcement of the system will not have a negative effect on competition.

The HMO licensing regime already applies to all houses occupied by three or more people who are members of two or more families, apart from categories of properties exempted by law.

In order to obtain a licence, an HMO has to meet certain standards, including some relating to physical conditions, safety and management. Attaining these standards requires some expenditure by compliant landlords. Those landlords who are currently failing to meet their legal obligations may gain a competitive advantage by not meeting the required standards and therefore being able to undercut the rents charged by law-abiding landlords.

Option 2 would increase local authority powers to deal with overcrowding resulting from breaches of the statutory limits on occupancy. This would have no negative effect on competition, since the result would be to reduce the occupancy of such houses to the statutory level and there would be no effect on other houses.

The changes in the tenancy regime and related matters proposed in Option 2 would make it easier for landlords to exercise rights of access and inspection; clarify documents at the end of certain short assured tenancies; and (for landlords and agents) clarify pre-tenancy charges. These would have no effect on competition. The proposal to require a private landlord to issue a standard information pack to a tenant would increase the knowledge and consumer awareness of tenants and also of some landlords. This should have a beneficial effect on competition, since it would make it more likely that tenants would seek out properties belonging to law-abiding landlords who provided a better service. In turn, this should lead to higher standards overall.

10. Enforcement, sanctions and monitoring

Responsibility for enforcement of landlord registration and HMO licensing already lies with local authorities, using powers under, respectively, Part 8 of the Antisocial Behaviour etc. (Scotland) Act 2004 and, from 31 August 2011, Part 5 of the Housing (Scotland) Act 2006. Although local authorities have taken action against a number of landlords, some have concerns about exercising the powers relating to prosecution, especially with regard to the gathering of evidence. The Bill measures will strengthen these powers.

Local authorities will have powers to enforce the new overcrowding provisions. They already have a role in preparing prosecutions relating to pre-tenancy charges. As explained above, the Private Rented Housing Panel would be able to enforce a landlord's right to gain access to carry out work required to meet the Repairing Standard, which would be an extension of its existing powers to require landlords to carry out such work on application by tenants.

There are new criminal offences in the Bill:

• Failure by a registered landlord to give notice of the appointment of an agent or the inclusion of false information in such notice.
• Failure by specified persons connected with a house to comply with a requirement to provide information to enable or assist a local authority to exercise its landlord registration functions or the provision of false or misleading information.
• Failure to comply with an overcrowding statutory notice.
• Failure by a private landlord to provide the standard tenancy documents to a tenant.

11. Implementation and delivery plan

A timetable for the implementation of the provisions in the Bill will be drawn up once the Bill has passed into law.

12. Post-implementation review

The Scottish Government will review the impact of the provisions within ten years of their coming into force.

13. Summary and recommendation

Based on the analysis outlined above, the Scottish Government recommends the adoption of option 2. Provisions in the Private Rented Housing (Scotland) Bill have been drafted on this basis.

14. Declaration and publication

I have read the impact assessment and I am satisfied that (a) it represents a fair and reasonable view of the expected costs, benefits and impact of the policy, and (b) that the benefits justify the costs I am satisfied that business impact has been assessed with the support of businesses in Scotland".

Signed……………………………………….

Date……4 October 2010……………………………………

ALEX NEIL

Minister for Housing and Communities