Local Government and Communities Committee

Meeting date: Wednesday, December 1, 2010

Official Report 535KB pdf

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Private Rented Housing (Scotland) Bill: Stage 1

Good morning. Welcome to the 28th meeting in 2010 of the Local Government and Communities Committee. I remind members and the public to turn off all mobile phones and BlackBerrys.

Item 1 is oral evidence at stage 1 of the Private Rented Housing (Scotland) Bill. I welcome today’s panel of witnesses. They are Alex Neil MSP, who is the Minister for Housing and Communities; Lisa Wallace, who is policy and consumers team leader in the Scottish Government’s private housing unit; and Colin Affleck, who is a policy officer in the unit. Thank you for your attendance at this morning’s meeting. I invite the minister to make some opening remarks.

The bill is part of my approach to building a stronger and more effective Scottish private rented sector. The sector has a clear role to play in helping to build mixed sustainable communities across Scotland, and in offering flexibility and choice in housing options.

Our review, which was published last year, highlighted high levels of satisfaction in the sector. I want to build on that good report card and to develop a strategic approach that sees the sector go from strength to strength. Last year I appointed the Scottish PRS strategy group to advise me on future policy direction for the sector. The group has considered a range of issues that were highlighted in the review, along with issues that have been raised by key stakeholders such as Glasgow City Council. It will continue to act as an important sounding board throughout the passage of the bill. The bill represents the first stage of that work, but broader reform of the sector is required. The group is taking a long-term view and will make recommendations to me next year on a future strategic direction that is focused on growth, sustainability, and quality.

In the bill, we need an approach to regulation that seeks to lighten the load on good lawful landlords and frees up local authority resources to focus on the relatively few unscrupulous players who are bringing the sector into disrepute. The bill will benefit both landlords and tenants. For example, it will give landlords access to the private rented housing panel to help them to carry out their repairing standard duties. Key provisions such as the mandatory information pack will encourage the existence of better-informed tenants who know their rights and responsibilities and are empowered to challenge bad landlord practice.

Many of the powers for which the bill provides have been requested and welcomed by local authorities. For example, it will improve the enforcement of landlord registration by improving councils’ evidence-gathering powers. It will allow them to request a criminal record certificate and it will strengthen attempts to catch unregistered landlords by requiring the PRHP to share information and by making the inclusion of registration numbers in adverts mandatory. The bill will put an end to agents charging unfair premiums by giving the Government powers to specify that only certain reasonable fees are allowed.

During the evidence sessions, stakeholders expressed concerns about the overall effectiveness of the landlord registration scheme. The scheme is not of this Government’s making, but we are intent on making it work better. We must enable local authorities to use their powers in a way that improves the sector and offers a degree of consistency for landlords, while allowing sufficient flexibility to take account of local circumstances.

There is a lot of good practice, which is being shared and encouraged via the local authority landlord registration group. An excellent example is co-ordinated effort within councils, where landlord registration teams and housing benefit teams share information. That can help to identify unregistered landlords and, at the same time, stop benefit fraud. It is not right that unregistered, unlawful landlords should gain from the public purse, so I want the good practice that I have described to be rolled out across Scotland. I intend to highlight its benefits in the new statutory guidance that we will issue on landlord registration.

The bill tackles important issues on which action is required now. We are carrying out a high-level review of landlord registration to consider what future improvements are needed. The bill will increase maximum fines to £50,000, which will act as a further deterrent for landlords, and send a strong message to the courts about the weight that we attach to such offences. However, I hear what is being said about difficulties in gathering evidence for successful prosecutions, and about the length of time and significant resource that it can take to progress through the courts. The improvements in the bill around councils’ evidence-gathering powers that I have outlined will help with that, and I have instructed the strategy group to consider that further as part of its forward work plan.

I have also included provisions to tackle overcrowding, in response to local authorities’ calls and the strategy group’s recommendations. We know that there are serious cases of overcrowding in some parts of Scotland, affecting vulnerable groups such as migrant workers. People are living in dreadful and unacceptable conditions, and are creating serious risk for themselves and upset for neighbours. To allow local authorities to issue overcrowding statutory notices to private landlords will help to protect communities and tackle localised problems such as those in Govanhill in Glasgow.

During the consultation, local authorities stressed the importance of that power being discretionary, so that it can be used only in the most severe cases. I believe that that is the right approach to take. It is essential that vulnerable tenants are protected, so we will issue statutory guidance on the use of the overcrowding notice, and we will make it explicit that local authorities must give careful consideration to all the facts case by case before deciding whether to take action.

First, the local authority will need to be convinced that the overcrowding is having detrimental effects on tenants’ health, or an impact on neighbours. It will then be expected to take account of the tenants’ needs, the consequences for the local community, homelessness implications and the availability of alternative accommodation. It is neither my intention, nor is it that of local authorities, to ask for powers to swoop in and make people homeless. Rather, landlords will be given a period of time to comply, and the guidance will outline that tenants must have time to find another place to live. It is certainly not the intention that the provision should become a fast track for tenants to get on to social housing lists, although local authorities’ statutory homelessness duties will apply in some cases. The guidance will make it plain that we will expect local authorities to act sensitively and to take a proactive multi-agency approach to providing advice and support for tenants.

The majority of landlords are law-abiding and are simply trying to make an honest living. Unfortunately, a small minority are providing unacceptable accommodation and employing poor management practices. As a result, tenants and communities are suffering, along with the reputation of the sector. The bill sends a clear message that unlawful landlords will not be tolerated and it will strengthen landlord registration enforcement by adding to the toolkit of discretionary powers that councils can use flexibly. It will not place an unwanted burden on councils that have no need for such powers, so it should not create unnecessary expenditure or bureaucracy.

I am sure that many members will be aware from their constituency mailboxes that there is a real need to tackle antisocial behaviour among some private tenants. Such unacceptable behaviour might be endorsed and often made worse by negligent landlords. The bill makes it clear that local authorities are expected to take account of antisocial behaviour occurring in a landlord’s property when applying the fit and proper person test. We know that good and lawful landlords will take the necessary steps to ensure that their tenants do not cause problems for neighbours, but it is right and proper that local authorities should have legislative powers to take action on landlords who do not. Where honest landlords are taking steps to deal with the problem, it is only fair that local authorities should have discretion in the use of the powers so that they can provide an apposite response.

I have found the recent meetings with committee members to be helpful and productive. I hope that we can continue to work together to improve and enhance the bill.

Thank you, minister. We move to the first question, which is from David McLetchie.

Some would say that the present landlord registration scheme was introduced with unseemly haste under the Antisocial Behaviour etc (Scotland) Act 2004. It had a very specific focus in that context rather than being focused more generally on the private rented sector. How would you assess the efficacy of the scheme as a whole?

It has now been operating for three years. The first registrations took place in 2007, although the legislation was passed in 2004.

A number of clear issues have arisen during the first three years. The main one is the lack of proper enforcement in some local authority areas. In the bill, and in our review of the registration scheme, we want to consider, for example, ways of ensuring better standards of enforcement throughout the country. There are some very good examples of enforcement, but there are also some local authorities which, to be frank, have taken a more laissez-faire approach to enforcement than is desirable. There are variations across the country. We have learned lessons during the first three years, and through the bill and the review—and through the continuing work of the private rented sector strategy group—we are, I think, making improvements to the system.

A review of the registration scheme is being undertaken by the group to which you referred. Why is it necessary to enact interim measures to tinker around the edges of the scheme before we have a report on the scheme as a whole? That report might lead to more comprehensive legislation.

The bill is largely based on the recommendations of the review of the private rented sector that we carried out last year. That review ranged widely across the whole sector; it dealt not only with issues of registration and enforcement but with wider issues related to the development of the sector. The vast bulk of the provisions in the bill arose from that review and from consequent consultations on its conclusions and recommendations.

The review of the landlord registration scheme, which we are now undertaking, focuses specifically on issues such as enforcement. As Mr McLetchie knows, we are asking in the bill for powers to provide statutory guidance; at the moment there is no statutory guidance procedure. Such a procedure would allow us to build in best practice, and that will be possible once we have received in March the conclusions and recommendations of the review of the specifics of the landlord registration scheme.

The bill is about much more than landlord registration; it is about the consequences and conclusions of the very substantial review that was undertaken last year. Some of the bill’s measures on overcrowding, for example, arose from those consultations. Glasgow City Council asked us to reinstate provisions on overcrowding—provisions that had been in law before, but had been taken out. The council believes that it needs such powers.

That answer wandered slightly off the issue of the landlord registration scheme. At its inception, the scheme was an adjunct to a bill that was intended to deal with antisocial behaviour. Some piecemeal reforms to the scheme have now come up in the context of a wider review of private sector landlords, which the minister has mentioned. Another review, of the registration scheme itself, is pending. Instead of having all these bits and pieces, which has been our experience since the inception of the scheme, would not it be better to have a focused review of the registration scheme, followed by focused legislation, if required?

I would agree with you if we could turn the clock back to 2004. Rather than considering landlord registration legislation as an adjunct, as it were, to antisocial behaviour legislation, we should have considered it in its own right. I think that most of us would agree with that. However, 2004 was six years ago, and we are where we are.

A strategic approach was outlined as a result of the wider “Review of the Private Rented Sector”. A result of that was a highlighting of the need to do more on landlord registration and to improve the legislative framework. The bill makes improvements to the legislative framework for the landlord registration scheme. The March report will be more about operations: it will consider best practice, minimum standards, and so on.

If we require additional legislative measures through secondary legislation to further improve the scheme, we will have powers to do that through the bill, and we will be happy to do it. We are taking a strategic approach that has its roots in last year’s private rented sector review.

09:30

Thank you for that. I have two specific questions for clarification. On the overcrowding provisions, I was interested to hear your comment in your opening remarks that the service of an overcrowding statutory notice will not be a fast track on to the housing list. Can I take it, therefore, that you would reject the proposal or suggestion by bodies including the Scottish Council for Single Homeless, Consumer Focus Scotland and Shelter that a duty should be placed on local authorities to rehouse people who are displaced as a result of the service of an overcrowding statutory notice?

Absolutely, I reject it. I think that there are enough duties at the moment, and the main duty is the homelessness duty. In extreme circumstances, some people might be subject to that duty. However, this is one of the reasons why I am not in favour of a national scheme. It is important that the local authority, in its various guises, operates in a co-ordinated fashion. There will be a section dealing with homelessness, a section dealing with housing allocations, a department dealing with landlord registration, a department dealing with landlord enforcement, and an environmental health department. It is important that, before any action is taken on an overcrowding statutory notice, the implications and consequences of issuing the notice are catered for by all those departments.

Typically, the overcrowding that has been cited to us is in migrant communities. Migrant communities from outside the European Union are not covered by the homelessness duty, so overcrowding in those communities has to be managed in a different way from overcrowding in other situations, where there might be a homelessness duty.

We imagine—our discussions with local authorities bear this out—that if there was a need to issue an overcrowding notice, the situation would typically be managed through managing down the numbers in the overcrowded accommodation by finding alternative accommodation, in many cases in other parts of the private rented sector, for the people who were living in the overcrowded accommodation. Local authorities will be wary of people trying in any way to abuse the system. We have designed the legislation in such a way as to avoid any such abuse. An overcrowding notice is not a fast-track way to jump the queue in the housing list.

Lastly, I will ask you about the provisions on pre-tenancy charges. The bill is intended to clarify what charges are legal. Will you tell us what is legal and what is illegal at the moment and what changes you propose?

That is actually a very grey area at the moment. The Govan Law Centre in particular has done a lot of worthwhile work on the issue. A couple of examples of legitimate pre-tenancy charges would be a rent deposit and a charge for a credit check. It is perfectly legitimate to pass on those expenses. However, to say, “We are going to charge you £400 for keeping this place open for you,” would not be legitimate. We will use the powers that the bill will give us to issue an order. Our approach will be to list legitimate charges, and any other charges will be deemed to be illegitimate. We will do that as a result of the consultation.

It is not just the legitimacy of the charges that is important but also the level of the charges. The order will deal with both points—the legitimacy or legality and the reasonableness of the charges. It is clear from the excellent work that the Govan Law Centre has done that there are certain unscrupulous agents out there who are levying on fairly vulnerable people charges that, frankly, could not be justified under any circumstances.

Are those placement charges for finding a tenancy in the first place?

They could be. We do not regard large charges for that kind of thing as being legitimate.

Good morning, minister. Some of us believed that the introduction of landlord registration under the Antisocial Behaviour etc (Scotland) Act 2004 was the correct thing to do in dealing with a specific problem. I have some sympathy with Mr McLetchie’s query. In looking at the private sector as a whole, this may not be the time to introduce landlord registration as a subset of that. I heard the minister’s answer. I will reflect further on it.

My question is on the proposal for a registration number by which to identify landlords. We have heard in evidence that instead of a number something like a kite mark should be used. What is your view on that?

I am very much in favour of using a number system. A number can be easily checked and would be unique to the landlord. Our experience is that it is very easy to copy a kite mark or to use somebody else’s kite mark, which makes it difficult to check whether the kite mark is legitimate. Obviously, we consulted on the proposal. Our view is that a number system is much more effective in enforcement terms; it is easy for people to check. I am always very conscious of the tenant or prospective tenant. If the landlord has a number, it is much easier for the tenant or prospective tenant to check the legitimacy and validity of the advert and the person who placed it than it would be using a kite mark.

Having lodged and moved an amendment during the passage of the Housing (Scotland) Bill, in which I suggested the same thing, I have every sympathy with taking the numbers route. However, there is a problem that I did not think about at the time. For obvious reasons to do with reproduction and so forth, we will not put the landlord number on to let advertisement boards. That seems to remove the benefit that a number would have. Would not the kite mark be better in that regard?

The crucial thing is that people can check the number with the local authority. It should be made as easy as possible for people to check whether the landlord is registered. As Mary Mulligan knows, we are introducing information requirements so that people can check whether the landlord’s application is pending or whether they have applied for registration and been refused. In terms of processing those enquiries through the local authority, the advice that we have received from authorities is that it is much easier, quicker and more effective to use a number than it is to use a kite mark.

One difficulty in any landlord registration scheme is how to let people—landlords and prospective tenants—know about it. Has the Government any proposal to advertise the procedures? How will you make the landlord registration scheme better known?

We will need to look at how to do that, which we will do once we see the committee’s stage 1 report. One constraining issue for everybody will, of course, be budgets.

There is a need to increase awareness among prospective tenants in the pre-information stage—I think that that is the stage to which Mary Mulligan is referring. The information pack, which will be a statutory requirement, will inform people about tenant rights, the availability of tenancies and so on. We will talk to the PRS strategy group and others about how we can increase awareness more effectively. That will be done on an on-going basis and not on the basis of a one-off advertising campaign. Obviously, there is a high churn in the sector, especially in some areas. We have to have an on-going way of making people aware.

We have now established a much closer working relationship with the Department for Work and Pensions in Scotland on a range of areas. As we know, a fair percentage of people in the private rented sector are on benefits. The DWP is therefore a possible way in which to disseminate information.

I want to go back to your earlier responses to Mr McLetchie on overcrowding. Let me give an example. If there was a small flat with 10 Polish individuals, on which an overcrowding notice was served and some of the individuals had to be rehoused, would they be covered by the homelessness legislation as it stands and therefore offered accommodation in the public sector?

That would depend on their status: they would need to fit the bill under the homelessness legislation.

I think that I am right in saying that there is a distinction between European Union and non-EU residents. By and large, EU residents have to be treated as if they are living in Scotland as part of the indigenous population, whereas non-EU residents do not. However, such people would also have to fulfil the requirements of the homelessness legislation, for example on whether they had made themselves deliberately homeless. We should remember that the overcrowding notice process is in stages. First, there is a pre-notice period during which the landlord has time to get everything sorted before a notice is issued, and then after that we would anticipate the local authority putting in place a plan to deal with the overcrowding. People may see an overcrowding notice as a way of jumping the queue, but if they deliberately make themselves homeless and are not compelled to do so, by definition they do not qualify under the homelessness legislation for the homelessness duty.

I understand the difference between European Union and non-European Union nationals, which is why I used the example of Polish people. Clearly, if people are in a flat and the council states that there is overcrowding, they are not making themselves intentionally homeless. You are saying to us that they would be eligible for rehousing under the homelessness legislation.

No. Let us say that there are 10 people in the house and the ideal figure should be six—there are four people too many. We anticipate that the local authority would then say that it and the people together need to find alternative accommodation for four people. I imagine that the first line of attack would be to find alternative accommodation elsewhere in the private rented sector. In most areas, there is enough capacity to do that. If that is not possible, there may be other sources of accommodation. One possibility is sharing with other friends who are not overcrowded.

Someone would be made homeless as a result of an order only in extremis. We envisage the local authority, with the landlord, managing the situation down rather than just saying that by next Tuesday, for example, the landlord has to get rid of four people. If the council did that, the four people would have a legitimate case for saying that they were unintentionally homeless.

I want to explore that a little further. You are saying that we are not going to put people out on the streets, and I appreciate that, but can you say a little about the timings once the order has been served? How much flexibility will the local authority have to find alternative accommodation?

The local authority will have maximum flexibility, both in the pre-order stage and once it has issued the order. This is one reason why it is so important that the issue remains to be dealt with by local authorities rather than there being a national scheme. A local authority would need to employ the resources of various departments within it to identify alternative accommodation. If there was a social work issue, the authority would involve social work as well as other normal services.

We envisage the role of the local authority being to manage down the number over time. It might take two or three months, and in the meantime the landlord would not be allowed to bring any additional people into the accommodation. In the example that we are using, once the four people had been found alternative accommodation, the landlord would be told that the number needs to stay at six. If the landlord defied the local authority, I think that that is the point at which it would come in with a slightly heavier approach.

09:45

Good morning, minister, I had not planned to ask you this question, but it follows on from Mrs Mulligan’s questions about overcrowding. Do the referral provisions under section 5 of the Housing (Scotland) Act 2001 not apply to overcrowding in the private sector? I understand that, where there is overcrowding, in certain circumstances, people are considered to be, in effect, homeless—at least, they can enter the housing list at that point.

Nobody would be prohibited from entering the housing list. One of the conditions for entitlement is that someone is unintentionally homeless. I am sure that most local authorities would not put people in a position where they became unintentionally homeless.

I realise that. However, that might happen by dint of overcrowding. I understand that section 5 of the 2001 act treats people who are in that position as being, in effect, homeless. Does that apply to people who rent in the private sector?

It does. As I said in my opening remarks, the key issue is whether the health and wellbeing of either the tenants or the neighbours are being affected. In those circumstances, the local authority may decide that it does not have time to manage the situation down and must take some people out of it. In that case, those people would be homeless and would qualify under the homelessness duty. However, we would regard that as a fairly rare and extreme circumstance.

That is what worries me slightly. There now seems to be a different definition of when someone is homeless in that situation. At the moment, someone is already deemed to be homeless if they are overcrowded.

Colin Affleck can perhaps clarify the position.

It is true that, if people are overcrowded and the overcrowding is affecting the health of the occupants, that can be regarded as homelessness. However, the local authority is not under an obligation to do anything unless the people apply for housing. The serving of the overcrowding statutory notice does not affect the existing position. The local authority does not have to serve a notice and, if it does not, the position is not altered. The people could apply for housing on the ground of being homeless because of overcrowding affecting their health. What we are doing here is giving local authorities an additional power that does not affect existing rights with regard to homelessness.

That is my point. I do not see a local authority making people unintentionally homeless except in extreme circumstances. Let us say that there was a breakout of some infectious disease as a result of overcrowding and two people being in too close proximity, although that is probably a very unusual example. In those circumstances, the local authority would need to move quickly to rehouse the people in temporary accommodation. They would almost certainly be deemed to be unintentionally homeless. However, in the vast bulk of the cases that we are dealing with, the local authority would not act in such a way that it made people unintentionally homeless.

I would like to reflect on that area further. It is far more complicated—and is about to become even more complicated because of the provisions—than the minister accepts this morning. Perhaps he, too, would like to reflect on it.

I am happy to get back to you with a legal clarification of which particular legislation kicks in if the bill is passed. That would clarify the matter. At the end of the day, it is about taking a commonsense approach. I think that it would be only in extreme circumstances that a local authority would serve overcrowding statutory notices in such a way that it ended up with more people on the homelessness list.

That is not my point, but maybe we can discuss the matter at another time.

What do you envisage would be contained in the tenant information pack?

A range of information. The role of the Government is to provide almost a checklist of the minimal information. The really good landlords already provide tenant information packs, although many do not. I could sit here all day and list everything. It would include basic information on the tenants’ rights and responsibilities, such as where they can go with complaints; issues relating to health and safety, including fire safety; and what to do in the case of any disputes over rent or tenancy deposits. All that stuff would need to be included in the tenant information pack.

Would the landlord be required to give the potential tenant not quite a guarantee but an assurance that, for example, gas and electrical systems were appropriate?

They should do that anyway, irrespective of whether there is a tenant information pack. If a landlord were not complying with health and safety legislation and the various bits of legislation that cover gas and electricity connections, they would be prosecuted anyway. That would happen not under housing legislation but under other legislation, most of which is reserved at the moment. The tenant information pack should advise tenants about where they can go if they believe that the landlord is not complying with such legislation.

I envisage that the tenant information pack will contain a section on useful numbers to phone, which will include everything from the number for the local accident and emergency unit to Scottish Gas, Scottish and Southern Energy or whoever the energy providers are. After consultation, we will lay an order about the minimal list of things that the pack must contain. My approach is this: if in doubt, put it in. If there is a question about whether to include something, my approach is to put it in because many of the recipients of the packs will be from the migrant community.

One of the issues that we will promote is the need for the packs to be available not only in English but a range of other languages. I mentioned Govanhill in my introductory remarks. I think that I am right in saying that, at the last count, 51 different languages were being used there. I am not saying that we will produce the packs in 51 separate languages but, to make them effective, we will need to print them in quite a number of languages.

I understand the point that the minister makes and I agree about the comprehensive nature that the piece of paper—or pack of papers, as it sounds as though it will need to be—will be required to have. I also make the point that Govanhill is not the only community where there are 51 languages.

Absolutely.

There was a proposal to allow rent to be claimed back in the case where a house in multiple occupation was unlicensed or did not fit the bill. Is that provision no longer being considered? If not, why not?

No. It was dropped because it was too complicated. Part 5 of the Housing (Scotland) Act 2006 becomes active in August. That contains a number of provisions, which means that the measure does not need to be in the bill because part 5 of the 2006 act is already being enacted. Part 5 gives local authorities more enforcement powers on HMOs—in particular, the ability to prevent rent from being payable for an unlicensed HMO without the need to go to court.

I do not think that it goes as far as allowing rent that has been paid to be returned. I think that that is what you originally proposed, so I wondered why that provision had been dropped.

The provision was dropped because, after consultation, we were advised that it was unworkable—difficult to implement and enforce. I am happy to provide you with details of the objections.

I am surprised—or perhaps not—that complication is becoming an issue.

Minister, you offered some clarification of the legal issues to do with homelessness and the overcrowding trigger. You also mentioned in your introductory remarks that a local authority’s statutory homelessness duties would apply in some cases of overcrowding. Has any work been done on how big an increase those cases would equal in the number of people in Scotland who are defined as homeless and given rights under the homelessness legislation?

Housing associations approach me about the provision under the Homelessness etc (Scotland) Act 2003 on disregarding the definition of “intentionally homeless”, which will come into force in 2012. I do not know whether that will cause another impact or whether it increases the risk of people jumping the queue and getting access to social rented housing when there is an extreme shortage.

This point is not particularly to do with the bill, but it is a general point that touches on the valid point that you have just raised. Six weeks ago, I had a meeting with the local authority housing conveners. Believe it or not, some of those conveners seemed to be under the impression that if, for example, someone has been evicted for antisocial behaviour, they have to go straight back on the homelessness list and the local authority has a duty to rehouse them. There is no such duty. If someone is evicted under antisocial behaviour legislation, they are deemed to be intentionally homeless. The duty on local authorities does not apply to people who are intentionally homeless. I issued a clarification letter to every local authority in Scotland as a result of that meeting, which I would be happy to circulate to the committee.

We would be happy to see that, but it again makes the point that the “intentionally homeless” definition that would prevent people from getting access to social housing unfairly is not being applied uniformly across the board.

You have mentioned Govanhill a couple of times. We have evidence from Glasgow City Council that it clearly believes that the new legislation and new overcrowding criteria would give entitlement to a number of residents, given that a cockroach and bed bug infestation would give them good reason. It would be interesting to know how many of those people would be entitled to social rented housing as a consequence.

Historically, the figures for such situations are not high at all. We will provide the committee with any updated estimates that we have from local authorities, particularly Glasgow, because it is keen on reinstating the overcrowding provision. We are happy to provide the committee with any estimate of the impact that that might have on the homelessness figures. However, I stress that we think that the potential impact is minimal.

I listened with interest to suggestions that the landlord registration issue should be put off pending the wider review of the sector. I am reminded that, just a few months ago, some members of the committee suggested that the whole thing should have been dropped and drawn into the Housing (Scotland) Bill. They wanted to bring it forward with one breath and kick it into the long grass with the next. There seems to be an inconsistency there.

However, I want to talk about how the sharing of information between the DWP and councils could help to secure prosecutions of unregistered landlords. In the private sector, how often does housing benefit go directly to the landlord, and how often does it go the tenant? That might have implications for whether the information can be used as evidence to secure a prosecution. Do you have information on that?

On your first point, when I come before a committee, I never try to score political points.

I have two points on your second, more substantial question. I said earlier that we now have a good working relationship at operational level with the DWP in Scotland. Two or three authorities, one of which is the City of Edinburgh Council, are now working with the DWP and we intend to roll that initiative out, because all the evidence is that it has been extremely successful. Those authorities are comparing their databases, looking at landlord registration and claims for housing benefit. That is advantageous to both local authorities and the DWP because, by comparing their databases, they can identify properties where housing benefit has been claimed for somebody living there as a tenant but the landlord has not been registered. It is a very effective way of catching those unregistered landlords. It is also a very effective way of catching any housing benefit scams or fraud. Both the DWP and we are keen to roll that sharing of information out across the country because it has proved to be very effective in the two or three authorities that are doing it at the moment.

10:00

Secondly, there is a very contentious issue, as you know. About 18 months ago, the DWP changed the procedure for the payment of housing benefit. I can understand why that was done; I am told that it was the Prime Minister at the time, Gordon Brown, who insisted that it be done. As Bob Doris probably knows, instead of housing benefit always being paid to the landlord, housing benefit in the private rented sector is now paid to the tenant. The evidence—it is anecdotal but increasing—is that the bad debt ratio among private landlords has risen significantly. Again, we are talking about relatively small percentages, because the vast bulk of tenants are paying their bills, but, in some areas, there has been quite a significant issue whereby tenants are getting the money but not paying their rent or not paying their full rent. That has led to real problems and I have spoken to some landlords who have told me that it has got to the stage that they are seriously thinking about not continuing in this marketplace. My understanding is that the new coalition Government is reviewing that procedure to see whether it is desirable to revert to the old system whereby housing benefit was paid directly to the landlord.

You have pre-empted my question on the review, which will help to bring clarity. Is it outwith the realms of possibility to suggest that the DWP should be able to pay housing benefit only to a social landlord or a landlord who is registered with the local authority? Would that not at a stroke take out a lot of unregistered landlords and incentivise decent landlords who have yet to register to do so? Will you make representations on such a proposal?

That is a sensible point. If the DWP reverts to the old system of paying housing benefit to the landlord instead of to the tenant, it makes sense for us to work with the DWP and use that as another way of identifying unregistered landlords.

I have a final question. Previously in the committee, I have raised the possibility of local authorities retaining the court fine arising from any successful prosecutions of unregistered landlords. You have expressed concern about whether local authorities would have a conflict of interest in seeking a criminal prosecution and trying to make a profit, with all the dynamics within that. However, now that we have proposals from the UK Government to give more powers to Scotland, would you be open to the idea of criminal court fines in housing matters, if not going directly to local authorities, coming to the Scottish Government to be used as challenge funding, so that any revenues that accrued could be used to improve and drive forward standards in the sector?

We have raised the issue, as I promised to do, with both the previous United Kingdom Government and the new coalition Government. I have to say that the prospect of the Treasury agreeing, even in the new Scotland Bill, to our retaining the revenue from fines as you described is not very high. However, we will continue to press on that. Although this is slightly different, cashback for communities is a good example of recycling back into the community funds that are sequestrated as a result of criminal activity. However, those are very substantial funds that come from the assets, for example, of convicted drug dealers and so on. As things stand, even with the Scotland Bill, the chances of the Treasury agreeing to look at this proposal let alone implement it are not high.

Perhaps the Treasury is not as open minded and progressive as we are. I will leave it at that.

You have alluded to some general issues. The figures that I have suggest that all the 1,300 or so people who rent in the private sector in my area will lose out by some margin as a result of benefit changes. The issue of bad debt ratios and rent arrears will come into that. You mentioned that housing benefit is now being paid to the tenant, which is another disincentive. There is the further legislation that you are proposing and the previous legislation that was introduced by Gordon Brown. The witnesses who gave evidence to us last week expect the review of landlord registration to lead to further legislation in that area. With all that, how will we ensure that enough people are prepared to run businesses in the private rented sector to provide tenancies to meet social need? Some evidence that we have received suggests that that might not be worth a candle. Will the issues that I have described have an impact on your overall ambition to make available more houses for rent in the private sector, where we cannot provide new build?

You make a fair point. All of us must be conscious of the need not to place financial or regulatory burdens on good landlords, in particular, that will act as a disincentive to people coming into or remaining in the sector. With one or two exceptions, our proposals have carried the support of the main bodies that represent landlords, including the landlord associations. They are not happy about some specific things that they would prefer us not to do or to do slightly differently. The Government must balance the interests of landlords with the interests of tenants. We cannot always take one side or the other—we must seek what is best for everyone, on balance.

In my view, the biggest threat to the sector is the benefit reforms, especially the reforms of housing benefit. I will highlight two or three areas of particular concern. The overall cap that the new Government has introduced is not a big problem in Scotland, because even the highest rent level in Scotland stands at only 60 per cent of the cap. The cap will affect people in London and the surrounding area, but it will not be an issue in Scotland. I am concerned about some of the more detailed and technical changes.

I will give members two examples of changes to housing benefit—in addition, there is the issue of to whom benefit is paid—that could be detrimental to individuals and the private rented sector. The first is the automatic withdrawal of 10 per cent of housing benefit from someone who has been on jobseekers allowance for a year. In the more remote parts of Scotland, in particular, but also in many urban communities, the prospects of getting a job even after a year are not great at the moment. Automatically taking away 10 per cent of housing benefit after a year on jobseekers allowance could be extremely detrimental both to the individuals concerned and to the private housing sector.

Secondly, the qualification age for the single room allowance has increased from 25 to 35. As we know, 60 per cent of the people who are homeless and rely on housing benefit are single people; another 25 per cent are single people with children. There are many potential downsides to forcing people to share up to the age of 35, which could have a negative impact both on the individuals concerned and on the private rented sector.

We have made two points to Lord Freud, Iain Duncan Smith and the other ministers in the department—indeed, Keith Brown and I had a meeting with Chris Grayling last month. First, given that housing is devolved, we should have been consulted before the housing benefit changes were introduced and, secondly, although we all share the ambition of getting people off welfare and into work, some of the reforms will be damaging and detrimental.

You referred to the majority of responsible landlords who have taken part in the registration scheme. However, the committee heard evidence that some have become disillusioned with it and that those who are due their three-year renewal might not go through with it. Are you aware of the issue and, if so, how might you address it?

I think that some of that disillusionment has arisen because of lack of enforcement on the bad guys. However, the bill will go after them without adding to the burden. Actually, I have tasked those reviewing the registration scheme to find ways of lightening the load on the good guys and free up resources to chase the bad guys. If any can be found, we should put them in place. I am not after the good guys, who are doing a good job and are providing a very valuable service in Scotland.

There is undoubtedly anecdotal evidence of landlords failing to reregister. We will not really have the total picture until about April next year, but the desk work that we have done so far and the available statistics suggest that about 20 per cent have not reregistered. However, we are talking about the big landlords who tend to reregister in bulk and, as a result, we do not think that there is the kind of big problem that has been suggested to the committee. That said, we are keeping a close eye on the situation. After all, failing to reregister is in itself an offence and we will make that very clear to people.

It is a valid point. Some landlords have become disillusioned because they see the guys who have not stepped up to the plate getting off scot free while they have to pay the cost of abiding by the rules. Of course, after the bill is passed, the other guys will not get off scot free.

I am grateful for that response and will be interested in the review panel’s suggestions on approaching the different landlords in the sector.

Finally, do you have any proposals for registering letting agents?

Having considered the issue, particularly in relation to Patricia Ferguson’s Property Factors (Scotland) Bill, I have to say that the history of it is interesting. I understand that the previous Scottish Executive considered the registration of letting agents in the 2004 legislation but the legal advice was that the registration of such agents—and, for that matter, property factors—was reserved under consumer legislation. However, the penalties that we have built into the bill for letting agents who do not provide certain information apparently do not fall into that category. I am told that it is a very fine legal point. The Presiding Officer has, I am glad to say, given Patricia’s bill written certification that it is within the Parliament’s competence and, assuming that the Advocate General raises no objection to that bill, I see no reason why the registration of letting agents should not be in the same position.

Being realistic, I do not think that the issue can be tackled in the bill—it will need to wait for the next session of Parliament. However, as I have said, the previous Executive considered the issue and took the advice that it was not within the Parliament’s competence.

10:15

That response seems to have encouraged Patricia Ferguson herself to ask a question.

But not on that issue, convener.

Going back to the earlier discussion with Mary Mulligan about whether there should be a registration number, some form of kite mark or whatever, I believe that certain trade bodies have kite-mark-type logos for approved individuals that also incorporate a registration number. I presume that the purpose is to enable people to check the registration, but those of us who look through “Yellow Pages” for a good plumber simply want the reassurance of the kite mark. Would it be possible to have such an approach, which would allow people to check easily whether someone is registered while also allowing the local authority to dig deeper and check who the person in question is, where they have been registered and so on?

I am not going to go to the barricades over this issue. I will be happy to take any guidance that the committee might provide in its stage 1 report and lodge any necessary amendments at stage 2. If the committee feels that a combination of a kite mark and a number is the ideal solution, I am perfectly open to that suggestion.

The problem that has been highlighted to the committee is that, unfortunately, the circulation area of the local newspapers in which these landlords might advertise do not neatly coincide with local authority boundaries and, because the registration number is unique to each local authority, adverts might have to carry several such numbers.

I hear your comments about making it easier for people to check details but, leaving aside allegations that the national website is never available for people to check numbers anyway, I wonder whether the problem is that the vulnerable people who are more likely to be exploited by landlords will simply not be familiar enough with the procedures or will not have access to information technology facilities and that, no matter how many numbers are on the advert, they will not be able to check them.

It is the same old story: you can take the horse to the trough but you cannot always make it drink. No matter what provisions you make, there will always be people who will not use them to most effect.

If having listened to all the evidence on this—and quite rightly so—the committee thinks that our approach is slightly wrong, I will be happy to take whatever recommendation it makes on these very valid points. We think that we can overcome the issue of individualised local authority numbers but, as I have said, if the committee feels that it would be better to have a combination of kite mark and number I am perfectly open to that suggestion.

I understand the deterrent intention behind the proposal to increase the potential fine with regard to HMOs but wonder whether, on this issue and on landlord registration, you can do anything to encourage sheriffs to understand that the fine in any situation is potentially £50,000—or whatever figure is decided—and not simply to fine these people £200 or £300, which seems to be the policy of Glasgow sheriffs in relation to the current legislation. I guess that this comes back to my usual complaint that although people can be evicted for drug dealing, sheriffs seem very reluctant to take that course of action when cases come to court. How can we collectively influence those who take such decisions? I ask because I genuinely do not know the answer.

The issue is extremely delicate because the judiciary are extremely jealous guardians of their independence and the last thing they want is for us to tell them what to do. Indeed, such a move would be likely to cause a counter-reaction.

Patricia Ferguson’s point is valid not just in relation to HMO legislation but throughout housing. Many local authorities tell me that they often do not pursue legal action because they “know what the result will be.” As you know, in his report last year on reform of the court system, Lord Gill recommended the introduction of a dedicated housing court. After considering the various ways in which disputes in the housing sector are or are not settled, I personally feel—I stress that this is not current Government policy; whoever is elected in May will have to address it—that we should have not necessarily a dedicated housing court but a dedicated housing panel that would incorporate the private rented housing panel. It would be a kind of housing tribunal. That would be more cost effective, reach decisions more quickly and comprise people with expertise in the field and experience in case work who might be better able to consider the various aspects of a case, the consequences of decisions and so on. That is a debate for another day, but it might be useful for the committee to highlight the issue in its report and perhaps, in doing so, send a message to sheriffs that certain cases perhaps merit higher fines than are currently being imposed.

A panel that with any luck will be introduced in the near future might well be ripe for expansion into that very field.

Absolutely.

But that is another story.

Has the issue been raised with the private rented sector strategy group, with which, as we know, you have been discussing possible changes to the tenancy regime?

That is a separate issue, convener.

So what has been discussed with that group?

As you know, Shelter has been arguing for changes to tenure legislation. The details of their proposals are not absolutely clear, but the gist of them is to ensure the provision of longer tenancies. I have asked the private rented sector strategy group to examine whether the proposals are viable and to come back to me with advice. However, as I say, that is separate from how we adjudicate disputes in the housing sector.

Apart from longer tenancies, which Shelter has raised, is the group looking at anything else?

I am not aware of any other specific proposals for tenure changes. It is primarily Shelter that is pressing for further changes and, as with any other organisation in the field, we should give due consideration to its ideas and proposals, even if at the end of the day we do not always agree with them.

Would the group agree with meeting the cost of the tribunal that you described in response to Patricia Ferguson’s question?

Lord Gill recommended a dedicated housing court in his report. I am thinking more of a dedicated tribunal, which would not necessarily be confined to the private rented sector. For example, the eviction cases that at the moment go to the sheriff court might be better dealt with by that kind of housing tribunal.

And the justice system would pay for that tribunal to deal with such disputes?

A lot of the detail would need to be discussed. At the moment, it is just an idea that builds on Lord Gill’s recommendation. I am sure, convener, that the manifestos of our respective parties will set out recommendations.

Indeed. I am sure that your colleagues will have their own views, minister.

As members have no other questions, I thank the minister and his official for their attendance and the evidence that they have provided and I suspend the meeting.

10:24 Meeting suspended.

11:28 On resuming—