Local Government and Communities Committee, 21 Jan 2009

Meeting date: Wednesday, January 21, 2009

Official Report 203KB pdf

---

Subordinate Legislation

---

Private Landlord Registration (Modification) (Scotland) Order 2009 (Draft)

Good morning, and welcome to the second meeting in 2009 of the Local Government and Communities Committee. I ask members and the public to turn off all mobile phones and BlackBerrys.

Under agenda item 1, we will take evidence from the Minister for Communities and Sport and his officials on the draft Private Landlord Registration (Modification) (Scotland) Order 2009. The minister and the officials may speak and respond to members' questions during item 1. The Subordinate Legislation Committee drew the order to our attention in relation to lack of clarity over the nature and extent of ownership. I welcome the minister and his officials, and offer them the opportunity to make any introductory remarks.

Private landlord registration is a key strand of the Scottish Government's wider policy framework for the private rented sector. It is designed to increase standards of management and property condition across the sector and, by doing so, to reinforce the positive contribution that the sector makes to meeting housing need in Scotland.

As we made clear in our document "Firm Foundations: The Future of Housing in Scotland", we want the private rented sector to play a greater role in meeting housing need. Landlord registration is key to that aim in a number of ways. Successful mandatory registration helps local authorities to improve their local housing strategies by filling the gaps in their knowledge of how many privately rented properties are in their area and where those properties are located. That leads to more relevant and effective local policies to improve, regulate and support the contribution that the sector makes to local economies and local housing markets.

Registration is an important tool in raising standards in the private rented sector. We recognise that the majority of landlords operate lawfully, but a minority of landlords still do not. Mandatory registration gives local authorities the power to remove that minority of landlords from the sector, and it provides tenants with an assurance that their landlord is a fit and proper person to let property.

Since April 2006, there have been more than 133,000 applications for registration, and more than 187,000 properties were contained within those applications. The approval rate now sits at 86 per cent, which is a significant increase from a rate of only 15 per cent in May 2007. Over the past year, there have been improvements to the delivery of the scheme. A good practice review of delivery was undertaken last year, and the recommendations from that review have been implemented by local authorities. Significant improvements have been made to the information technology system through a series of developments, and local authorities have begun to take forward work to enforce the scheme.

The package of amended regulations that has been laid before the Parliament is designed to build on those improvements. The amendments are designed to streamline the delivery of the scheme, making it more effective and efficient, and to prepare for the start of the application renewal process in March 2009. I understand that the convention is to speak only to affirmative instruments, but as the committee will also consider the two amended negative instruments on landlord registration today, I thought that it would be helpful if I were to speak to all three.

The modification order provides a six-month exemption from registration for insolvency practitioners, who are not already exempt from registration if, for example, they are appointed under the auspices of the Accountant in Bankruptcy. The inclusion of that exemption corrects an omission in the original legislation, which provided a six-month exemption for executors and heritable creditors, but not for private insolvency practitioners. The amendment will ensure that the legislation is consistent in its treatment of transitory ownership.

The current fee and discount structure has been complex to administer and has resulted in delays in the processing of applications. The amendment regulations are designed to simplify the structure, which will in turn increase the efficiency of local implementation. They will reduce the administrative burden on local authorities and benefit landlords and agencies, which should experience a reduction in bureaucracy and quicker processing times.

The advice and assistance amendment regulations place a duty on local authorities to provide general advice on letting practice and landlord registration to tenants and prospective tenants when they approach a local authority with an inquiry. That extends the current duty on local authorities to provide advice and assistance to tenants in cases where their landlord is refused registration or is deregistered, or when a rent penalty notice is served. I am aware that many local authorities already provide general advice to tenants on a broad range of subjects and view that as standard practice. The regulations put that on a statutory footing to ensure that all tenants benefit.

The amended regulations were prepared in the light of a full public consultation, which was informed by an independent review of the legislation that underpins the scheme. A regulatory impact assessment has been prepared in support of the amendments. That demonstrates that the overall financial impact of the changes on landlords and local authorities is anticipated to be broadly cost neutral. I do not intend to revisit the policy principles behind landlord registration—those principles have already been widely consulted on and agreed by the Scottish Parliament, and I have committed to a full evaluation of the scheme in 2010. The amendments to the regulations are about improving the efficiency of the scheme and ensuring that the service that local authorities provide is streamlined and effective.

Good morning, minister. Are you satisfied that the period of six months for which registration is deferred is sufficient for a trustee in bankruptcy to complete the process of vesting his interim or transitory title to the property into the hands of a third party, whether that is a purchaser or some other party? In other words, is it sufficient time to complete the process, as far as the rented property is concerned, of administration of the bankrupt's estate?

Yes, I am satisfied. As far as I am aware, no incidents have been brought to our attention in which that has caused any difficulties. The exemption that we are introducing will bring insolvency practitioners into line with the other categories that are exempt for a six-month period. If people have transitory ownership for more than six months, it is reasonable to assume that that is not quite as transitory as the legislation originally intended, and that people should register. Six months is a reasonable period in which to complete the business in hand and, unless Mr McLetchie has any particular problems in mind, I am not aware that we have received any complaints about that.

I am slightly surprised that six months is thought to be sufficient, since any bankruptcy with which I have had dealings—not my own, I hasten to add—suggests that the administration process can take a good deal longer than six months. The executor of a deceased person does not have to render an account to HM Revenue and Customs in respect of the deceased's estate—an integral part of the confirmation process—until six months have elapsed after the death. In other words, in the case of a deceased person, often the executor will not have even a transitory title until more than six months have elapsed since the death. That leads me to question whether a period of six months is adequate for the purpose of executors and trustees in bankruptcy. If you believe in the principle of an exemption for transitory ownership, would it not be more appropriate for that exemption to apply for, say, a year? That would be a more normal timescale within which an executor would obtain title.

We have consulted widely on the proposed changes and we did not receive any feedback that that is an issue for the category that you mention. Given that we have just held that consultation and that people were able to provide information or to comment, I am not sure that there is an issue around what you have described. In the responses, there was 69 per cent agreement that the change should be made for insolvency practitioners. We did not get any feedback that the six-month period would be problematic.

Is there anything in the legislation to prevent people from voluntarily registering as insolvency practitioners or executors in that six-month period?

No.

In effect, if people thought that they might hold the asset for much longer than six months because of the process of liquidation, bankruptcy or administration of the estate, they could come along and say that they are likely to be landed with the landlord role for the property earlier, so they will just register now and get that administrative process out of the way. Is that right?

Yes, they could.

Convener, are we asking questions on all the instruments at this stage?

No. The minister made some comments on the negative instruments, but we will deal with them at the appropriate time.

As there are no further questions, we move to the debate on the motion under agenda item 2. Officials will remain at the table, but only the minister may speak during the debate. I invite the minister to move the motion.

Motion moved,

That the Local Government and Communities Committee recommends that the draft Private Landlord Registration (Modification) (Scotland) Order 2009 be approved.—[Stewart Maxwell.]

Motion agreed to.

---

Private Landlord Registration (Advice and Assistance) (Scotland) Amendment Regulations 2008 (SSI 2008/402)<br />Private Landlord Registration (Information and Fees) (Scotland) Amendment Regulations 2008 (SSI 2008/403)

Agenda item 3 is consideration of two negative Scottish statutory instruments, to which the minister referred as they are linked to the affirmative instrument that we have just considered. Do members have any questions?

I seek clarification on fees. If a landlord applies to the scheme but is refused registration, does a period of time have to elapse before he or she can reapply? If so, do they have to pay a fee when they reapply? What is that fee?

Yes, there is a time lag. They cannot reapply for a period of 12 months.

Do they then have to pay the fee again?

Yes.

Private landlords pay a fee of £11 per property; I think that that is quite a small amount, although I am not suggesting that it should be more. Might the minister think about increasing that fee in the future and using the money for other purposes in regulating the sector?

The registration fee is higher than that—it is £55—and there is an individual property fee beyond that. We keep those fees under review and the expectation is that the scheme, overall, will be self-financing. It is clear, from the evidence that we have received so far, that it remains the expectation that local authorities' income from the scheme will cover—and possibly more than cover—the administration costs of the scheme. No cost will be incurred to the public purse as a result of the scheme.

It would be difficult to argue that we should gain extra income for local authorities beyond what is required to pay for the administration of the scheme. Nevertheless, I understand what you are saying. Local authorities must have the resources to do the work properly, and we hope that that is already the case in many areas under the current fees structure.

There are no further questions. Do members agree that we do not wish to make any recommendation in relation to SSI 2008/402 and SSI 2008/403?

Members indicated agreement.

I thank the minister and his officials for their attendance. I suspend the meeting—[Interruption.] Oh, yes—we have another item to consider. However, the minister can go. I was too anxious to get my coffee.

---

Local Government (Allowances and Expenses) (Scotland) Amendment Regulations 2008 (SSI 2008/414)<br />Local Governance (Scotland) Act 2004 (Remuneration) Amendment Regulations 2008 (SSI 2008/415)

Agenda item 4 is consideration of two further negative instruments.

I wish to make a declaration of interests in relation to the issues that are covered by the regulations before us. I am an elected member of a local authority, for which I receive no allowances, expenses or remuneration. However, I receive an in-kind contribution towards the cost of a mobile phone, which is noted in my declaration of interests.

Thank you, John. Do members agree that we do not wish to make any recommendation in relation to SSI 2008/414 and SSI 2008/415??

Members indicated agreement.

I suspend the meeting for a short period until the Minister for Transport, Infrastructure and Climate Change is available. He might be here before 11 o'clock, but we have time for a coffee before he arrives.

Meeting suspended.

On resuming—