Licence to let?

Early 2006 will see dramatic changes to the way in which landlords operate. Part 8 of the Antisocial Behaviour etc (Scotland) Act 2004 will come into force, compelling them into taking more responsibility for their tenants. Aimed at curbing antisocial behaviour, this legislation will transform the way landlords operate. And with strict regulation combined with tough penalties for landlords who do not take their new roles seriously, this legislation is set to have a great impact for all.

Established under this law will be a new set of rules governing private landlords – under which, landlords will have to register with the local authority in the area in which they rent out property, making it a criminal offence for those unregistered to let out residential property. The Act catches any lease or “occupancy arrangement” by which someone not a member of the landlord’s family has the right to occupy a house or part of it – even taking in a lodger will be covered.

Only those deemed a “fit and proper person to act as a landlord” will be allowed on the register. Has the person ever breached the criminal law? Have they ever exhibited racist or sexist behaviour? Have they ever broken any provision of the law relating to housing or landlord and tenant law? It is difficult to say how these questions can be easily answered.

Another job for the council

The system is to be administered by local authorities, who, no doubt will see a dramatic increase in the level of administrative work it will generate. In order to minimise the impact on good landlords and to reduce this burden, a current consultation process on the new laws aims to streamline registration to as great a degree as possible. For example, it is expected that holders of an HMO licence, or those accredited by voluntary schemes will already have been assessed as “fit and proper”, and will not be required to re-register. Furthermore, with online processing, and with an online hub storing all information shared between local authorities, landlords whose properties are spread out across several areas will only need to register once. For this, the Executive estimates that a fee for applications is likely to be £50 (payable every three years), with discounts for those with larger portfolios.

It is the power to penalise, however, which is the strongest weapon in the arsenal of the local authorities in their fight against antisocial tenants and landlords. Non-compliance with the Act can result in fines, and in extreme cases de-registration. It will become a criminal offence to collect rent as an unregistered landlord, something which could result in fines or court action. Landlords whose application is still under consideration will not be affected by this, but surprisingly, the Act does not tell us what will occur if the application is refused – presumably they will be forced to end the tenancy or sell. Both of these options will take time, and in the meantime a landlord would seem to be committing a criminal offence if it continues to collect rent. The same issues will arise if a landlord is de-registered by the local authority or if an unregistered person inherits leased property.

Answering for the tenant

Part 7 of the Act allows local authorities to serve “antisocial behaviour notices” on any landlord whose tenants misbehave, forcing landlords into taking responsibility. Ignoring these notices will come at a cost – failure to comply with the antisocial behaviour notice will lead to fines, and risk potential de-registration.

On the face of it the situation could potentially arise of tenants profiting from their own misbehaviour. The Executive consultation mentioned above, without dealing directly with this issue, asks among other questions: “Do you agree that regulations should be made requiring the local authority to provide advice and assistance to the landlord before serving an antisocial behaviour notice?”

The paper advises that in deciding what actions to require of the landlord, the local authority should take into account the relative costs of different options – for example it can be very expensive for a landlord to obtain a court order for possession of the house, so consideration should be given to other options which could be effective at lower cost. It will always be important that a local authority can show that it has reached a reasonable decision. It also states that authorities must consider whether additional support and advice require to be given to the landlord on how to go about, for example obtaining possession or investigating complaints. It then poses the question: “Is the proposed guidance sufficient and appropriate?” Responses are due by 23 September and the picture should become clearer once these have been evaluated.

It is clear that in the future, the onus will be squarely on the shoulders of the landlords to ensure their tenants comply with the letter of the law, or both will face the music. It is crucial that landlords are aware of their need to register – landlords who think they may be affected by the new rules should take advice early to ensure that the necessary steps are taken to submit their application for registration at the earliest possible date. Local authorities will be given far greater powers, and landlords will need to be far stricter in their dealings with tenants. Whether or not this will lead to a decrease in antisocial behaviour is certainly debatable.

What you need to know

• The Act applies to trusts, companies and partnerships as well as individuals.
• It makes it a criminal offence for an unregistered person to let out residential property.
• If a landlord does not register, the local authority can serve a notice ending the landlord’s right to collect rent.
• If someone buys a property to let it out he must tell the local authority, or if he sells a property which he had let out he must intimate this to the local authority.
• The local authority has to be satisfied that the applicant is a “fit and proper person” to act as a landlord. A local authority may remove a person from the register if the authority no longer considers the landlord to be a fit and proper person.
• The Act allows local authorities to serve an “antisocial behaviour notice” on the landlord requiring him to take action to deal with the antisocial behaviour of an occupant. Failure to comply is an offence leading to a fine and further orders against the landlord.