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A Review of the First Year of the Mandatory Licensing of Houses in Multiple Occupation in Scotland - Research Findings

DescriptionDraws on a survey of LAs and interviews with HMO officers, landlords, tenants and reps of 9 ‘key player’ organisations to provide an initial assessment of the mandatory licensing scheme for HMOs.
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Official Print Publication Date
Website Publication DateDecember 13, 2002

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    Development Department Research Programme Research Findings No.150/2002

    A Review of the First Year of the Mandatory Licensing of Houses in Multiple Occupation in Scotland

    Hector Currie
    (School of Planning & Housing, Edinburgh College of Art/Heriot Watt University)

    This document is also available in pdf format (104k)

    On 1st October 2000, every local authority had to establish a licensing scheme for Houses in Multiple Occupation (HMOs) with over 6 persons (not all from one or two families). Following a Ministerial commitment to review the scheme after its first year, this research was commissioned and offers an initial assessment of the scheme's first year of operation.

    Main Findings
    • To date the scheme has been only partially effective. It has raised the standards of the HMOs that have been licensed but the number of HMOs granted a license in the first year has been limited.
    • Reasons for the relatively low uptake included: poor promotion; inadequate staffing and financial resources; civic government licensing procedures; disputes over the 'correct' fire safety standards to apply and officer inexperience of HMO licensing together with an unwillingness on the part of some owners to apply.
    • There was a consensus across those consulted by the research that there had been no significant decline in the number of HMOs in the private rented sector in the first year of the scheme.
    • Most local authorities had adopted the recommended benchmark standards with little or no alteration and considered the inclusion of some Technical Standards quite helpful but there was some concern that certain standards may be inappropriate for older HMO buildings.
    • Landlords generally supported the principle of licensing but were critical of how the scheme was implemented and of the fire safety standards required.
    • Tenants in licensed HMOs were generally satisfied with their accommodation and its management. Local authorities had virtually no contact with tenants at property inspections.
    • Most local authorities did not support any change to the exemption categories or minimum occupancy threshold level, but some authorities and others consulted favour some change.
    Assessing Effectiveness

    Most participants considered the scheme effective in bringing HMOs whose owners had applied for a licence, up to a high standard. However, there was universal agreement that it had not succeeded in stopping unscrupulous owners and poor condition HMOs from operating, due to owners' failure to apply for a licence. The private owners with licensed HMOs saw themselves as conscientious and committed to lawful renting. They resented what they saw as other owners appearing to 'get away' with not licensing while they had spent considerable money and effort in obtaining a licence.

    A broad consensus existed that the scheme had not had an adverse effect on supply in its first year of licensing larger HMOs; nor was it generally thought that rent levels had increased due to licensing. Market pressures and housing benefit levels were considered more important drivers of rents. The future was much less certain with half of local authorities, the private HMO owners and some key player organisations fearful that owners of small 3 person HMOs will pull out of the sector.

    Promoting the Scheme

    Most authorities produced leaflets and guides about their scheme for HMO owners but the guides were often extracts from the national Guidance designed for use by authorities themselves. Some authorities had held public meetings for HMO owners to publicise the scheme. Nevertheless, most private HMO owners, the universities and housing associations thought the local schemes got off to a poor start. They were critical of the overall lack of preparation by authorities, the lack of clear communication at the outset about procedures and the uncertainty about standards. However, several owners noted that the efficiency and confidence of officers had visibly improved as they had gained more experience of the scheme.

    Initial publicity and communications with HMO tenants was minimal or non-existent. The research found no examples of leaflets produced specifically for tenants, explaining the licensing scheme. Where there was any reference to tenants' issues, it was briefly included in leaflets designed for owners.

    Processing, Administration and Joint Working

    Licence approval was limited in the first year. Of 1326 applications received, 206 (16%) were approved, of which 44% were by the City of Edinburgh Council. (Additional data for the second year of the scheme indicates a marked increase in the number of licenses granted, with a strong 'pick up' by Glasgow City Council).

    Leading up to the start of the scheme most local authorities had set up a joint working group to develop policies and standards but with some exceptions they tended to be disbanded or to meet infrequently once the scheme was underway, despite the problems that were emerging.

    The lead role in HMO licensing was most commonly an environmental health or a licensing officer; very infrequently, a housing officer. Property inspections were generally conducted by environmental health, building control and fire officers. In most authorities housing officers played no inspection role although they were more often involved with assessing leases.

    Disputes arose between some local authorities and fire brigades over fire safety standards for HMOs with 6 or less occupants. Generally the brigades' view prevailed with higher standards for fire detection and alarm systems than recommended in the Guidance.

    Data Collection and Performance Monitoring

    Local authorities employed a variety of methods to identify HMOs but there was little systematic approach to data collection. Knowledge on the size of the HMO sector and the number of HMOs of different sizes within their area was very poor, particularly for the smaller 3 person HMOs. The use of key performance indicators appeared limited to Edinburgh and Glasgow City Councils. There was no evidence of any performance monitoring of the licensing scheme at councillor level

    Costs and Fees

    Only a third of authorities provided information on the costs of operating their licensing schemes - most operated in deficit. Most authorities lacked a solid financial framework to accurately identify the costs of operating their licensing schemes. Licence fees varied widely across Scotland. Although the majority of rural authorities had low fees so too did a number of urban authorities. The 3 universities in the research were more dissatisfied with the licence fees than the private owners of HMOs who were more concerned with their upgrading costs to meet the licensing standards.

    Benchmark Standards

    Most authorities adopted the recommended benchmark standards with little or no alteration. Those that made significant alterations tended to set higher fire safety standards. Almost all the HMO private owners accepted the principle of licensing but felt that local authority officers and fire officers were too rigid in their application of the benchmark standards. They accepted the need for fire safety precautions but most considered the standards rather excessive. Private sector HMO tenants generally had a favourable opinion of the standard of their accommodation and a good awareness of the fire safety equipment in their HMO. The housing associations were not favourably disposed to the standards for fire safety, believing them to be over-onerous. The universities were more concerned with maintenance issues and heating systems.

    Tenancy Management Standards

    A majority of authorities reported no significant problems in assessing tenancy management standards but only five authorities had any contact with HMO tenants. The majority of HMO tenants knew they were living in a licensed HMO. Their landlord had been the main source of this information, not their local authority.

    Exemptions

    Most local authorities wanted no changes to the scheme. A few supported exempting Abbeyfield Homes. Hardly any supported exempting very sheltered housing schemes. None supported exempting women's refuges. The organisations representing these types of accommodation disagreed. A third of authorities was agreeable to extending the timescale of implementation but could not agree in what way. There was no consensus across the participants on excluding 3 person HMOs and those composed of resident owners with 2 tenants or lodgers.

    Suggestions for Change

    Noting that the original aim of licensing was to deal with bad conditions in the private rented sector and recognising the practical pressures on the scheme, the research suggested some options for changes to the framework of the scheme:

    1. Extend the timescale by 2 years
    2. Suspend the occupancy threshold at 4
    3. Exempt the resident owner/ 2 tenants
    4. Exempt the 3 person shared flat/ house
    5. Suspend the non-profit sector HMOs
    6. Exempt the non-profit sector HMOs
    7. Provide more financial resources for the administration of the scheme.

    Research Methods

    The study consisted of:

    • A postal survey of all 32 local authorities
    • Case studies of 8 local authorities
    • Interviews with 10 owners of private sector licensed HMOs
    • Interviews with 3 universities and 2 housing associations
    • Interviews with 13 private sector tenants living in licensed HMOs
    • Interviews with 3 owners of 3 person HMOs to be licensed in the future
    • Interviews with representatives of 9 'key player' organisations.

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