DHCP Agent not assigning IP if more than one subnet exists on network

If more than one subnet is assigned to a network then the VM's running on that network do not receive IP addresses.

Reproduction:
1. create network
2. create subnet 192.168.7.0/24
3. create subnet 192.168.8.0/24
4. deploy VM nova boot --image cirros-0.3.0-x86_64-uec --flavor 1 --nic net-id=<netid> t3

The host file has:
fa:16:3e:1c:99:49,192-168-7-2.openstacklocal,192.168.7.2
fa:16:3e:1c:99:49,192-168-8-2.openstacklocal,192.168.8.2
fa:16:3e:0f:fa:bd,192-168-8-3.openstacklocal,192.168.8.3
fa:16:3e:c1:69:26,192-168-8-4.openstacklocal,192.168.8.4
fa:16:3e:40:3d:9a,192-168-8-5.openstacklocal,192.168.8.5

2 problems:
1. VM's do not receive IP addresses
2. dnsmasq only has first IP (it is not updated if there are subnet changes)

nobody 26718 0.0 0.0 28812 1024 ? S 16:41 0:00 dnsmasq --no-hosts --no-resolv --strict-order --bind-interfaces --interface=tap847dc625-02 --except-interface=lo --domain=openstacklocal --pid-file=/opt/stack/data/dhcp/c5e157b8-6099-4582-a1e5-df6ba7529074/pid --dhcp-hostsfile=/opt/stack/data/dhcp/c5e157b8-6099-4582-a1e5-df6ba7529074/host --dhcp-optsfile=/opt/stack/data/dhcp/c5e157b8-6099-4582-a1e5-df6ba7529074/opts --dhcp-script=/opt/stack/quantum/bin/quantum-dhcp-agent-dnsmasq-lease-update --leasefile-ro --dhcp-range=set:tag1,192.168.7.0,static,120s

Not sure if this is the cause of the problem

Thanks
Gary