Selective landlord licensing schemes were first introduced in April 2006 through the Housing Act 2004.
The reasoning behind the scheme was to raise the standard of living for tenants in the private rental sector (by eliminating rogue landlords) and reduce anti-social behaviour in the borough. Panorama’s programme, ‘The Great Housing Benefit Scandal’ (20 April 2015) highlighted how unscrupulous landlords were taking advantage and benefiting from dire situations that tenants found themselves in, at the benefit of tax payers and the public purse.
Previously a landlord only required a licence if s/he was letting a House in Multiple Occupation (“HMO”). A landlord licence will set you back about £500 for a 5 year license. This is not transferable and is personal to each landlord per property.
There are serious consequences for failure to get a licence in a borough which requires it. You could be fined £20,000 or receive a penalty of £5,000 for breach of the licence conditions, and you cannot obtain possession through the accelerated possession procedure with a section 21 notice. Some mortgagors and insurers are also making this a prerequisite for them to lend or insure.
Initially there was a slow up take, the London Borough of Newham was the first council in England to introduce council wide compulsory licensing in January 2013. But this has gained momentum with more and more councils getting onto the band wagon of selective licensing.
A criticism of the scheme is that it is nothing but another means to raise revenue for cash strapped councils. Further it could well force investors/landlords to buy elsewhere (in areas which don’t operate the scheme), in turn causing a shortfall of private rentals in certain areas.
The National Landlords Association published a report in February 2015 called ‘Landlord Licensing’ which concluded, “…it is not a one-stop solution to housing problems and can be an incredibly poor, blunt instrument when used inappropriately or with unrealistic objectives.” The House of Commons then published a note on 17th March 2015 titled ‘Selective Licensing of Privately Rented Housing (England and Wales)’.
This led to the Selective Licensing of Houses (Additional Conditions) (England) Order 2015. As from 1st April 2015, councils now require government approval for such a scheme if they plan to licence a large area or proportion of the market (i.e. more than 20% of either the geographical area covered by the council or the local private rented sector). The idea is that this should promote effective licensing to address specific problems in particular areas.
As a landlord you need to be aware of whether the area that your property is situated in requires selective licensing of private rented accommodation, and what this can mean for you.
As a tenant you should be mindful of the law and in the event your landlord is in default, make the necessary steps to ensure redress of their failures.