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Selective licensing: what every landlord should know

Wednesday 25 March 2015

In 2006 local authorities were granted the power to introduce the selective licensing of private landlords to tackle the problems in areas of low housing demand, such as antisocial behaviour.

 
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The scheme, which was introduced as part of the Housing Act 2004, was introduced authority-wide in some cases, like that of the London Borough of Newham, and incurs an administration fee on landlords which varies in price but is set at £473 for accredited landlords by Kent’s Thanet District Council.

In areas which are subject of selective licensing private landlords who fail to obtain a licence can face fines of up to £20,000 and there have been frequent prosecutions of landlords who have breached licence conditions.

But selective licensing has been criticised for placing an unreasonable cost burden on responsible landlords and the government is currently reviewing its process for granting selective licensing schemes.

The review has ruled that from 1st April 2015 local authorities would have to seek permission from the Secretary of State for Housing if a licensing scheme is likely to cover more than 20 per cent of their geographical area or affect more than 20 per cent of privately rented homes in the area.

Housing Minister Brandon Lewis said licensing played an important role when strictly focused on discrete areas with specific problems.

But a statement released by the MP also reads: “The blanket licensing approach adopted by some local authorities has major drawbacks.

“This is because it impacts on all landlords and places additional burdens on reputable landlords who are already fully compliant with their obligations, thereby creating additional unnecessary costs for reputable landlords which are generally passed on to tenants through higher rents.

“The vast majority of landlords provide a good service and the Government does not believe it is right to impose unnecessary additional costs on them, or their tenants. Such an approach is disproportionate and unfairly penalises good landlords.”

Which areas can be selectively licensed?

Since 2006 local councils have been permitted to nominate an entire district or part of it as long as it meets the following criteria:

  • It experiences low housing demand and the housing authority believes designating an area for licensing will lead to improved economic circumstances
  • It has a persistent problem as a result of antisocial behaviour and private landlords in the area are not acting sufficiently to tackle it

Under the Housing Act councils must consider the following when deciding if an area has problems with low housing demand:

  • Residential properties’ value compared to similar ones in comparable areas
  • How often properties change hands
  • The number of residential properties available to buy or rent and periods of unoccupancy

With regard to defining areas which have antisocial behaviour problems, the following criteria must be satisfied:

  • The area is experiencing a persistent problem
  • Some or all private sector landlords are not acting to tackle the problem in the area

But the Government intends to expand the conditions for selective licensing to include poor property conditions and high levels of immigration, deprivation and crime, all subject to parliamentary approval.

What must landlords do to comply with selective licensing?

With regard to antisocial behaviour councils are given discretion over the precise conditions of a landlord’s licence, such as those relating to a house’s use and measures dealing with the antisocial behaviour of tenants or those visiting them, but there are also compulsory requirements which include:

  • Submitting a gas safety certificate to the housing authority
  • Keeping electrical appliances in a buy-to-let safe
  • Maintaining the working order of smoke alarms
  • Supplying the occupier with terms of occupation
  • Ensuring references are provided by prospective occupiers

Landlords and the fit and proper person rule

Councils must consider whether landlords have previous convictions relating to violence, sexual offences, drugs or fraud or whether they have broken any laws relating to housing when deciding whether to grant them licences.

If a council decides a landlord is not fit and proper it can refuse to grant a licence but must give 14 days’ notice beforehand. Landlords can appeal the decision during this time.

Authorities can also withdraw licences if the licensee is no longer considered fit and proper.

Authorities must also be sure landlords are locally resident and responsible for their property’s management.

What are the sanctions for breach of landlord licensing conditions?

Landlords can face fines of up to £5,000 for the above, while renting a property unlicensed in a designated area can attract fines of up to £20,000.

Who is exempt from selective licensing schemes?

Tenancies operated by registered social landlords and local authorities are exempt as are houses in multiple occupation (HMOs), which are subject to licensing elsewhere in the Housing Act 2004.

How much is the fee local authorities can charge a local authority?

Councils set the fee’s level but under the terms of the Housing Act this rate should be transparent and only cover the cost of the scheme’s administration.

If you found this guide useful then please visit the Simple Landlords Insurance News section for more helpful tips and advice.

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