New Policy or rogue Policy? Licensing in the private rented sector under scrutiny
Sections 79 to 81 of the Housing Act 2004 provided for the introduction of a scheme of selective licensing of private landlords in a local housing authority’s area. Many of the provisions relating to selective licensing are similar to those relating to the mandatory and discretionary licensing of Houses in Multiple Occupation (HMOs) – regimes which were also introduced by the 2004 Act.
Why has property licensing been introduced by Local Authorities?
HMOs (Houses in Multiple Occupation) which fall within the current mandatory licensing scheme only make up a proportion of the privately rented accommodation across the Country. There is therefore a large proportion of shared rented accommodation which is currently unregulated.
The purpose of the Additional Licensing Scheme is the same as that of Mandatory Licensing Scheme and is being introduced to ensure that a larger proportion of rented accommodation is managed effectively. Local Authorities typically say the move is to reduce anti-social behaviour and improve rental property quality, although many within the private rented sector believe the true motive is to raise money for Local Authorities as there are only limited resources dedicated to policing the licensing scheme.
The Government criticised the Borough-wide licensing schemes and expressed a preference for voluntary accreditation instead. Just before the general election, Housing Minister Brandon Lewis wrote to all Local Authorities and announced on behalf of the then-coalition government that all Councils wanting to apply blanket licensing schemes throughout their areas could only do so with ministerial approval. The new regulations, which came into effect on April 1 2015, require the Secretary of State to approve any new scheme that covers more than 20% of the geographical area, or more than 20% of all privately rented houses. Other licensing schemes can still go ahead on the decision of the Council, without ministerial approval. Existing schemes agreed before April 1, which includes the controversial scheme across all of Liverpool, can continue to operate under the new rules.
The draft Selective Licensing of Housing (Additional Conditions) (England) (Order) 2015 has been published which sets out conditions which a Local Authority must meet to satisfy the licensing requirements. There is an intention to review the conditions in 2017.
The Act requires a Local Authority who is considering introducing the licensing scheme to carry out a consultation (a minimum of 10 weeks) with those likely to be affected including; local residents, tenants, landlords and managing agents and businesses in the area that may be affected.
In December 2014 the High Court ruled that a judicial review brought by a landlord against Enfield Council challenging the Council’s licencing scheme was to be upheld. The Court found that the Council had not carried out an adequate consultation process. However, in April 2015 a challenge brought by the Rotherham Action Group Ltd against Rotherham Council was dismissed with the High Court ruling that a Local Authority must consider whether other options are available before making any licensing designation, but can lawfully make a designation even if there are other options which might be available (e.g. a voluntary accreditation scheme).
London Boroughs including, Newham (scheme in operation since 2013), Waltham Forest, Redbridge, Croydon (from October 2015) and Brent have introduced the scheme. Most Local Authorities will charge £500 per property for a licence with Croydon’s proposed fees amongst the most expensive of any of the licensing schemes across the country; with landlords having to pay £750 every five years for each property they let, cut to £350 if they apply within the first three months of the scheme. In addition to the fees a landlord will need to provide information including; information about the owner, agent, mortgage details, detailed information about the rooms and facilities at the property, fire safety precautions, health and safety checks, energy performance certificate and gas safety certificates. In an area subject to selective licensing, all private landlords must obtain a licence before the date given by each Local Authority and if they fail to do so, or fail to achieve acceptable management standards, the authority can take enforcement action – such as issuing a fine of up to £20,000 or in some cases, assuming management control of the property.
The issue of rogue landlords is not new and those who are critical of the new scheme argue that it will increase the barriers to entry for potential future landlords in areas of high housing demand which will result in professional landlords increasing rents. Perhaps what renters need is to see better enforcement of existing rules and legislation.
To obtain further information please contact Aisha Akhtar Solicitor in the Housing Management & Leasehold Services Team on 020 8799 1884