Since 2010, councils in England and Wales have been able to introduce landlord licensing schemes.
The 2004 Housing Act introduced mandatory licensing across England and Wales for Houses in Multiple Occupation (HMOs), where properties with five or more tenants occupying three or more stories would need a license. However the type of licensing that has caused controversy and courted headlines since 2010 is Selective licensing.
Selective licensing was also introduced by the Housing Act 2004, as an enforcement tool for councils to tackle poor management standards in non HMO privately rented properties. Councils could designate and target licensing in areas they deemed to be suffering from low housing demand, significant and persistent anti-social behaviour, high crime and migration and property disrepair.
Since 2010 we have seen a steady increase in the number of councils across the Country rolling out Selective licensing schemes; citing the need to stamp out rogue landlords and improve the quality and management standards in private rented homes. However, with so much regulation already available to councils to enforce against rogue landlords these type of schemes are often labelled as money making initiatives for local councils.
All proposed schemes have to go through a consultation period, during which councils are required to consult with those likely to be affected - tenants, landlords, landlord organisations and others in the local community. If a proposed scheme impacts more than 20% of the council’s geographical area or their private rented housing, permission to proceed with the scheme must be given by Secretary of State for the Department of Communities and Local Government. (DCLG)
In November 2016 Nottingham City Council (NCC) voted to commence a citywide Selective licensing consultation. The eleven week consultation to license over 35,000 properties representing all non HMO rental properties across Nottingham commenced in January 2017 and ended 31st March 2017. It produced just 1466 responses and according to the council a significant number of these responses were in favour of a citywide scheme.
At a full council meeting on the 18th July 2017 it was agreed by Nottingham City Councillors, a submission be made to the Secretary of State for DCLG requesting permission for a designation.
However the designation would no longer recommend a citywide scheme, instead the focus for their submission to DCLG will be targeting those areas which contain a high proportion of private rented homes. Therefore the council has agreed to reduce the scheme by 8% (3K properties) by removing the North West of the City from the designation where a high concentration of housing estates, parkland and industrial areas are situated. Apparently this part of the City contributed very little to the 1443 complaints the council received from private rented housing last year.
Councillor Jane Urquhart, the City Council’s Portfolio Holder for Planning, Housing & Heritage, said: “The introduction of a licensing scheme for private landlords was a key commitment made in our council Plan. The majority of private tenants who responded to the consultation were in favour of a scheme.
“We have listened carefully to the issues raised in the consultation and made changes to the proposed scheme without losing focus on the improvements it sets to achieve in the overall standard of private rented housing in the city.
“Reducing the cost to licence to £400.00 for landlords who have accreditation creates even more of an incentive for landlords to obtain it to demonstrate that they meet the required standards so we would encourage them to make an application now via DASH or Unipol, Nottingham’s approved landlord accreditation schemes.”
The designation submission by the council to DCLG went in September 2017. The council received permission to proceed with their more or less citywide scheme in February 2018. The decision will impact over 32000 properties and will commence on the 1st August 2018 and will last for up to five years. In March 2018 the Council announced they were now proposing fees of £480 or £780 depending on the accreditation status of the applicant. Landlords who fail to licence or breach any of the license conditions can be fined as much as £30,000 per offence. Alternatively, they can be prosecuted and served with a minimum twelve month banning order. Tenants can now apply for a 12 month rent repayment order if their landlord fails to license or breaches license conditions or other 2004 Housing Act offences.
The licensing scheme will be self-funding with the cost of over £25 million to the private landlord. The license fee will be paid in two parts, where a licence application is refused, no refund shall be given. The first payment will be due on license application and the second payment shall be due following the applicant being served with statutory notification of the intention to grant a licence. Payment of the second fee will be a condition of the licence. No grace period will be given. All applicants will be required to apply through a council online portal and submit all their required documents and fee via this portal. It is anticipated that licence documents and correspondence from the council shall also be issued through their portal.
EMPO have identified a number of issues which may occur with the scheme.
1. Recent changes in legislation around rent repayment orders and civil penalties will encourage license applications to flood into the council on day one. The impact of this may lead to a meltdown situation where a backlog of licence applications and large numbers of inexperienced staff result in applications not being dealt with in a timely manner. In turn this may lead to poor decision making in regards to issuing licenses and conducting property inspections.
However despite EMPO’s concern, the council is confident there will be adequate resources in place as 71 new people will be employed to process applications etc. The council have indicated in the event the workload becomes too much in the early months of the scheme they can activate a plan with local employment agencies to bring in temporary staff.
2. An accredited EMPO landlord who has been providing decent and safe homes to families since 1996 has reported he will sell three houses in Nottingham if the scheme is approved. He has cited other pressures too, however he believes the continuing hostile environment in Nottingham is not good for his business and is now looking at neighbouring boroughs for future portfolio growth.
Hopefully this scheme will not mean other good landlords decide to exit out of the Nottingham rental market because they perceive the regulatory environment as damaging to their business growth.
3. Landlords who appoint regulated agents to manage their properties will have to apply for a licence even though they have no day to day dealings with the management of their rental property. This is because no process or joint working relationship has been put in place to release regulated agents from this scheme, who in many cases conduct comprehensive HHSRS checks on properties before listing them for rental. The unintended consequence of this oversight will be more landlords forced into self-management as a way to save cost.
4. NCC promotes a key driver for their more or less citywide licensing scheme is ensuring the protection and safeguarding of tenants. It would seem however there is a lack of robustness in achieving this outcome as only 50% of non-accredited and 10% of the accredited properties will be inspected under their scheme.
Ashfield District Council who has been operating a Selective licensing scheme since February 2017 will only issue licenses once a property inspection has been carried out. The reason for this is to ensure the property is decent and safe and the landlord has the necessary skill set for their role.
5. People who wish to rent their properties for a short period of time will be at risk of receiving a Civil Penalty fine up to £30,000 as they would not consider the requirement to pay between £480.00 and £780.00 for a license to rent their home.
What is baffling about the scheme is the councils claim it is being introduced to protect and safeguard tenants, however under this scheme the council only intends to inspect up to 50% of the 32,000 properties impacted.
To help landlords and agents understand the implications and complexities of these schemes EMPO is hosting a number of two-hour workshops in Nottingham.
The objective of the Selective Licensing workshop is to explain, step-by-step, exactly what landlords need to do to initially get their properties licenced, along with the ongoing requirement to manage and maintain their properties within the scope of the scheme.
There will be Q&A’s along the way, and attendees will leave with a full practical understanding of what is required in time for the August 1st deadline.
The dates and venue are as follows:
Wednesday 2nd May 2018 (11:00am – 1:00pm, 1:30pm – 3:30pm, 4:30pm – 6:30pm).
Monday June 18th 2018 (11:00am – 1:00pm, 1:30pm – 3:30pm, 4:30pm – 6:30pm).
Tuesday July 10th 2018 (11:00am – 1:00pm, 1:30pm – 3:30pm, 4:30pm – 6:30pm).
Castle Cavendish Works, Dorking Rd, Nottingham NG7 5PN
£10.00 per delegate
EMPO members FREE
To reserve your place CALL- 0115 950 2639
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