In light of the latest regulations some may have noticed that some London Boroughs have bought in the ‘Selective Licensing’, a form of licensing that all landlords have to adhere by.
Now I can already here you asking ‘Isn’t property licensing restricted to Houses in Multiple Occupation (HMOs) – surely a house or a flat rented to a single family doesn’t need to be licensed?’
Well, it depends on where your property is located. Under mandatory HMO and additional licensing, the licensing schemes are limited to certain HMOs.
But with selective licensing the rules are different. With a third of London Boroughs already operating selective licensing schemes (as of November 2017) and more schemes on the horizon, this is something all landlords and letting agents need to be aware of.
Part III of the Housing Act 2004 gives councils the power to implement a selective licensing scheme covering almost all private rented properties within a defined geographical area. We will try and explain some of the key issues.
Which properties does a selective licensing scheme cover?
Some schemes cover the whole borough whereas others cover smaller geographical areas.
Most private rented properties that fall within the scheme boundary will need to be licensed by the council – not just HMOs. Failure to comply is a criminal offence that can result in prosecution and a hefty fine or a civil penalty of up to £30,000, so it is important to get things right.
Which councils have introduced selective licensing?
There is no central directory of property licensing schemes so you will need to contact your local council or search on their website.
If your property is in London, we’ve done all the hard work for you! As of November 2017, selective licensing schemes have been introduced in eleven London boroughs – Barking & Dagenham, Brent, Croydon, Ealing, Hammersmith & Fulham, Harrow, Newham, Redbridge, Southwark, Tower Hamlets & Waltham Forest.
Can any council introduce a selective licensing scheme?
A selective licensing scheme can only be introduced if the council is satisfied that are problems with low housing demand or significant and persistent problems of Anti Social Behaviour (ASB) linked to the private rented homes in that area. Given the exceptional levels of housing demand in London, schemes are normally introduced to tackle ASB.
Under regulations introduced in March 2015 (the Selective Licensing of Houses (Additional Conditions)(England) Order 2015), councils were given wider powers to implement selective licensing in areas with a high proportion of private rented properties, provided they can satisfy one of four criteria around poor housing conditions, migration, deprivation or crime.
Before introducing a selective licensing scheme, the council must take reasonable steps to consult with everyone affected by the designation for a minimum of 10 weeks. Under new rules that came into force on 1 April 2015, any selective licensing scheme that covers more than 20% of the area or 20% of private rented homes can only be introduced with central government approval.
What are the statutory exemptions?
You do not need a selective licence if:
The property is an HMO that already requires a licence under a mandatory HMO or additional licensing scheme;
The tenancy or licence has been granted by a registered social landlord under Part I of the Housing Act 1996;
The property is subject to an Interim or Final Management Order under Part 4 of the Housing Act 2004 (i.e. the council have taken over the management of the property);
The property is covered by a temporary exemption notice; or
The property is occupied under an exempt tenancy or licence, as defined in the Selective Licensing of Houses (Specified Exemptions) (England) Order 2006.
Whilst not a complete list, examples of some of the exempt tenancies or licences include:
Any property subject to a housing prohibition order;
Certain tenancies associated with business premises, Licensing Act 2003 premises, agricultural land or agricultural holdings;
Buildings managed by a local housing authority, police or fire & rescue authority or a health service body;
Buildings already regulated under certain other statutory provisions (Schedule 1 to SI 2006 Number 373)
Certain student halls of residence;
Holiday homes; and
Buildings where an occupant shares any accommodation with the landlord or a member of the landlord’s family.