The Housing Act 2004 provided for the introduction of selective licensing of private landlords in a local authority’s area. The provisions came into force in April 2006 and apply in England and Wales.
In an area subject to selective licensing, all private landlords must obtain a licence. If they fail to do so or fail to achieve acceptable management standards, the authority can take enforcement action.
The Housing Act 2004 allows local authorities to apply for Selective Licensing of privately rented properties in areas which are experiencing low housing demand and/or suffering from anti-social behaviour.
From 1 April 2015 local authorities in England are required to obtain confirmation from the Secretary of State for Communities and Local Government for any Selective Licensing scheme which would cover more than 20% of their geographical area or would affect more than 20% of privately rented homes in the local authority area. The criteria for Selective Licensing was also expanded. It now covers areas experiencing poor property conditions, an influx of migration, a high level of deprivation or high levels of crime.
In Wales, the Welsh Assembly exercised its powers under the Act to determine additional ‘conditions’ for designating an area. For instance, the Regulations allow local housing authorities in Wales to apply for Selective Licensing designation where a district or an area in their district comprises a minimum of 25% of housing stock let by a private sector landlord.
The Housing Act 2004 introduced licensing for Houses in Multiple Occupation (HMOs). Under the law, there are different types of HMO licensing:
We launched a new database in partnership with GetRentr, a technology platform which automatically monitors property portfolios for compliance with all UK property licensing schemes.
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Our member-only Fact Sheets on Selective, Additional and Mandatory licensing explain to members how they must comply with the rules.
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We do not believe that licensing schemes are an effective way of promoting higher quality accommodation. This is because most schemes fail as they are not adequately resourced to undertake the necessary enforcement activity.
The licensing regime becomes an administrative exercise, penalising those landlords who comply with the regulations whilst still allowing the landlords that the scheme was designed to target to continue operating under the radar.
“Licensing does not work. Licensing has never worked and never will work…Newham have done 1,200 prosecutions, or 240 a year, out of 47,000 properties. That is 0.5% of properties in their area that they have done anything about and have done prosecutions. I would note that that is with 140 officers. They have 40 police officers; 100 enforcement officers and they have done 240 prosecutions a year. That is less than two prosecutions an officer.
If that is what is classed as success—and it is classed across the industry as the most successful licensing scheme in the country—really what does that say? It is pitiful.”
David Cox, Chief Executive ARLA Propertymark Communities and Local Government Committee oral evidence session on 29 January 2018
Many licensing schemes fail due to the lack of adequate resources needed to undertake the necessary enforcement activity. Due to the EU Services Directive, the fee to apply for a property licence cannot exceed the cost to process the application, this means that the cost of enforcing the schemes must come from elsewhere. Councils operating licensing schemes have often indicated that the schemes cost more to operate than the funding they receive from licence fees.
Licensing schemes heavily focus on the administration involved, often directing staff away from enforcement to process applications.
Councils have indicated that processing a single application can take between 15 minutes and one hour. This can be incredibly time consuming and costly when thousands of properties require licensing.
Often, the rogue landlords and agents that the schemes are created to target continue to operate under the radar.
Already compliant landlords and agents pay their licensing fees, funding the administration of the scheme while more than often those providing poor housing ignore their legal requirements.
The Housing and Planning Act 2016 allows civil penalty fines levied for offences in the private rented sector to be retained by the Local Authority for further enforcement. Research conducted by the Housing, Communities and Local Government Committee in April 2018 highlighted that Local Authorities overall rarely issue landlords and agents with penalties. Existing licensing schemes have demonstrated that only a small number of prosecutions ever occur, with 50% of all prosecutions in 2016-17 coming from Newham Borough Council out of 33 boroughs with licensing across all of England.
November 2017 - Written evidence to the Communities and Local Government Committee
Our response to the Communities and Local Government Committee's call for evidence looking at whether councils have adequate powers to tackle 'rogue landlords'.
Read response
January 2017 - Written evidence to Newham Council
Our response to Newham Council's consultation looking at extending its borough-wide selective licensing scheme.
We believe that local authorities should adopt a collaborative approach with letting agents, landlords, professional bodies and public services to tackle issues within the private rented sector. This approach recognises and rewards landlords and agents that already adhere to good practice and enables local authorities to better target their resources on effective intelligence-led enforcement.
Homestamp in the West Midlands is a collaborative approach of which we are a partner of. The initiative combines local authorities, private rented sector bodies, universities, Police and Fire services. Homestamp considers and responds to regional and national issues affecting the sector alongside providing information and training for landlords, addressing potential issues before they arise. Coincidentally, the West Midlands has the lowest level of licensing in England.
ARLA Propertymark has a co-regulation partnership with Liverpool City Council. The scheme allows the Council to effectively target their resources and rewards ARLA Propertymark agents already adhering to high standards, and landlords who opt to use our members receive a discount incentive on licensing fees.
The London Rental Standard ran from 2014-2017. ARLA Propertymark was appointed as one of the accrediting bodies to the scheme by the former London Mayor. The voluntary set of minimum rules separated out agents and landlords performing their duties to a high professional standard, allowing scarce Local Authority resources to be directed towards inadequate landlords and agents.
“What we need is education. Landlords need to be trained in what they need to do. Agents need to be trained in what they need to do. Filling in a piece of paper and giving it to the council and paying £500 is not going to teach them the 150 laws that they need to understand.”
David Cox, Chief Executive ARLA Propertymark MHCLG Committee oral evidence session on 29 January 2018