The Housing Act 2004 brought about 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 a Selective Licensing area, all private landlords must obtain a licence; the authority can take enforcement action if they fail to do so or don’t achieve acceptable management standards.

COVID-19 Update

The Government are encouraging local authorities to take a common-sense, pragmatic approach to landlord licensing enforcement during these unprecedented times. On 1 June, the Government published updated Coronavirus (COVID-19) Guidance for Landlords and Tenants. The Guidance advises landlords who have property in an area subject to selective or additional licensing that local authorities should consider pausing the introduction of non-mandatory licensing schemes where this will allow limited resources to be focused where they are most needed.

Local authorities that already have landlord licensing schemes in place have been instructed by the Government to:

• Contact landlords who are waiting for licences to be determined to explain potential delays.
• Take individual landlords’ circumstances into account where licence fee payments may have been delayed due to the current situation.
• Prioritise high-risk licensable properties if this is necessary to protect vulnerable tenants and target imminent risks to health.
• Continue as usual for non-mandatory licensing schemes which are already in place but, as with all enforcement, take a pragmatic and common-sense approach to enforcement action.

Where schemes are in the process of being introduced but are not yet in force the Government have advised local authorities to consider:

• Pausing the process completely wherever practicable until current restrictions are lifted and/or assessed that it is safe and reasonable to continue.
• Extending relevant parts of the process such as the consultation period or the date of the commencement of the scheme to a more suitable time.
• Avoiding, wherever possible, commencing a scheme unless its administration will not conflict with latest government advice regarding the COVID-19 outbreak.

View latest guidance

Action Propertymark are taking

MHCLG Committee inquiry into the impact of COVID-19 (Coronavirus) on homelessness and the private rented sector

The need for local authorities to postpone the introduction of all licensing schemes until the market can recover from the impacts of COVID-19 formed a key part of ARLA Propertymark’s written submission to the Housing, Communities and Local Government Committee Inquiry into the impact of COVID-19 (Coronavirus) on homelessness and the private rented sector.

Our evidence stated that the requirement for landlord licensing applications to still be submitted and fees paid places additional pressure on the private rented sector in the following ways:

• The cost of licensing may be passed on to tenants via rent increases.
• Landlords who cannot afford the license fee may decide not to pay the licensing fees and remove their property from market, forcing tenants to seek new homes during the period of lockdown, placing people at risk and spreading rather than stemming the pandemic.
• With little or no rents being paid on properties, landlords are not able to fund new license fees at this time, leaving them with the choice of criminal liability, or evicting their tenants.
• With many agents furloughed or working from home they are unable to access relevant paperwork and documentation to complete licensing scheme applications and process fees.
• Agents are facing problems getting routine maintenance and safety checks at the properties they manage completed. This is because there is a shortage of engineers willing to carry out routine work and most tenants do not want to permit access to strangers even when it is an emergency. Without evidence that routine checks have been successfully completed agents and landlords would be submitting incomplete applications.

ARLA Propertymark believes councils who are pursuing the implementation of licensing schemes are being socially irresponsible as it needlessly puts vulnerable people at risk of being infected. In this unprecedented situation, landlords and agents are not able to comply with the requirements of the scheme and council resources are unlikely to be able to effectively enforce them.

Our response

Lobbying local authorities

ARLA Propertymark Chief Executive David Cox outlines our position on licensing and our call for Government to suspend the introduction of licensing during lockdown.

Where ARLA Propertymark have been aware of new schemes being introduced whilst the country is under lockdown, we have lobbied the local authority, calling on them to pause the implementation of any new schemes.

We were successful in Newcastle where the city council who had decided to continue with the implementation of a new additional and selective property licensing scheme on 6 April 2020 reviewed their decision and have paused requirements until 6 July 2020. ARLA Propertymark are calling for the suspension to be further extended beyond this date.

Is your local authority continuing with implementation of a new licensing scheme?

Contact us at policy@propertymark.co.uk with your concerns and we will lobby them to pause the introduction of the scheme while the Coronavirus pandemic continues, calling on them to take a common-sense, pragmatic approach to enforcement as the Government advise.

What is Selective Licensing?

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.

Selective Licensing 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 per cent of housing stock let by a private sector landlord.

Additional licensing

The Housing Act 2004 introduced licensing for Houses in Multiple Occupation (HMOs). Under the law, there are different types of HMO licensing.

Mandatory licensing (England): from 1 October 2018, any landlord who lets a property to five or more people from two or more separate households must be licensed by their local authority.

Large HMOs (Wales): a property with three or more storeys and at least five occupants who do not form a single household must be licensed.

Additional licensing (England and Wales): this is when a local authority can impose a licence on other categories of HMOs in its area which are not subject to mandatory licensing.

Landlord licensing does not work, has never worked and never will work

We do not believe that licensing schemes are an effective way of promoting higher quality accommodation. 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.

Communities and Local Government Committee evidence sessiON

ARLA Propertymark's concerns

Lack of resources
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 licence cannot exceed the cost to process the application, meaning 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.

Administrative exercise
Licensing schemes focus heavily on the administration involved, often directing staff away from enforcement to process applications. Councils have indicated that processing a single application can take between 15–60 minutes. This can be incredibly time consuming and costly when thousands of properties require licensing.

Penalising compliant landlords and agents
Rogue landlords and agents that the schemes are created to target often continue to operate under the radar. Landlords and agents who are already compliant, pay their licensing fees and fund the administration of the scheme whilst those providing poor housing regularly ignore their legal requirements.

The low number of prosecutions
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 in April 2018 by the Housing, Communities and Local Government Committee highlighted that overall local authorities rarely issue landlords and agents with penalties. Existing licensing schemes have demonstrated that only a small number of prosecutions occur. In 2016/17, 50 per cent of all prosecutions (out of 33 boroughs with licensing across England) came from Newham Borough Council.

Collaborative approach needed

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 letting agents who already adhere to good practice and enables local authorities to better target their resources on effective intelligence-led enforcement.

Homestamp
Homestamp is a collaborative approach in the West Midlands which we partner. The initiative combines local authorities, private rented sector bodies, universities, the police and fire services. Homestamp considers 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.

Liverpool City Council 
Until March 2020 ARLA Propertymark had a co-regulation partnership with Liverpool City Council. The scheme allowed the council to effectively target their resources and rewarded our members who already adhere to high standards. Landlords who opted to use our members also received a discount incentive on licensing fees.

London Rental Standard
The London Rental Standard ran from 2014 to 2017, we were 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 letting agents.