Selective licensing schemes have been a mainstay in England for almost 2 decades, improving the way the private rental sector functions and putting the welfare of tenants front and centre. With over 50 councils across the country already using selective licensing schemes, and many more contemplating introducing them, it is more important than ever for landlords and property owners to have a solid understanding of selective licensing. Here’s Centrick’s comprehensive guide to selective licensing in the UK…
Selective licensing was initially introduced as part of the 2004 Housing Act under part 3, section 80. The intention of this clause was to give local authorities the power to implement schemes where they felt necessary to ensure a minimum standard of safety and management for units in the private rental sector.
Where selective licensing measures are in place, all landlords letting properties in the private rental sector must obtain a local authority license in order to legally rent out their unit. You simply won’t be able to rent out your unit without one, or face huge penalties. Each scheme generally lasts five years.
At the time of writing, over 50 local authorities utilise selective licensing schemes to better regulate the quality and safety of housing in their local area. More councils are vying to start their own variation of the scheme in the near future.
Selective licensing schemes can be implemented for a number of reason, but namely to regulate poor quality rental accommodation in a specific area. According to Shelter England, “selective licensing for privately rented housing is available if local authorities believe it would reduce or eliminate specific housing problems”. In regions where there are high levels of antisocial behaviour, crime, homelessness and deprivation, selective licensing schemes are introduced to ensure that the quality of housing in these areas meets minimum standards.
However, deprivation within a local area is not the only reason why selective licensing schemes can be put into place. If there is low housing demand and an abundance of empty homes, a selective licensing scheme can help to build confidence in searching tenants that the properties in the region which the licensing scheme applies to are safe, functional and of high quality. This isn’t to mention that some local authorities will introduce licensing schemes to simply better regulate the housing market in their area to ensure that all tenants are able to rent safe and secure homes within a specific district.
Selective licensing schemes are popping up across the UK, with the most notable recent scheme being introduced across a number of Birmingham wards. However, there are already existing schemes in place across the UK, namely in London, Nottingham, Liverpool, Manchester, Oxford, and many more. However, it is important to know that just because your wider city or town has implemented selective licensing does not mean that you will need to obtain a license. Councils typically target specific parts of a town or city for selective licensing – please check with your local council to see if your neighbourhood or ward is eligible for a license.
Furthermore, there are exemptions when it comes to selective licensing – for example, HMO’s require a different type of license altogether. Similarly, registered social landlords and those listing their unit as a holiday home will not need to acquire a license. If you are unsure whether your property requires a license, it is highly recommended that you speak to a local property agent such as Centrick, or contact your local council directly for further clarification.
You will need a set of documents ready to provide in order to apply for your license, including:
You will also need to provide payment details for your fee to be taken. Fees can vary – at the time of writing, a license in Birmingham is £700 per property for five years.
The assessment of your property will seek to determine the condition and overall safety of your unit whilst also considering the adequacy of the tenancy and property management systems in place. The assessor will specifically consider whether the property in question is habitable for a certain number of tenants, the health, safety and welfare of tenants, as well as the aptitude of the landlord responsible for the property.
Not all properties require a license. However, if you fail to obtain a license where you need one, there are steep penalties in place. You may be issued with a rent repayment order, requiring you to pay a portion of rent back to your tenants as compensation for not having a license. You may also have your ability to issue a Section 21 eviction notice revoked. In the worst case scenario, a civil penalty can be issued of up to £30,000 and a banning order could be granted, stopping a landlord from letting any properties in the future. As such, it is absolutely vital that landlords obtain a license if they need one.
At Centrick, we understand that the introduction of selective licensing can be new and daunting for many landlords. That’s why we are on hand to help property owners every step of the way. Whether you simply want more information on selective licensing in your area, or are interested in a comprehensive portfolio review, be sure to contact our team using the form below.
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