Understanding additional licensing

Understanding additional licensing is not an easy task – we know that and we’ve been using the legislation since in came into force in April 2006!

To make your life a bit easier, we have produced this free guide to help you understand additional licensing schemes which apply to private rented properties in various parts of England.

With over half of London Boroughs operating additional licensing schemes (as of November 2020) and more schemes being developed, this is something all landlords and letting agents need to be aware of.

Ok, first things first. It is important to know that each council has the power to introduce an additional licensing scheme under Part II of the Housing Act 2004. Additional licensing applies to certain Houses in Multiple Occupation (HMOs) that fall outside the scope of the mandatory HMO licensing scheme.

So the first thing you need to decide is whether your property is an HMO. You could read the legislation itself (Sections 254 – 260 Housing Act 2004) although you may prefer the much simpler advice on the Gov.uk website.

As a simple rule of thumb, an HMO is any property (house of flat) occupied by three or more people comprising two or more households who share facilities (kitchen, bathroom and/or toilet) and occupy the property as their only or main residence, even if they are all friends and occupy the property on a single tenancy.

The HMO definition also covers certain buildings that have been converted to self-contained flats, so-called ‘Section 257 HMOs’. Not quite all HMOs have shared facilitites. We’ll come back to that later as it’s a bit more complicated.

Even if your property is not an HMO, you might still need a licence if your local council has implemented a selective licensing scheme that applies to all private rented accommodation, more information here.

Which HMOs need an additional licence?

That will depend on exactly how your local council has drafted the scheme designation. Some schemes cover the whole borough whereas others cover smaller geographical areas.

Each council will decide what type of HMOs need a licence within the designated area. For example, Newham Council has included all HMOs within its additional licensing scheme. In contrast, the additional licensing scheme in Ealing excludes HMOs occupied by three people unless in a mixed use commercial / residential building.

A particular complication with additional licensing concerns ‘Section 257 HMOs’. These are properties that:

• have been converted into self-contained flats; and
• less than two thirds of the flats are owner occupied; and
• the conversion did not comply with the relevant Building Regulations in force at that time and still does not comply.

When working out which are the relevant Building Regulations, if the conversion was completed before 1 June 1992, it should comply with Building Regulations in force as of 1 June 1992. If it was converted after 1 June 1992, it should comply with the Building Regulations in force at the time of the conversion.

So a building containing both owner-occupied and rented flats may need one licence for the whole building. This is a complex area of law and you may need further advice.

Guidance from the government (DCLG, 2007) urges local authorities to adopt particular caution before deciding to include Section 257 HMOs within an additional licensing scheme. The guidance explains that this legislation was never intended to regulate owner-occupied properties. It suggests that management problems in leasehold blocks should normally be dealt with through leasehold legislation.

Which councils have introduced additional licensing?

Unfortunately, there is no national directory of selective licensing schemes and so you may need to contact your local council to find out.

If your property is in London, we’ve done all the hard work for you! As of November 2020, there are additional licensing schemes in Barnet, Brent, Camden, Ealing, Enfield, Greenwich, Hackney, Hammersmith & Fulham, Haringey, Harrow, Havering, Hounslow, Kingston upon Thames, Lewisham, Newham, Redbridge, Southwark, Tower Hamlets & Waltham Forest.

To find more information about each scheme you can click on the ‘Select Borough’ link at the top of this webpage and choose the borough you are interested in.

Can any council introduce an additional licensing scheme?

An additional licensing scheme can only be introduced if the council is satisfied that a significant proportion of the HMOs are being poorly managed and are giving rise, or likely to give rise, to problems affecting the occupiers or members of the public.

Any decision to implement an additional licensing scheme must be consistent with the council’s housing strategy and must be part of a coordinated approach for dealing with homelessness, empty homes and anti-social behaviour.

The council must be satisfied that there are no other courses of action that might provide an effective remedy and that the introduction of a licensing scheme will significantly assist in dealing with the problem. As you can see, there is a lot of evidence a council must collect before it can introduce such a scheme.

Councils can implement an additional licensing scheme provided it meets all the requirements in the Housing Act 2004 and they have consulted with everyone affected by the designation for a minimum of 10 weeks. 

Are there any exemptions?

You do not need an additional licence if:

• The property is an HMO that already requires a licence under the mandatory HMO licensing scheme;
• 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.
• The property is managed a local housing authority, registered social landlord, police or fire & rescue authority or a health service body;
• The property is already regulated under certain other statutory provisions (Schedule 1 to SI 2006 Number 373)
• The property falls within an exemption applying to certain student halls of residence;
• The property is occupied principally for the purposes of a religious community whose principle occupation is prayer; contemplation, education or the relief of suffering; 
• The property is owner occupied with no more than two lodgers; or
• The property is occupied by just two people who form two households.

Need further advice and support?

If you find the whole licensing process a bit daunting and are based in the London area, we can help you. We offer a fixed price licence application handling service and you can find more information here. We have limited capacity and specialise in more complex cases.

Several other companies offering a licence application handling service can be found in our Landlord Suppliers Directory here.

If you want to learn more about what happens once you submit your application, we have another guide explaining the next part of the process here.

If you still have questions and need expert advice, we can also offer a 30-minute telephone consultation, explained here. Following an initial consultation, we may be able to offer more in-depth consultancy support, including the preparation of temporary exemptions, licensing representations and appeals.

We hope you have found our guide to additional licensing useful. It is important to remember this is not legal advice and you may want to refer to our disclaimer below.

To keep up to date with all the latest housing regulation news, you can sign up to our free London Property Licensing newsletter here.