Confusion over Barking and Dagenham’s new property licensing scheme

Friday, August 16th, 2019 - Barking & Dagenham Council

On 1 September 2019, the London Borough of Barking and Dagenham are implementing a borough wide selective licensing scheme to replace the previous scheme that expires on 31 August. Permission to implement this replacement selective licensing scheme was granted by the Secretary of State earlier in the year.

Landlords and letting agents with selective licences that expire on 31 August will need to ensure that new selective licence applications are submitted before month end to remain compliant.

Whilst the selective licensing renewal process is running quite smoothly, the same cannot be said for their borough wide additional licensing scheme which also expires on 31 August 2019.

To date, no replacement additional licensing scheme has been approved and it is unclear whether the council has yet consulted on plans for a replacement scheme. London Property Licensing was awaiting a response from the council at the time of publication.

Without an additional licensing scheme in place, all HMOs that fall outside the mandatory HMO licensing scheme criteria will instead need to be licensed under the council’s selective licensing scheme when individual licences expire.

Incorrect advice could put landlords in breach of the law

On two separate occasions, London Property Licensing has phoned the council’s licensing hotline to request advice on what happens when an additional licence expires.

On both occasions, we have been given incorrect advice and been told smaller HMOs will not need licensing from 1 September 2019. Instead, the advice given was to wait and see if an additional licensing scheme is introduced before applying.

Following this advice could leave landlords and letting agents in breach of the law with the risk of a criminal prosecution. They could also find themselves unable to issue a section 21 notice of seeking possession. In addition, it could enable the tenants to apply for a Rent Repayment Order for the period between the old licence expiring and a new licence application being submitted.

Additional verses selective licensing – what is the difference?

Selective licensing applies to all properties within the borough that are not already licensed under a mandatory HMO or additional licensing scheme. When the additional licensing scheme expires, this will bring more properties within the scope of selective licensing when it is time to renew those licences.

To remain compliant, HMO landlords with an additional licence will need to apply for either a mandatory HMO or selective licence depending on the occupancy arrangements. Each application needs to be submitted on or before the date that the current licence expires.

There are various consequences that stem from the council relicensing smaller HMOs under the selective rather than additional licensing scheme:

  • Selective licence applications usually have lower licence application fees which could lead to reduced fee income for the council.
  • The government’s new absolute minimum bedroom sizes for licensed HMOs do not apply to HMOs licensed under a selective licensing scheme.
  • There are more restrictions on conditions that can be applied to a selective licence.

Substantial increase in fees

To coincide with changes to the property licensing schemes, the council have announced a substantial increase in licensing fees.

Mandatory HMO licensing fees have increased by over a third to £1,300 for a property occupied by five people. HMOs with six or more occupants cost more.

Selective licensing fees have increased the most – up 78% from £506 to £900 per property. This is now the highest selective licensing fee in London and possibly in the country. It is expected to generate over £16 million in fee income over the next five years.

Will additional licensing be reintroduced in the future?

According to the Property Licensing Scheme FAQs document on the council’s website, it says:

The Council is working to introduce an Additional HMO Licence for HMOs that are occupied by three or more non-related people that share some facilities such as a kitchen or bathroom“.

This leads to further complications. If an additional licensing scheme is introduced in the future, landlords of smaller HMOs who have correctly applied for a selective licence could then find they then need an additional licence, yet licences cannot be transferred.

Richard Tacagni, MD, London Property Licensing commented:

It is important that councils provide clear, consistent and accurate information to help landlords and agents correctly interpret local licensing rules.

With a replacement selective licensing scheme starting on 1 September 2019, it is vital that Barking and Dagenham Council clarify how the rules will apply to HMOs that are no longer covered by their additional licensing scheme.

If additional licensing is to be introduced in the future, the council must also carefully consider the impact on HMO landlords who have already applied for a selective licence to remain compliant“.

London Property Licensing will publish an update from the council as soon as it is made available.

A free guide containing more detailed information about property licensing in the London Borough of Barking & Dagenham is available here.

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