Independent selective licensing review recommends the introduction of a national landlord register

Tuesday, June 25th, 2019 -

On 25 June 2019, the Ministry of Housing Communities and Local Government (MHCLG) published an independent review on the use and effectiveness of selective licensing schemes in England.

The review, undertaken by Opinion Research Services with support from Lavender and Wilson housing consultancy, was designed to explore the effectiveness of selective licensing as a means of regulating the private rented sector.

The four phase review comprised a literature review followed by desktop research and analysis. A survey was then sent to all local housing authorities in England, attracting an 84% response rate. This was followed up by in-depth interviews with 30 local authorities and 16 other stakeholders including landlord and tenant organisations and other interested parties.

Local authorities can implement selective licensing of all private rented accommodation in designated areas to help tackle concerns over anti-social behaviour and low housing demand. In 2015, the criteria were widened to include poor housing conditions, crime, deprivation and high rates of migration. Selective licensing schemes are usually implemented for five years and larger schemes covering over 20% of the council’s geographical area or 20% of private rented homes require approval from the Secretary of State.

As of 1 January 2019, the researchers found there were 44 local authorities operating selective licensing schemes in England, of which 30% are in London. Most local authorities assessed their selective licensing schemes to be at least ‘fairly effective’ although we understand this viewpoint was not tested with other interested groups in each locality.

Overall, the report concludes that selective licensing can be an effective policy tool with many schemes achieving positive outcomes. The study also found that when selective licensing is implemented in isolation from other policy interventions, its impact can be far more limited.

Twelve recommendations for change

Whilst concluding that selective licensing should be retained to help regulate the private rented sector, the researchers made twelve recommendations to improve the implementation and effectiveness of selective licensing schemes, as summarised below.

Recommendation 1
The government should consider amending the mandatory licence conditions in Schedule 4 of the Housing Act 2004 to include a standard requirement on property condition that covers the absence of serious hazards, for example:

the landlord should ensure that the property is in such a condition as to comply with the condition obligation of a landlord under section 9A of the Landlord and Tenant Act 1985 to let and keep a property fit for human habitation within the meaning of section 10 of the Landlord and Tenant Act 1985.

Recommendation 2
Government should consider issuing best practice guidance to help local authorities improve the implementation of selective licensing schemes.

Recommendation 3
Government should consider adding new statutory exemptions from selective licensing. Suggested exemptions include purpose-built student accommodation that follows a government approved code and non-profit charitable institutions that are not registered social housing providers.

Recommendation 4
Government should retain the requirement for Secretary of State approval for all designations above 20% of the privately rented sector or 20% of total geographic area, but should keep the threshold under review so it relates to up to date data sources and so smaller authorities are not disadvantaged.

Recommendation 5
Government should explore options for a “light touch” process for authorities seeking to re-designate an area at the end of a period of licensing. This should apply where there is no substantive change proposed to the existing scheme and should maintain a requirement for consultation.

Recommendation 6
Government should consider introducing a national registration scheme for landlords to support and complement selective licensing schemes.

Recommendation 7
Government should explore alternatives to judicial review as the primary method of challenging a designation, as the process of judicial review can be prohibitively expensive.

Recommendation 8
Government should consider reviewing requirements for advertising new scheme designations to ensure they are appropriate; this should reflect the reduction in the circulation of existing newspapers and the widespread use of social media and other electronic formats for the dissemination of information.

Recommendation 9
Currently, in most cases, licenses are issued for a full five-year period regardless of the time remaining on the designation. Local authorities introducing new schemes should adopt the practice of charging the enforcement element of the licence fee on a prorated basis to allow this element of the charge to reflect the remainder of the designation period. This should only apply in cases where there is no evidence of a deliberate attempt to avoid applying for a licence.

Recommendation 10
Government should consider allowing local authorities flexibility to streamline the extensive list of mandatory questions that must be included on every licence application form, so they only include those questions that they consider relevant to their specific scheme.

Recommendation 11
Government should consider expanding the range of offences which can trigger a landlord failing the “fit and proper person” test as part of an application for a licence to include breaches of planning law.

Recommendation 12
Government should explore options for usefully expanding the range of data that can be shared with local authorities for the purpose of gathering intelligence about the private rented sector.

Commenting on the review, Richard Tacagni, MD, London Property Licensing said:

The government’s decision to review selective licensing in isolation from additional licensing has prevented a more comprehensive root and branch review of the discretionary licensing powers granted to local authorities under the Housing Act 2004.

While the recommendations will give government food for thought and may help to tweak the current arrangements, I think the time has come for a more fundamental review of the property licensing rules. Looking forward, we need a simple, streamlined and low cost property licensing model that is consistently implemented and enforced across the country“.

The government have not yet published their response to the review and it is not known which, if any of the recommendations they may decide to implement. Further updates will be published on the London Property Licensing website in due course.

A copy of the MHCLG Independent selective licensing review report is available here.

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