Lewisham Council consulting on plans to license 32,000 private rented homes

Tuesday, June 18th, 2019 -

Lewisham Council have launched a 12-week consultation on plans to license all private rented homes in the borough.

The council currently operate the mandatory House in Multiple Occupation (HMO) licensing scheme and in 2017 they introduced an additional licensing scheme for all HMOs located above commercial premises.

The current additional licensing scheme was expected to cover around 1,800 HMOs although to date, only 100 HMOs have been licensed in the first two years of the scheme.

According to the council, about 26% of the boroughs housing stock, comprising around 32,000 properties, are in the private rented sector and about 6,000 of these properties are HMOs.

Rationale for extending licensing

According to Lewisham Council, extensive research into the private rented sector has revealed:

  • Antisocial behaviour incidents are higher in wards with more private rented properties
  • 36% of private rented homes and 46% of HMOs have experienced multiple incidents of environmental antisocial behaviour in ‘close proximity’ to the property, which is higher than other tenures
  • Levels of deprivation tend to be higher in areas with more private rented homes
  • The six wards with most private rented properties also experience the highest levels of crime
  • The council receives three times more complaints about HMOs than single family private rented properties
  • A survey showed 18.4% of private rented homes had serious (category 1) hazards under the HHSRS

The council have published a 50 page evidence base setting out their business case for licensing.

In presenting their proposals, the council have given a challenging commitment to inspect every licensed property during the life of the scheme, including all rented properties occupied by a single family. Even if inspections started on day 1, this would involve inspecting over 100 properties each and every week throughout the five year life of the scheme.

Consultation timeline

The council is consulting on the proposed licensing schemes from 28 May to 20 August 2019, with results expected to be presented to the Mayor and Cabinet meeting in October 2019.

The council are considering a two-step implementation process. Firstly, to approve a borough wide additional licensing scheme covering all HMOs. This scheme could be implemented three months after making a scheme designation.

Secondly, the council acknowledge that plans for borough wide selective licensing would need Secretary of State approval. Any such licensing scheme would therefore be approved on a later date, subject to obtaining consent.

Consent is by no means guaranteed as government have indicated their opposition to blanket licensing schemes. For example, the council would need to demonstrate why desirable locations such as Blackheath Village meet the prescriptive criteria to implement a selective licensing scheme.

In June 2015, Redbridge Council approved plans for borough wide selective licensing scheme but their plans were subsequently rejected by government (read here). Following a second consultation, a smaller selective licensing scheme was implemented two years later.

Could £500 per-bedroom HMO licensing fees drive up the rent?

Both landlords and tenants may be concerned about the high level of HMO licensing fees that mirror the council’s existing mandatory HMO and additional licensing schemes. The licensing fee of £500 per bedroom is the highest in London and believed to be the highest per-bedroom rate in the country.

The application fee for the smallest two bedroom / three person HMO would be charged at £1,000, with each additional bedroom occupied by an unrelated person adding another £500 to the cost. Licences are expected to be issued for up to five years.

The proposed fees for selective licensing have been set at a lower level, ranging from £575 to £750 per property. Unusually, the fee is based on the council tax banding for each property which is an approach not previously adopted by any of the London Boroughs.

Assuming an average 3 bedroom HMO licensing fee of £1,500, the additional licensing scheme could generate £9 million income for the council. The selective licensing scheme, based on an average band C property, could raise £16.25 million income although the notional £25 million income has to be reinvested in delivering the property licensing scheme.

Licence conditions

Whilst highlighting mandatory licence conditions within their evidence base, it appears the council are not consulting on the proposed additional and selective licence conditions that they propose to add to each licence.

It is also unclear what other interventions have been considered before concluding the borough wide licensing of all private rented homes is the best way forwards.

The consultation runs until Tuesday 20 August 2019. You can find out more information and take part in the consultation on the council’s website.

A free guide containing more detailed information about property licensing schemes in the London Borough of Lewisham is available here.

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