Lewisham landlords face new licensing scheme and steep rise in fees
On Wednesday 2 March 2016, Lewisham Council’s Mayor and Cabinet meeting approved a new additional landlord licensing scheme and signalled a steep rise in their licence application fees.
The Lewisham additional licensing scheme, expected to be implemented by Autumn 2016, will apply borough wide and will cover all Houses in Multiple Occupation (HMOs) located above commercial premises. This is where council officers say they have found the worst conditions in the private rented sector.
According to the Council, the private rented sector in Lewisham has doubled in size since 2001 and now consists of more than 30,000 units of accommodation, housing 25% of borough residents. Lewisham Council estimate that the scheme will require licensing of around 1,800 properties containing approximately 4,200 separate lettings.
London Property Licensing has sought clarification on whether the scheme will apply to purpose build blocks of flats that have leisure centres, cafes or other commercial premises on the ground floor, such as the new Lewisham Gateway development. The Council have confirmed that any flat shared by three or more people who are not all related will need a licence if there are commercial premises on a lower floor in the building.
Licensing Public Consultation
Lewisham Council consulted on the proposals for 12 weeks from 1 September to 24 November 2015 and sent out thousands of letters and emails encouraging people to take part.
Forty people attended a public consultation meeting and 136 on-line responses were received, combined with detailed responses from the National Landlords Association, Residential Landlords Association and Citizens Advice.
The council concluded that overall opinion was strongly in favour of an expanded licensing scheme and there was agreement that HMOs above commercial premises should be targeted.
Substantial rise in licence application fees
In addition to approving the new licensing scheme, the report to Lewisham’s Mayor and Cabinet Meeting recommended an increased fee of £500 “per let unit” for both the existing mandatory HMO licensing scheme and the new additional licensing scheme. Licences normally last for five years.
Whilst a £500 licence fee may at first appear reasonable, we understand that this is actually the fee per letting within a property. i.e. a single person occupying one room on a separate tenancy. The council have said that the fee would be capped at £5,000 per property for 10 or more lettings.
This dramatic increase in fees will see the existing mandatory HMO licensing fee rise from £180 (frozen since 2012) to £500 per letting, an increase of 278%. The fee to licence an HMO with five individual room lets would rise from £900 to £2,500.
We understand there will be a 20% discount for accredited landlords and a 33% discount for landlords licensing more than one property in the borough.
Research by London Property Licensing reveals that this new HMO licence fee would be by far the highest in London and possibly the highest licensing fee in England. The average standard licence fee for a 5-bedroom HMO with five single person lettings in London is currently £900, with Westminster the highest at £1,425.
We understand that the steep rise in HMO licensing fees will be approved by the Council’s Licensing Supplementary Committee in the near future.
Richard Tacagni, Managing Director, London Property Licensing commented:
“The decision by Lewisham Council will increase to nineteen the number of additional and selective licensing schemes operating in the capital, each with different terms and conditions. Ensuring compliance is already creating a major logistical challenge to portfolio landlords and letting agents.
“Of particular concern will be the proposed dramatic rise in licence application fees which will hit landlords hard and no doubt be passed onto tenants in the form of rent increases. This could also reduce housing supply for single homeless people if landlords decide to restrict future occupation to groups of people on a single tenancy in order to minimise the fee“.
Gavin Dick, Local Authority Policy Officer for the National Landlords Association (NLA), said:
“The NLA does not support the creation of a licensing scheme in Lewisham. We believe that additional licensing can be effective at improving standards of housing if it is targeted at specific problems in specific areas and is fully resourced.
“However, too often licensing schemes are too broad and poorly targeted, leaving them ineffective and unable to demonstrate any benefit for tenants or the wider community and we fully expect Lewisham’s scheme to fall under this category.“
A Lewisham Council spokesperson said:
“We are committed to ensure that Lewisham has a thriving private rented market that provides good quality housing for tenants and that landlords are fully supported to maintain good standards in their properties. This licensing scheme is a key tool in achieving this.
“We have set the fee to ensure that we fully meet the costs of running an effective licensing scheme that is good for tenants and good for responsible landlords. We have a range of qualifying discounts and reductions that will continue. All the income raised will be reinvested in this scheme to improve the private rented sector in Lewisham, which is huge and growing every day.“
Will Lewisham Council’s new HMO licensing fee of £500 ‘per let unit’ be the highest in England? If you know of a higher fee, please let us know.
Further information about property licensing in Lewisham is available at www.londonpropertylicensing.co.uk/lewisham.