Understanding the property licensing application process

When you submit a mandatory HMO, additional or selective licence application to your local council, there is often confusion about what happens next. Apart from receiving an acknowledgement, you may hear nothing more for several months.

In due course, the council will process your licence application. Exactly how this is done can vary considerably. Whilst some councils will inspect your property, others will process your application based on a desktop examination of the paperwork.

Once the council is ready to approve or refuse your licence application, they must follow the prescribed process in Schedule 5 of the Housing Act 2004. We have prepared this simple guide to explain what this means in practice.

Notice of intention to approve your licence application

If the council intend to approve your licence application, they will issue a notice setting out the reasons for their decision. At the same time, they will send you a copy of the draft licence with all the proposed terms and conditions.

The council must send this notice to the applicant and all interested parties. They must allow a period of at least 14 days for any representation to be submitted.

When the draft licence is received, there is a tendency for landlords and agents to think the job is done, file the paperwork and wait for the final licence to arrive. In our opinion, that is the wrong thing to do and if you read on, you will find out why.

The draft property licence

When you receive the draft licence, it is important to check it carefully to ensure the details are correct and that you understand and accept all the proposed terms and conditions.

Why is this important? Well, once a licence has been granted, you cannot change the licence holder without applying for a new licence and paying another fee. Plus, if the licence holder fails to comply with a licence condition, they will be committing a criminal offence and could be prosecuted or issued with a civil penalty of up to £30,000. Saying you did not read the conditions is no excuse!

What are the key things to check on the draft licence? Our advice is to check the complete document from start to finish or you could miss something important. For example:

• Is the proposed licence holder correct? Should it be an individual, limited company or another legal entity?
• Does it show the correct property address?
• What is the proposed length of the licence? It can be up to five years.
• Do you agree with any proposed occupancy limit for the property and the individual bedrooms within it?
• If occupancy is being reduced due to undersized rooms on a mandatory HMO or additional licence, has the council allowed a reasonable time to achieve compliance?
• Are all the licence conditions fair, reasonable and clearly defined so you know what is required?
• Are there any property-specific conditions requiring works to be carried out? If so, is the schedule of work reasonable and has the council allowed sufficient time for you to complete the work? 

As you can see, there is a lot to think about and you will only have a short period of time to respond, so you need to act quickly.

Notice of intention to refuse your licence application

Whilst it doesn’t happen often, the council could decide to refuse your licence application. If that happens, they will issue a notice setting out the reasons for their decision.

The council must send this notice to the applicant and all interested parties. They must allow a period of at least 14 days for any representation to be submitted.

Receiving such a letter from the council can be a heart stopping moment and it requires urgent action. It could be that the proposed licence holder and/or manager is not fit and proper, that the management arrangements are inadequate or that the property is deemed unsuitable for the proposed use. The notice must explain the reasons, so you need to study it carefully.

Preparing a licence representation

There are two main reasons for submitting a licence representation:

• the council is proposing to refuse the licence application and you want them to reverse their decision; or
• the council is proposing to approve the licence application, but you want to negotiate changes to the occupancy limit and/or terms and conditions on the licence.

Either way, it is important to prepare a detailed representation that explains your reasons and contains constructive suggestions about how the licence should be amended.

In our experience, the two most contentious issues are fire precautions and the occupancy limit, particularly in HMOs. We also come across poorly drafted conditions. For example, requiring prescribed information on tenancy deposits to be provided to the tenant at the time the deposit is taken, rather than within 30 days of receiving the deposit.

Some councils ask you to upload your representation to an online system whereas others accept representations by email or post. Either way, make sure you follow any instructions, submit the representation by the deadline and get confirmation of receipt.

What happens next

The council must consider your representation before deciding whether to approve or refuse the licence application. If the council propose to reverse their decision or modify the licence, they will normally issue an amended draft licence and repeat the consultation process.

Alternatively, if the council decide not to alter their decision, they will approve or refuse the licence application and send a copy of the licence to all interested parties within 7 days of making their decision.
 
Appealing to the First-tier Tribunal

Once a licence has been approved or refused, the landlord can appeal to the First-tier Tribunal within 28 days if they disagree with the council’s decision. In our opinion, this should be seen as an option of last resort. It is far better to negotiate and reach agreement with the council during the representation phase.

We handle lots of appeals for our clients and are developing further guidance to explain the First-tier Tribunal appeals process. We will add a link when it is ready.

Conclusion

If you experience difficulties with the licence application process, please get in touch. We can negotiate with the council and resolve issues through the licence representation process. Submitting a licence representation is far quicker and cheaper than pursuing an appeal. 

If you need help in preparing a licence representation, please drop us a line to discuss the situation (here). We can also assist with First-tier Tribunal appeals.

You can also read client reviews on Trustpilot here.  

Examples of cases we have successfully resolved

2023

South London: the local authority issued a draft HMO licence with a proposed occupancy limit of one person for this four bedroom property. We prepared a licence representation explaining why the limit was set too low. The council agreed and the occupancy limit was increased to five people comprising four households (case ref: IN1869)

2022
North London: the local authority issued a draft HMO licence with a proposed occupancy limit of three people comprising two households. We prepared a licence representation explaining why the limit was set too low. The council agreed and the occupancy limit was increased to five people comprising three households (case ref: IN1270/46).

2021
North London: the local authority issued a draft HMO licence with a proposed occupancy limit of three people comprising two households. We advised the landlord on a proposed scheme of works to increase the occupancy limit and prepared a licence representation. The council agreed and the occupancy limit was increased to four people comprising four households (case ref: 224).

South London: the local authority issued a draft HMO licence with a proposed occupancy limit of five people. We prepared a licence representation explaining why the council should allow a couple to live in the largest room. The council agreed and the occupancy limit was increased to six people (case ref: 255).

East London: the local authority granted a selective licence with an occupancy limit of three people. We successfully negotiated for a higher occupancy limit. Whilst we requested a higher limit of four people, the council reissued the licence with an occupancy limit of five people with no alterations to the property (case ref: 266).

North London: the local authority insisted the landlord must apply for an HMO licence costing over £1,000. We reviewed the case and determined no licence was needed. We liaised directly with the council and they agreed with our view that no licence was needed (case ref: IN1188).

South London: landlord applied for an additional licence for a four person HMO. They received a draft selective restricting occupancy to a single household. Helped landlord to negotiate with the council. Prepared a licence representation. The matter was resolved and an additional licence granted allowing occupancy by four people (case ref: IN1155).

2020
North London: additional licence. Draft licence with an occupancy limit of three people in two households. Helped landlord negotiate with the council whilst improving the internal layout. A revised occupancy limit of four people in four households was agreed (case ref: 224)

2019
South East England: mandatory HMO licence. Council proposed adding a licence condition requiring wash hand basins in every bedroom. We successfully negotiated for the proposed licence condition to be removed (read here)

South East London: selective licence. Following receipt of a draft licence, we helped our client negotiate for three licence conditions to be deleted and a fourth condition to be amended (case ref: 158)

West London: mandatory HMO licence. Following receipt of a draft licence, we helped our client negotiate for the maximum occupancy to be increased from five to ten people by negotiating the provision of additional kitchen facilities (case ref: 152)

South East London: additional licence. Following receipt of a draft licence, we helped our client negotiate a five year licence and an 18 month period to resolve an occupied but undersized bedroom (ref: 138)

North West England: mandatory HMO licence. Following receipt of a draft licence proposing to exclude two bedrooms from use as they were considered too small, we helped out client negotiate for all six bedrooms to be occupied

2018
South East London: additional licence. Following receipt of a notice of intention to refuse the licence as the kitchen was deemed too small for three sharers, we helped our client negotiate for the decision to be reversed and the licence was approved (case ref: 81)

North East London: additional licence. Following receipt of a draft licence, we helped our client negotiate changes to various licence conditions that were not appropriate to the nature and occupancy of the property (case ref: 48)

2017
North West London: additional licence. Following receipt of a draft licence that restricted occupation to nil occupants, we helped our client negotiate a scheme of works which resulted in occupancy being increased to five people (case ref: 7)

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