Shock as Westminster City Council ‘partially revoke’ their additional licensing scheme after just one month

Friday, October 1st, 2021 - London Property Licensing

Westminster City Council additional licensing partial revocation announcement 2021

In a surprise move, Westminster City Council has decided to ‘partially revoke’ their borough wide additional licensing scheme that was launched on 30 August 2021. The changes to their property licensing scheme came into force today (1 October 2021).

Before deciding to implement a borough wide additional licensing scheme, Westminster City Council held a public consultation for 12 weeks from 19 November 2020. The council received 89 responses with 62% support amongst tenants, 69% support amongst residents and 70% objection from landlords.

A detailed report was presented to the full council meeting on 21 April 2021. Following a debate, councillors voted and approved plans for the borough wide additional licensing scheme covering up to 9,000 Houses in Multiple Occupation (HMOs).

An additional licensing scheme designation was made the same day (21 April 2021) and came into force on 30 August 2021. To ensure compliance with the scheme, all licence applications had to be submitted by that date.

Licensing of Section 257 HMOs

Within the original scheme designation, the council included so-called ‘section 257 HMOs’. These are buildings converted into self-contained flats, where less than two thirds of the flats are owner occupied and the conversion of the building into flats does not meet the relevant building regulations. It is a complex part of licensing legislation which places some long lease owner occupied flats within licensable HMOs.

Whilst most section 257 HMOs were included in the licensing scheme, the council excluded those containing just two flats that were not above commercial premises, plus section 257 HMOs where none of the flats share any common parts.

Review of the new licensing scheme

Within three weeks of the licensing scheme starting, officers had undertaken a review of the scheme under section 60(3) of the Housing Act 2004. Why a review was undertaken at such an early stage of the five-year licensing scheme is unclear.

On 23 September 2021, Westminster’s Cabinet Member for Communities and Regeneration considered the review report and decided to ‘partially revoke’ the new licensing scheme. This has involved removing all section 257 HMOs from the remit of the scheme.

A public notice on the council’s website says that the partial revocation is effective from 1 October 2021.

Westminster City Council additional licensing partial revocation announcement 2021

According to the council the scheme remains in force for all other HMOs throughout the borough.

Reasons for ‘partial revocation’

The council’s public notice gives two reasons for the decision to partially revoke the scheme.

Firstly, it says the Covid-19 pandemic has had a major impact on Westminster’s economy and falling rents may risk rented accommodation falling into further disrepair, placing the most vulnerable tenants at risk.

Secondly, it says the council wants to focus on protecting the most vulnerable HMO residents living in s.254 HMOs. These include shared houses and bedsits.

Why these issues have arisen so soon after the scheme was approved, and whether they amount to a good reason to amend the scheme, is unclear.

Impact of the decision

According to the council’s report, £138,000 of fees have already been paid for section 257 HMO licence applications.

In total, the council estimate that removing section 257 HMOs from the scheme will result in 1,050 less licenses being issued and a £1.3million reduction in fee income. The council estimate that £320,000 of staffing costs will be saved from not processing these applications, leaving £980,000 less income to spend on running the licensing scheme.

There is a further complication. As the scheme is being ‘partially-revoked’ on 1 October 2021, it means that section 257 HMOs in Westminster did require licensing between 30 August and 30 September 2021. They were not removed from the scheme entirely. As such, the applications were properly made but the licensing period for section 257 HMOs has now ended.

The council anticipate having to refund all section 257 HMO licence application fees, and say they expect compensation claims for landlords’ costs paying third parties to prepare and submit these licence applications.

Is the decision legal?

Important questions remain about the legality of the council’s decision to partially revoke the licensing scheme.

The legislation includes no power to vary a scheme designation and the concept of a ‘partial revocation’ does not appear in the Housing Act 2004. The legislation simply imposes a power to revoke the designation following a review. Whether a power to revoke includes a power to partially revoke is something only a Court or Tribunal can determine with any authority.

Richard Tacagni, MD, London Property Licensing commented:

This unexpected decision by Westminster City Council will cause huge confusion for the lettings industry. Since April 2021, the council have been telling landlords they must apply for an additional licence for section 257 HMOs by 30 August 2021 or risk a hefty financial penalty.

To change the licensing criteria one month after a scheme starts is something I had never come across before. The legislation requires licensing schemes to be reviewed from time to time and if appropriate, the council can revoke a scheme. Whether the power to revoke a scheme includes the power to amend a scheme is far from clear“.

A free guide containing more detailed information about property licensing and HMO planning rules in the City of Westminster is available here.

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