Survey by consumer group Which? reveals 70 councils now operate additional or selective licensing schemes
A survey by the consumer group Which? has found an increasing number of councils are launching additional and selective licensing schemes as they look to improve standards in the private rented sector. To date, 70 councils in England have brought in schemes that go above and beyond the mandatory HMO licensing scheme that applies across the country.
According to Which? last week Tower Hamlets Council became the latest council to announce a public consultation to expand its selective landlord licensing scheme. However, research by London Property Licensing indicates the Tower Hamlets consultation is about a proposed additional rather than selective licensing scheme.
The Which? report summarises the three types of property licensing schemes as:
1. Mandatory HMO licensing
The scheme applies if you are letting out a large HMO (house in multiple occupation) to five or more people who are not all related and share facilities. To date, the scheme has been restricted to properties that are three or more storeys in height although that restriction is being removed from 1 October 2018, and not 1 April as reported by Which?
2. Additional licensing
Additional licensing schemes only apply to landlords and agents that are letting out HMOs. Each and every licensing scheme is different and so you need to study the rules carefully. Which? report that the licence application fee will cost £500-£600, although in London the average fee for a 5-bedroom HMO is over £1,100, with one council charging up to £2,500, based on our own research.
3. Selective licensing
Selective licensing can apply to all landlords in a geographical area that are not already licensed under a mandatory HMO or additional licensing scheme. Before awarding you with a licence, the council will make you undergo checks to prove you are a ‘fit and proper person’ and you’ll need to agree to adhere to various conditions around property management and tenant safety. The licence fee could be around £500-£600 although in London the highest fee is currently £750.
Which? report that licensing related offences can result in fines of £5,000 to £20,000 although the rules changed in 2015 and the fine is now unlimited. Civil penalties of up to £30,000 per offence can also be issued.
The complexity and patchwork of landlord licensing schemes is demonstrated by the map in the Which? report purportedly listing all licensing schemes in London. However, an independent check by London Property Licensing revealed that several licensing schemes are missing from the map. This illustrates the compliance risk facing landlords and agents if they misunderstand the rules.
London Property Licensing remains the only website providing a comprehensive directory of every licensing scheme in London, where around 235,000 private rented properties need licensing.
You can read a full copy of the Which? Report here.
London Property Licensing have published a series of free guides to help landlords and letting agents to understand their responsibilities. We have guides to mandatory HMO licensing (here), additional licensing (here) and selective licensing (here).
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