Why London Property Licensing?

Tuesday, April 21st, 2015 - By Richard Tacagni, Managing Director at London Property Licensing

On Tuesday 21 April 2015, a new website was born providing simple, impartial and expert advice on property licensing and the regulation of private rented homes in London. The London Property Licensing website contains a wealth of information about the mandatory licensing of Houses in Multiple Occupation (HMOs), plus all additional and selective licensing schemes operating in London. But who really needs this information and why now?

The way private rented homes are being regulated has been undergoing significant change and many private landlords are completely unaware of these changes or how they will be impacted.

Whilst the Housing Act 2004 introduced property licensing powers back in April 2006, it is only since the roll out of borough wide licensing in the London Borough of Newham on 1 January 2013 that we have seen such a significant uplift in the number of selective and additional licensing schemes being introduced. Prior to 2013, licensing was often restricted to certain larger houses in multiple occupation under the mandatory HMO licensing scheme that applies throughout England and Wales.

So what are the three licensing schemes?

Mandatory HMO licensing
It applies to HMOs that are three or more storeys in height, containing five or more people who are not all related and share facilities.

Additional licensing
It applies to some or all HMOs not already included in the above scheme. The HMO definition includes properties shared by three or more people who are not all related.

Selective licensing
It applies to almost all private rented homes within the scheme boundary – even houses or flats rented to a single person, couple or family.

Between December 2014 and April 2015, London Property Licensing undertook a major research project to map out the extent of property licensing in London. Information was obtained from all 33 London Councils – both from council websites and freedom of information requests. I am pleased to report that every council responded.

The findings from the research project are quite profound and should act as a wake up call for all landlords and managing agents who rent out residential properties in London. Some of the key findings include:

  • Over one third of London boroughs already operate a selective and/or additional licensing scheme covering part, or all, of their borough.
  • Seven London boroughs are consulting, or have recently consulted on the introduction of new licensing schemes.
  • Over 100,000 private rented homes in London now require a licence from the council before they can be rented out.
  • Less that 40,000 private rented properties have been licensed so far.
  • A quarter of London boroughs took no prosecutions against rogue landlords in the three-year period from April 2011 to March 2014.

Did you know there are currently fifteen separate selective and additional licensing schemes dotted across London? Each scheme has different criteria, licence fees, terms and conditions and there is no central coordination. So with tens of thousands of properties being rented out illegally without a licence, there is an urgent need to raise awareness. That is why London Property Licensing was born.

Remember that failure to obtain a property licence can result in prosecution and a hefty fine, a Rent Repayment Order to repay up to 12 months rental income and the inability to evict the tenants using a Notice of Seeking Possession under Section 21 of the Housing Act 1988.

Can licensing achieve its objective to tackle anti-social behaviour, poor management or unsafe housing conditions? I think it is too early to say, although with the financial pressure on local authorities, the likelihood of recruiting large numbers of skilled officers to enforce all these schemes remains to be seen.

Over the weeks and months ahead, I plan to share more information from the research project to help increase awareness of property licensing and encourage a constructive debate about the future regulation of the private rented sector.

In the meantime, I hope the London Property Licensing website will be a useful resource for all and I welcome your feedback.