Councils Lose Powers to Introduce “Blanket” Selective Licensing

The Department for Communities and Local Government (DCLG) issued Guidance to Councils this week which restricts their ability to use the powers given them in the Housing Act 2004 to introduce more licensing of private landlords in their area.

Selective Licensing was intended to enable those councils, who had difficult problems relating to anti social behaviour or low demand in privately rented properties, to tackle the problems by forcing landlords in the designated areas to pay for a licence to let. Those councils could then attach licence conditions which would solve the problems or prevent the landlords from letting.

Unfortunately many local authorities have misused their powers and Selective Licensing has become the scourge of the PRS. Good landlords have been forced to pay the licence fees while bad landlords have continued to let and therefore these schemes have not only failed to solve the problems they have created more. Many landlords have avoided buying properties to let in areas where Selective Licensing has been introduced. These are not the bad landlords who are meant to be the targets, they are those landlords who know that the only way that they can build a profitable business is to avoid additional overheads or increase their rents.

When Liverpool City Council announced that they intended to use Selective Licensing to force EVERY landlord in the city to become licensed the National Landlords Association (NLA) said “Enough is enough”. Newham Council had already got away with licensing every landlord in the whole of their area and that trend was growing with several other London authorities planning to do the same.

Working with the Department of Communities and Local Government (DCLG) they agreed that there needed to be some controls put in place to stop other local authorities doing what is known as “Blanket Licensing”, which far from being Selective, is against the spirit and intention of the legislation. Fortunately Government agreed.

The new guidance, Improving the Private Rented Sector and Tackling Bad Practice, was issued by DCLG on behalf of the Housing Minister Brandon Lewis MP who said in the forward:

“The private rented sector is an important and growing part of our housing market, housing 4.4 million households in England. The quality of housing in the sector has improved dramatically over the last decade. It is now the second largest tenure and this growth is forecast to continue growing.

I am proud of this growth as it shows increasing choice, improving standards whilst helping to keep rents affordable. The Government supports a bigger and better private rented sector and wants to see this growth continue. This can only be achieved by maintaining the reputation of the sector and continuing its improvement in standards. This has been achieved by good landlords working within the sector and is demonstrated by the fact that 84% of tenants are satisfied with their accommodation; underlining that the overwhelming majority of landlords are reputable and provide decent well maintained homes. We want to encourage and support these landlords to continue to provide a good service and safe, decent and well maintained homes for their tenants.

Whilst the majority of landlords are diligent and responsible, there are a small minority of landlords who ignore their obligations and knowingly rent out unsafe and overcrowded accommodation. These criminal landlords are exploiting vulnerable tenants, who just want a safe place to call home. In extreme cases, criminal landlords have links to organised crime, gangmaster activity and human trafficking. This cannot continue unchecked, as these activities undermine the work of good landlords and harm the sector’s reputation. Approaches to tackling criminal landlords can be varied, this guidance draws on a wide a range of experience from local authorities; offering practical advice on how to identify and effectively prosecute criminal landlords.

This Government wants to create an environment that roots out and removes criminal landlords, allows good landlords to thrive and provides peace of mind for tenants seeking a place called home.”

The guide covers several issues but the one which most of us will want to know about is the restrictions to be placed on local authorities who plan to introduce Selective Licensing after 1st April 2015.

The Guide identifies some of the issues which are preventing councils from tackling bad landlord and the most fundamental of these is :

“A key problem for local authorities can be identifying the location and scale of the private rented sector in their area.”

Many of the local authorities which have introduced extra licensing have done so in order to gain this information – this is ridiculous and I was very pleased to read in this Guide something which puzzles most of us – why different departments are not sharing their extensive records in order to map properties which are rented by private landlords – rather than forcing good landlords, who they need, to pay licence fees which give them the money to chase the bad boys. Selective and Additional Licensing schemes have left a bad taste and have damaged the relationships between local authorities and responsible landlords. Government has recognised this:

“Selective licensing can play an effective role in tackling criminal landlords and linked activities, for example illegal immigration. When it is applied in a borough wide fashion and not properly enforced, it can affect the majority of landlords who provide a good service. The Government is mindful of this when considering the use of selective licensing. To prevent the disproportionate use of selective licensing to penalise good landlords; the Government has announced plans to introduce a threshold in instances where licensing would cover 20% of a local authority’s area or stock of rented properties. In such cases, local authorities must first seek approval from the Secretary of State. Larger schemes will be judged impartially, but they will need to demonstrate need and be supported by adequate enforcement plans. New guidance will be made available, following enactment of the changes.”

The Guide contains many other restrictions but this one in particular will prevent the misuse of these powers and should force local authorities to do the homework before they take the big guns out.

So no more blanket licensing, in future local authorities will need to choose the areas where they really need to use these powers and where they will be able to prove that they have worked. Government will be able to apply their own criteria to each local authority which applies to the Secretary of State and must be mindful of the fact that private landlords are preventing homelessness, offering the many tenants who are not yet ready to buy the choice of renting from us in the areas where they want to live, providing affordable homes to those on modest incomes and those who are in need of social support.

We all want to see the back of bad landlords and poor properties but, having paid our taxes, none of us want to pay more to local authorities to enable them to enforce their extensive powers.

Well done NLA a battle well chosen.

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