#011 What is selective licensing and what does it mean for Landlords?

Episode 11
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Landlords have a lot of regulations to bear in mind and a failure to do so can have negative consequences for their business. One issue that many landlords across the country have to contend with is selective licensing. At my own agency Liberty Gate in Nottingham, we are working closely with landlords regarding the incoming Selective Licensing and we know that many professionals in this sector have concerns about what it means for them. In this episode we aim to outline what the selective licensing scheme is and what you need to be aware of.

The selective licensing scheme requires private landlords to hold a licence, and this will enable them to rent property to tenants when a licensing scheme is in force in an area. This move places local council authorities in greater control over the rental market and will require landlords to meet certain standards if they wish to act in this role.

Selective licensing can be used only when the local authority believes that the scheme will aid in reducing or eliminating problems within the housing market.

Some of the problems that are deemed relevant to the issuing of the licence scheme include:

  • The area has a low level of housing demand
  • There has been a persistent and significant anti-social behaviour problem in the area
  • There is a significant volume of privately rented properties that are in poor condition
  • There are prominent levels of deprivation in the area
  • There has been a significant level of migration in the area
  • There are significant levels of crime in the area

A licence is granted on properties for a maximum of five years’ time and the licence is not transferable to a new landlord or property owner.

How can a landlord obtain a licence?

As you would expect, there are conditions attached to the licence and the authority will be looking to prove that:

  • The licence holder is a fit and proper person
  • The licence holder is the most appropriate person to hold the licence
  • If the proposed manager of the property is different from the licence holder that they are also an appropriate person
  • The proposed management arrangements are deemed to be satisfactory

There are also conditions attached to the licence that must be met. The mandatory conditions are:

  • A gas safety certificate must be supplied if there is a gas supply to the property
  • All electrical appliances are maintained in a safe condition
  • All furniture is maintained in a safe condition
  • A written statement of the terms of occupancy is provided to the tenant or occupier of the house
  • That references are obtained from people wishing to occupy the house

There are also discretionary conditions attached to the scheme, including:

  • A requirement for the landlord to undertake reasonable steps to ensure anti-social behaviour doesn’t occur at the property
  • Restrictions may be placed on the use of certain parts of the property

If these conditions are met, it is likely that the licence will be granted but it should be remembered that the issuing of a licence is still at the authorities’ discretion.

Can a licence be revoked?

The short and obvious answer to this question is yes. There are several reasons why a licence may be revoked including where there has been a serious breach or repeated breaches of any condition of the licence. If the licence holder is deemed to no longer be a fit and proper person, the licence can be revoked, and it is also possible for the licence to be revoked if the property becomes structurally defective.

What sanctions are available when a property has not been licenced?

If a person who manages or controls a property does not have a licence when they are required to have one, they are committing an offence. This could lead to the offender being faced with a fine on conviction but as of 6th of April 2017, it has been possible for local authorities to impose a civil penalty of up to £30,000 on offenders. This stands as an alternative to prosecution.

Some of the sanctions that offenders could receive include:

  • A Rent Repayment Order, or RRO, and this applies when a property has been let without a licence when it should have a licence
  • A banning order may be imposed on a landlord or agent
  • A landlord may be prevented from serving a Section 21 notice when they don’t hold a licence

If a landlord or owner has a right of appeal, the appeal should be made within 28 days of a decision being made and the appeal is made to the First-Tier Tribunal.

There are good intentions behind the selective licensing scheme, but a lot of landlords naturally worry about the impact on them. Whenever there is a new regulation in place, there tends to be some financial cost to landlords and even though the long-term benefits should improve, there will be costs and issues to contend with in the short-term.

So that concludes todays episode on selective licensing. I hope you’ve found it useful and that it’s given you a few pointers whether you’re already a landlord or if your considering your first investment property. This topic is certainly one to understand and factor in when choosing a location to purchase your investment properties.

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So don’t forget to contact us with any subjects you would like us to cover or questions you would like answering in the coming episodes and until next time I would like to thank you for listening and goodbye for now.

About the author, David Thomas

David Thomas is an Entrepreneur and passionate Estate Agent who loves helping others on their property journey.

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