Selective Licensing - Is it Really the Answer?

Selective licensing is back as a hot topic again where landlords are facing the obligation to obtain a license to rent out properties in certain designated areas – This is not just for HMO’s, and it will affect almost all privately rented homes in the assigned areas. Thurrock is currently in consultation and in Great Yarmouth the Council is proposing a scheme and plans to launch consultation soon. 

The schemes are introduced by local authorities with the aim of improving housing standards and manage issues like anti-social behaviour or overcrowding. While it strives to protect tenants and raise rental property standards, we know that landlords have several real concerns about selective licensing and the negative impact it has potential to cause:

1. Cost and Financial Burden

• Licensing Fees: The cost of obtaining a license can be significant, especially for landlords with multiple properties.

• Associated Costs: Complying with licensing requirements (e.g. property upgrades, safety checks) can add further expenses.

  
  

2. Administrative Burden

• Paperwork: The application process can be complex, requiring documentation such as safety certificates, tenancy agreements, and proof of property management procedures.

• Ongoing Compliance: Landlords may need to keep detailed records and be subject to inspections, which takes time and effort.

  
  

3. Uncertainty and Inconsistency

• Variation by Area: Licensing rules and fees vary between councils, making it harder for landlords who operate in multiple regions to keep track of requirements.

• Changing Rules: Local authorities may revise licensing rules or expand licensing zones with little notice, making it harder for landlords to plan long term.

  
  

4. Penalties and Legal Risks

• Fines for Non-Compliance: Failure to obtain a license or meet its conditions can result in hefty fines, rent repayment orders, or even prosecution.

• Criminal Offences: Renting without a license in designated areas can be classified as a criminal offence.

  
  

5. Questionable Effectiveness

• Doubt Over Impact: Some landlords argue that selective licensing unfairly targets compliant landlords while bad landlords and problem tenants remain unaffected.

• Enforcement Issues: Inconsistent enforcement and under-resourced councils can lead to unfair application or limited improvements in housing quality.

  
  

6. Impact on Rental Market

• Increased Rents: Landlords may raise rents to cover costs, affecting affordability for tenants.

• Deterrent to Investment: The scheme may discourage property investment or lead to landlords exiting the market, potentially reducing rental stock.

  
  

7. Stigmatization

• Negative Perception: Being in a licensing area can imply the area has significant problems, which may affect property values and tenant demand.

  
  

If you're a landlord facing a new or existing selective licensing scheme, it's important to:

• understand the local council’s requirements

• budget for both direct and indirect costs

• consider seeking professional advice or representation through landlord associations

  
  

ELA are currently in talks with MPs and negotiations with other landlord associations to try to create a louder voice and higher impact against selective licensing.   We feel strongly the effectiveness of such a scheme is questionable as there is limited evidence that licensing will improve housing standards and rogue landlords could still operate under the radar whilst compliant ones bear the burden.

We will continue to update our members with the outcome of those negotiations but independently landlords are able to lobby their local MP to help support the negative impact that the introduction of selective licensing can have.