Landlords have been warned to prepare for more local licensing schemes this year, after the government took the brakes off local councils’ choice to introduce them.
On 23 December, councils were given the right to introduce private rental licensing schemes for landlords in their areas without needing permission from the Secretary of State for Housing.
Previously, councils had to get central government signoff for any scheme that covered more than 20% of their area, or more than 20% of its privately rented homes.
Under the new guidance from the Ministry of Housing, Communities and Local Government (MHCLG), councils looking to add to their service coffers from such schemes will still have to demonstrate that their area is affected by low housing demand, significant and persistent anti-social behaviour, poor housing conditions, or high levels of crime, deprivation or migration.
They will also have to consult on any proposed scheme for at least 10 weeks, include the local mayor (if there is one) in the consultation process, share data on the scheme with MHCLG, and publish the outcome of any selective licensing reviews.
But taking the Secretary of State out of the process will remove a big hindrance to local licensing schemes. Previous housing secretaries blocked several local licensing schemes, including Liverpool’s in 2020 and Croydon’s in 2021.
Will councils take advantage?
Easier licensing scheme rules may have been an early Christmas present for councils, but it hasn’t had universal support.
On average, councils with licensing schemes charge landlords around £700 for a licence lasting up to five years, and fines for renting out properties without a licence can run into the tens of thousands. Some in the sector have reacted furiously, with Phil Turtle of Landlord Licensing & Defence calling them “out-of-control local council money raising schemes”.
Even so, some local authorities have been quick off the mark. Grimsby has already launched a consultation, Burnley is looking into expanding the local licensing scheme to new areas, and Barking and Dagenham could require all landlords in the borough to be licensed from 6 April. In total, estimates property compliance platform Yuno, there are 37 licensing schemes either in consultation or about to be implemented, from Blackpool to Newcastle.
The next question is what will happen to selective licensing schemes after the Renters’ Rights Bill is passed. The bill will bring in a new national database of private rented sector landlords and properties, helping local councils to enforce housing standards. But sector experts have said that this will lead to a lot of duplicate data – and landlords will be left with two fees to pay. To date, though, the government has said that the two systems will exist alongside each other – and politicians have even rejected an amendment that would have extended selective licensing schemes to 10 years.
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