Published: 12 Mar 2015 by Martha Mackenzie

An article in last night’s Evening Standard and a draft Statutory Instrument (SI) published last week detail major changes to selective licensing. Licensing is a key tool that councils can use to improve their local private rented sector.

This has happened very suddenly. And with just three weeks left until the end of the Parliament, it will progress at lightning speed.

With this in mind, I have done my best to unpick what we know.

The good

The government are extending the criteria for selective licensing – this is something Shelter and local authorities across England have called for.

In order to improve the management of privately rented homes, councils have the power to introduce selective licensing. Before exercising this power, they must demonstrate that a given area is suffering from a significant problem with low demand or antisocial behaviour.

These terms are restrictive and they do not reflect how much private renting has changed.

As a result, the government are now introducing several additional criteria. Local authorities will also be able to introduce selective licensing if a given area has a high proportion of privately rented homes and exhibits one or more of the following: poor property conditions; an influx of migration; a high level of deprivation; and high levels of crime.

In theory, this will allow local authorities to use selective licensing to deal with a much wider range of issues.

The bad

However, at the same time, the government appear to be making it harder to introduce licensing in the first place.

From 1st April 2015, councils will have to seek permission from the Secretary of State for ‘any selective licensing scheme which would cover more than 20% of their geographical area or would affect more than 20% of privately rented homes in the local authority area’.

Although not explicitly ruling out borough-wide selective licensing, this new measure is designed to put a stop to this practice.

The London Borough of Newham introduced borough-wide selective licensing in January 2013. Despite legal challenges at the time, this scheme appears to have been very successful; it has even won the praise of landlords. In response to this success, a number of other authorities are considering this path – something the government are not happy about.

However, there is a strange contradiction at the heart of government. Last year, the Department for Communities and Local Government awarded Newham over £1million pounds to support their scheme. Clearly they want to drive up the standard of privately rented homes, but disagree about the best way to go about it.

This new measure interferes with councils’ autonomy: local authorities are well placed to decide whether borough-wide licensing is appropriate for them. It also creates another costly hoop for cash-strapped authorities to jump through.

The ugly

What is particularly unwelcome, is the way the government have chosen to present this. The Evening Standard article talks of licensing as a ‘tenant’s tax’. The implication being that borough-wide licensing pushes up rents – and should therefore be opposed by renters. In reality there is little evidence of this.

Licensing is an important tool to ensure renters get the best deal from their private landlord. Positioning renters in opposition to licensing is not only disingenuous, it is out of touch when tenants are crying out for reform.

Where do we go from here?

While Shelter are not opposed to a more targeted use of selective licensing, it has to be coupled with other, major policy interventions:

• A national register of landlords – this would equip local authorities with data to proactively manage their private rented sector.
• Increased funding for local authority enforcement – this would help local authorities target rogue landlords.

Rushing through a major change in this way is highly unorthodox, as a result there is every chance it will not happen. The House of Lords will debate the Statutory Instrument on 23rd March. In the meantime, we’ll keep you posted.