Are the government about to make it even harder to introduce selective licensing?

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.

  1. The Residential Landlords Association publicised and welcomed the proposed change on their website earlier in the week.

    However a couple of weeks ago they also posted an article saying that Councils are letting down tenants by poor enforcement.

    “Tenants are being let down by a failure to properly enforce the powers already available to tackle poor housing conditions, argues the Residential Landlords Association.”

    Their position seems to be that councils do not have resource to implement existing laws and therefore no new law should be introduced.

    “The RLA is writing to all the political parties to call on them to commit to undertake a review of the capacity and capabilities of local authorities, the courts, the police and trading standards to enforce the powers they already have as they relate to private rented housing.”

    The RLA preferred position is that if a landlord joins a landlord organisation that they would not need to apply for a landlord licence – what they call – “co-regulation”, where the RLA or other organisation jointly regulates the sector even though landlord orgs do not have the resources themselves to ensure that minimum physical standards or management standards are achieved, in effect undermining existing regulations.

    The quote below is taken from the RLA Manifesto for 2015.(page 22)

    “The RLA proposes a system of co-regulation with local authorities whereby landlords are given the opportunity to join an industry-run accreditation scheme taking them out of the purview
    of local authority control”.

    In my career in housing it was necessary for me to instigate prosecution of a “local business man of the year” who was a member of all sorts of professional bodies and also others at the upper end of the market as well as those at the lower end who are generally described as rogue landlords.Why should there be different standards of protection within a single industry?

  2. Licensing is supposed to solve specific issues in problem areas. We agree with Colin and the view of RLA – enforcement is the key. What Newham has done well is put money aside and hired staff to actually carry out the enforcement that the scheme throws up. This, fundamentally, is what others councils – to eager to jump on the bandwagon – fail to do when proposing a scheme. Making a landlord have a license or to register does absolutely nothing unless it’s coupled with enforcement. We lobbied government for this change – you can see our report on why here

  3. “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; ”

    The article is incorrect, there was no legal challenge to Newham Council.

    What evidence do Shelter have the Newham scheme is successful? Has anyone conducted a study?

    As Licensing is a new scheme. Did Shelter set up offices in Newham to help Landlords and tenants facing issue or to learn about concerns?

    A number of Newham Landlords had to needlessly evict tenants prior to Licensing coming into force. In my opinion, Shelter is partly ‘responsible’ for those evictions as you supported Licensing and you remained silent on the consequences. These tenants would not have not lost their home if it was not for licensing. These were good people….

    It is unclear how handing over £500 per property to Newham council helped improve that rental property. You have to remember, the Government has stopped increasing housing benefit and it is effectively frozen for private landlords. Despite Landlords sticking by their housing benefit tenants, Newham Council has punished Landlords by increasing financial burden by asking for £500 towards the License.

    Even if the property is sold to another Landlord, it will require a new license which is another £500.

    Newham has the third cheapest property in London. It is popular with tenants who are looking for affordable housing in London with good transport links.

    Newham Council has alienated private landlords. Every council department is at war with landlords. The Mayor of Newham went to the Governement, wishing to set up a special task force to investigate every Landlord, to check if they were paying tax, this was highly offensive. Why not check all businesses operating in Newham?.

    Licensing does not drive out the bad landlords. The bad landlords know how to outwit the council. Many of the bad landlord were issued licenses, despite the council having received complaints against them in the past. One Landlord had built a shed in the garden, he was reported by a neighbour, Newham Council visited the property and took photos of the shed. They wrote letters to the landlords. He was still granted a license. That landlord gave his address as a kebab shop!. What is the point of a Landlord register?

    It is the good landlords who face scrutiny. If a tenant gives a false complaint the to council, then letting agents are receiving nasty letters from the council. But there is no one impartial to look at the case and help resolve matters. Especially, with issues such as mould where tenants turn the property in to tropical steam room.

    A garage which have been illegally converted to a single room flat, is still occupied by tenants. I was wondering when Newham council take action but it still has not changed back to a garage.

    The newsagents still show adverts for rooms for £35 per week, it is clear the landlord are cramming four people into a room, as the going rate for a room is £70 or £100 for an en-suite. Newham is not interested in these things.

  4. “These tenants would not have not lost their home if it was not for licensing. These were good people.”

    As you are obviously a local person and you knew the tenants and the local streets it begs the question as to why the landlords ‘had’ to evict the good people merely because a licensing system.was to be introduced.

    Perhaps it was because the good people were unable to find good quality accommodation elsewhere and had to resort to rent places that were not up to modern standards for homes in a relatively rich country. Reports of the work that Newham has done show that they have, in conjunction with fire, police and Gas safety services been able to ensure that people are not living in death traps with several people living in one room. Their inspection work will take a time to complete. They may have perhaps placed the bed in shed property that you allege was eventually licensed in a low risk category if it was no longer to be occupied and the rest of the property was to be brought up to standard.

    It seems that you have very in depth knowledge of the area and what has happened on individual properties. As a local resident you have the right to make a complaint to the Local Govt Ombudsman if you feel that the council is administrating the system improperly. Believe me they do find against council officers and make sure that everything that should have been done was done. Look at their website.

    All that licensing is requiring is that landlords who let properties ensure that they are usually a little above the general standards that apply elsewhere. The licence fee provides the resources for them to staff the project.

    Landlordism is a business like any other, even if it is a small business. Gas engineers, electricians and other small businesses need to maintain their qualifications to remain in and to pay the relevant fees. They do not expect the local council to bear the cost.

  5. Councils have no need to bear any of the costs as there is already legislation in place for this. If the council are genuinely concerned about residents in the borough of newham then why not have a landlord register and educate tenants about the rights that they have when moving into private accommadation. Is this not possible?
    Also, how exactly and in what way has antisocial behaviour improved since the introduction of landlord licensing????? What has antisocial behaviour and licensing got to do with one another?
    I sincerely believe that the London borough of new ham has looked at online way of dealing with this issue of a handful of bad landlords and has decided to penalise them all with a licensing fee.

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