A guide for landlords and managing agents on Selective Licensing
What is selective licensing?
(HMOs) have become an issue in a number of towns and cities across the country. High concentrations can have a detrimental effect on the local environment as well as impacts on social cohesion and services within an area. Newcastle, along with other local authorities, has lobbied the Government for greater planning powers to be available to tackle these problems.
Youmay be aware that the Government changed the planning legislation in October this year in relation to Houses in Multiple Occupation. It is now permitted to change a family dwelling (class C3) to a small house in multiple occupation of up to 6 people (class C4). This means that such changes of use can happen freely without the need for planning permission. However, in introducing the new powers the government stated that, where Local Authorities consider that there is a local need to control the spread of HMOs, they can use existing powers in the form of Article 4 Directions to require developers to submit planning applications.
The Council’s Executive Committee has agreed to proceed with an Article 4 Direction in the Area of Housing Mix as defined by the Shared Housing Supplementary Planning Document. This area contains the highest proportion of existing HMO’s and evidence of the impact of this type of tenure on the area already exists to support the creation of the Direction.
The housing act 2004 provides councils with the power to introduce licensing of privately owned properties in selected areas with the aim of improving conditions for local tenants and the surrounding community. In order to introduce Selective Licensing, the council has to demonstrate one of the following criteria within the designated area:
1. That the area is, or is likely to become, an area of low housing demand AND/OR
2. That the area is experiencing a significant and persistent problem caused by anti-social behaviour and some or all of the private sector landlords who have premises in the area are falling to take appropriate action to combat the problem.
Selective Licensing requires all private rented properties within a designated area to be licensed. Certain standards and conditions are required to be met in order for a licence to be granted. Failure to meet such conditions and standards may result in prosecution and /or the making of a management order which will transfer responsibility for managing the property to the council.
It will be a criminal offence to let a property in a Selecting Licensing area from the 6thSeptember 2010 without applying for a licence. On conviction this may result in a fine up to £20,000. For any period where an unlicensed property is being privately rented, an application can be made to the Residential Property Tribunalfor a Rent Repayment Order for up to 12 months’ rent to be repaid including housing benefit payments.
Why Introduce Selective Licensing?
We recognise that there are many good landlords in the nation, however there are so many problems associated with anti-social behaviour, vandalism, poor quality rented housing, and irresponsible and unscrupulous landlords can have a detrimental effect on the community. As the area becomes less attractive, properties are left empty or increasingly are purchased by speculative investors.
These landlords may have no interest in the area and often rent to tenants who have not been properly vetted, leading to further anti-social behaviour and decline.
City Councils and local authorities aim to encourage the best possible standards of property management and maintenance amongst private landlords, letting agents and managers of property. City Councils encourage all landlords to join up to good practices and management standards, in return the City Councils offer a number of free advice and support services and work with these landlords to offer good quality and affordable accommodation to residents. By working in partnership landlords can make an important contribution to efforts being made to improve the housing stock.
Selective Licensing will give Councils the power to make Landlords accountable for the management of their property and tenants. It will encourage absentee or unprofessional landlords to use the services of an agent or other appropriate person to manage their property effectively.
Councils believe that Selective Licensing will benefit communities by:
- Ensuring privately rented properties are well managed
- Tackling unprofessional landlords and supporting good landlords
- Reducing anti-social behaviour
- Increasing demand for properties
- Ensuring the local area is a more attractive place to live
- Encouraging responsible residents to stay
Who will need to be Licensed?
All private rented properties within a designated Selective Licensing area are required to be licensed. The legislation allows certain properties to be exempt from licensing. These properties include:
- Those managed or controlled by Registered Social Landlords or local housing authorities.
- Buildings regulated by other legislation
- Holiday lets
- Tenancies under a long lease
- Business tenancies of where the council as taken action to close the property
- Homes occupied by close relatives of the owner
Who can apply for a licence and who should be the Proposed Licence Holder?
The proposed licence holder will preferably be the owner or if deemed to be more appropriate, a person designated by the owner, e.g. the managing agent. In determining a licence application the council has a duty to award a licence to the most appropriate person. At the very least, the council expects the licence holder to have the power to:
- Let and terminate tenancies;
- Access all parts of the premises to the same extent as the owner; and
- Authorise expenditure of 25% of the yearly income of the house for emergency repairs (at a minimum of £1500).
Temporary Exemption Notice (TEN)
Some properties may be eligible for a Temporary Exemption Notice (TEN) if steps are in progress to change the occupancy of the property from a private rented property e.g. if the property is being sold for owner occupation. If you believe you may be eligible for a TEN please contact the Selective Licensing team who will be able to advise accordingly.
All licences will expire on the 5thSeptember 2015 although on occasion some licences may be granted for a shorter period. All properties will be inspected at least once during the life of the scheme, although additional inspections may also take place. The Council will contact the licence holder prior to any inspection unless deemed otherwise necessary.
Licences are non-transferable
Should the licence holder change during the licence period a new licence application and fee will be required. Charges may also be incurred for variations to the licence e.g. changes to the ownership or manager during the licence period.
Current fees and changes
Upon validation of the application for a licence a request will be made for payment of outstanding fees. Upon receipt of the invoice, payment must be made within 21 days. Failure to pay the outstanding fee within this time may result in refusal of the licence. In such cases the application will be referred to a committee comprising members of the council’s executive. If the proposal to refuse the licence is upheld by the licensing committee this may result in the making of an Interim Management Order (IMO). This will transfer the management of the property to the council.
For further information and details on how thehomegame.co.uk can help with selective licensing in your area, please contact us on firstname.lastname@example.org or 01748 823 863.