Alternatives to Landlord Licencing Schemes

by Mark Alexander

11:45 AM, 12th August 2013
About 7 years ago

Alternatives to Landlord Licencing Schemes

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Alternatives to Landlord Licencing Schemes

The alternatives to Landlord Licensing Schemes require joined up thinking, changes to data sharing protocols within local authorities and revised high level directives and strategies which must begin at Government level. 

Perhaps the first question to ask is what is Landlord Licensing all about? Is it really about raising standards or is it more to do with raising funds?Alternatives to Landlord Licencing Schemes

Funding

If society as a whole desires that people should not be subjected to sub standard housing conditions then society as a whole must pay to enforce this (howsoever that might be done) whether the money is raised at a local level or centrally.

It is both unacceptable and wholly undemocratic that landlords should be singled out by Government, Councils and Local Authorities to pay stealth taxes badged as licensing fees on the pretence that the money will be used to fund enforcement related initiatives.

Costs associated with licensing schemes imposed on landlords are funded through increased rents. Neither landlords nor tenants want this, particularly as there is clear evidence (demonstrated in this article) that landlord licensing schemes have proven not to be an effective solution to problems in the Private Rented Sector.

Recycling of Court awarded penalties

The high costs associated with prosecuting criminal landlords is borne by Local Authorities, however, fines and penalties go to the treasury. If these funds were to be redirected to the prosecuting authorities this would assist funding of additional prosecutions and create incentives to bring more criminal landlords to task.

Improvements to PRS housing standards for benefits claimants

Our suggestion is that Local Authorities should check to ensure they only pay housing benefits to fit and proper landlords who provide decent accommodation. That would be what any responsible parent would do if paying for their offspring’s accommodation. In this case, the state is effectively in loco parentis. It is proposed that payment of Housing Benefits to landlords are suspended following unsatisfactory checks until such time as properties are brought up to acceptable standards. The proposed quid pro quo to landlords is direct payment of rent before the benefits cap is applied. The logic for direct payment of rent to landlords being the first payment is that shelter is one of the most basic requirements for human existence and should, therefore, be the first welfare benefit to be paid, not the last as it is now. Clearly this impacts significantly on the Universal credit proposals which have been widely contested by the PRS and Housing Charities alike.

The above would require inspections prior to new housing benefits being granted. This would also enable phasing in as opposed to having to asses every property within a defined timescale.

The enforcement teams currently in place within the public sector to tackle problems in the PRS are:-

  • Environmental Heath Officers for property conditions,
  • Planning Enforcement – for unauthorised conversions which seriously brings down standards across the board.
  • Tenancy Relations Officers for harassment and illegal eviction
  • Benefit Fraud to tackle widespread scamming
  • Trading Standards for sharp practices amongst agents
  • Anti social behaviour teams

Outside of the council are:-

  • EDF revenue to tackle cannabis factories and theft of electricity
  • British Gas revenue for theft of supply.
  • Police Community support officers and the Police.

Put them all together and you have quite an army. This is what a visiting team would need to do.

  • Visit the property and check for breaches of HHSRS.
  • Check gas safe certificates
  • Phone the planning team if it’s a conversion to ascertain that all has been done with permission. (3 minutes)
  • Land reg check to ensure the person you are dealing with is actually the owner (£3 and 2 minutes)
  • Experian check for the same reasons as above (£6.99 10 seconds)
  • Council tax check for any outstanding bills and history of use (5 minutes)
  • Check past Housing Benefit claimants which cross references info you have about landlord (5 minutes)
  • Call to EDF and British Gas to make sure all utilities are above board. (5 minutes & free)
  • Run companies search to check solvency. (Free or just £2 for a director check)
  • If landlord is not resident in UK check NRA certificate. (free)
  • Run landlord or company name through Google (You’d be amazed what comes up sometimes & free)
  • Call Environmental Health Officer to see if they have any dealings in the past with the property or the landlord/agent. (2 minutes & free)

The problem is that it is only in sporadic circumstances that any of these teams and organisations talk to each other on an unofficial basis. Often they have different computer databases, so a person might be receiving a grant from one council team while another team is prosecuting them for fraud or failing to pay council tax. Councils do work in this way in other circumstances. MAPPA panels made up of homelessness workers, social workers, Police, probation officers, etc have been common place for years tackling those who are a danger to the community.

Tax Breaks for Landlords

Well thought out tax breaks could encourage private rented sector landlords to increase availability of quality housing which is let to recipients of benefits, thus increasing competition and driving out the racketeers who rely on intense demand  in this segment of the private rented sector.

Fair and reasonable HMO licensing in Birmingham

Reasonable progress has been made in Birmingham to bring about a major change in the structure of their HMO licence fees. In a nutshell good landlords, who have become accredited through an education based scheme, are given a big discount on their licence fee. Good landlords who are members of recognised landlords associations are given a further discount. This has reduced the licence fee from £1,150 to £850 but is still questionable. The cost of these discounts is being recovered by charging the bad landlords. When the Local Authority has to trace and chase a landlord and force him to licence he will be charged the full amount without discounts, regardless of accreditation or landlords association membership and a one year licence is granted. At the end of the year the landlord has to pay the full fee again and is then granted a normal five year licence. This proposal was made by National Landlords Association and Birmingham City Council accepted the model on the basis that bad landlords who increase their enforcement costs  should pay, not as happens in other areas. The same structure applies to the licence renewal.

Whilst we support the basic principals used in Birmingham we must point out that we do not support Additional Licencing and/or Selective Licencing. The requirement for compulsory licencing of any type of HMO is questionable based on our first set of suggestions.

Failed or failing Landlord Licensing Schemes

Landlord Licensing in Scotland has been in place for 7 years, Housing Charity Shelter said “We conclude that landlord registration is not yet fulfilling the expectations placed upon it; indeed, that it may not be able to do so.” in this report.

The Salford Landlord Licensing scheme was a failure admitted by the Local Authority but there are plans to extend it. Isn’t doing the same thing and expecting different results supposed to be a sign of madness? See this report.

The Oxford scheme has become a bit of a joke, check out this thread based on a freedom of information request to Oxford County Council.

Sources of information and how you can make a difference

Sources of information are linked.

This article has been compiled from a long discussion here on Property118.

If your local authority intends to introduce a new form of licensing these suggestions will give you options to propose alternative solutions. You may obtain a copy of this document as a PDF to present to your local MP and/or to submit in response to public consultations by completing the form below.

Why not write to your local MP (Member of Parliament) about this and ask him/her to raise the matter in the Houses of Parliament and with his/her Local Authorities?

If you do not have the contact details of your local MP, please see >>> http://findyourmp.parliament.uk/

Remember, increased licensing results in increased rents. Together we can make a difference.

Landlords and tenants combined = over 5 million votes!

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Comments

Ben Reeve-Lewis

15:19 PM, 12th August 2013
About 7 years ago

Haha you two are like a double act.

Tax incentives for providing decent property? Isnt there a moral duty to do so?

An increase in social housing would entirely change the demographic and yeah, I’m all for that. I think it’s tragic that social housing has become both so denuded and also so vilified.

I’m old enough to remember it as an ethos, a philosophy even. I grew up in council housing and I remember when Thatcher brought in the right to buy there were as many people who refused to buy on principle as there were tenants who just wanted onto the property ladder at a discount and I hold no value judgements over either.

But the fact remains it aint gonna happen. Son of right to buy means that any new stock will be sold off and the social housing world has changed remarkably.

The 15 biggest Housing associations in London are now looking to invest in properties to run at market rents and in a PRS style of management, albeit it with a social landlord. The times are indeed changing.

I’m not promoting a licence either Neil. Just give me a multi agency team to target and take out the offenders and I’m happy to leave you decent lot alone.

Neil Patterson

15:47 PM, 12th August 2013
About 7 years ago

Reply to the comment left by "Ben Reeve-Lewis" at "12/08/2013 - 15:19":

I am merely thinking if you provide good quality property to Councils for their inspection you get some sort of tax break, but only while it is being used by the council for social housing.

EG you get a tax certificate from the council like you do for Child care when you are employed.

No upfront cost to government to provide more social housing and less need for scoundrels.

This must be a more efficient way of helping the unfortunate when Councils have no money.

It's like a mix of Capitalism and Socialism together or does that make me an unrealistic dreamer?

Neil Patterson

15:50 PM, 12th August 2013
About 7 years ago

Reply to the comment left by "Ben Reeve-Lewis" at "12/08/2013 - 15:19":

PS I would vote for putting Ben in charge.

Ben Reeve-Lewis

16:02 PM, 12th August 2013
About 7 years ago

Ha dont vote just yet Neil

Ah that little difference in definition again. In the presence of housing benefit caps I have long suggested tax breaks for landlords offering properties to councils to effectively use for social need. There are tax breaks for energy efficiency etc so why not?.

Despite all the talk about benefit scroungers and the need to shave what is it? £17 billion off of the housing benefit bill? The bill has gone up, because more people are claiming who are working on crap wages. Also the homelessness bill has gone through the roof because landlords, particularly in London where rents are off the scale, wont/cant let to benefit tenants because of the benefit cap, which incidentally comes in for my borough today…..let the fun begin.

Not to mention the small landlords who have been caught out and are unable to pay their buy to let mortgage because their tenants cant pay the rent.

So I suppose the question is, would the money spent in rehousing homeless families match the amount given in tax breaks encouraging landlords to let to benefit tenants? It’s a numbers game I suppose.

Neil Patterson

16:11 PM, 12th August 2013
About 7 years ago

Reply to the comment left by "Ben Reeve-Lewis" at "12/08/2013 - 16:02":

I personally think if you let the Market spend the money, because of the need to make profit it would probably do it more efficiently, but with the proviso there is no get out clause. eg there is only a benefit while the new property is used for social housing.

That is where I think Right to buy went wrong. The benefit was too great while the clause not to make profit (the pre-emption period) was too short 3 years.

What ever the method I personally think the only solution is to increase the supply of Social Housing and the encouragement of that.

16:28 PM, 12th August 2013
About 7 years ago

Reply to the comment left by "Neil Patterson" at "12/08/2013 - 15:03":

I think you'll find the govt can 'afford' anything it chooses!!
It is a political choice to build more social accommodation which I agree is desperately needed.
The Tories won't do this as there are too many NIMBYS and it would mean Thatchers flagship policy of selling off cheap all the council houses being seen as a terrible mistake.
Well that is obvious; nobody was going to turn down FREE money.
We do need about 2 million council houses to be built by British workers only and to be given to British citizens ONLY based NOT on NEED but on how long they have been on the waiting list.
Presently about 472000 EU migrants have been given council accommodation........................................WHY!!?
I'll tell you; because they are seen to be in greater NEED than a British citizen who has been on the waiting list longer.
NEED should be abolished; it should be where you are on the list that counts, like it used to be!!
If NEED remains British citizens will never meet the NEED requirement.............................this is manifestly unfair that non-British citizens jump the queue over British citizens to enjoy subsidised accommodation.
Council house building could get the country back to work.
It is not the money issue that is the problem it is the political will.

Mark Alexander

16:32 PM, 12th August 2013
About 7 years ago

I have said for a long time that I can't see why Quantitive Easing money couldn't be used to build more social housing.
.

Neil Patterson

16:43 PM, 12th August 2013
About 7 years ago

Reply to the comment left by "Mark Alexander" at "12/08/2013 - 16:32":

Shame we didn't do this earlier with the 375 billion spent so far.

We could have replaced our discounted sale of Gold Bullion at the bottom of the Market with Bricks and Mortar owned by us all (the Government).

17:26 PM, 12th August 2013
About 7 years ago

Reply to the comment left by "Neil Patterson" at "12/08/2013 - 16:43":

Yep and all that HB paid out would come back to the govt rather than disappearing into a PRS LL pocket!!!
So govt doesn't really lose apart from having to upkeep the stock; a bit like a PRS LL has to do!!!!..........................or be prosecuted by the COUNCIL!!!
Plus such accommodation would give flexibility to the workforce who could move and do the jobs the migrants currently take and the accommodation would have restored the 'family silver' that was effectively given away by silly Thatcher
NONE of those RTB properties would have sold if at market price.
ONLY FREE money encouraged people to buy.
Most of those former tenants are now council or PRS tenants now as they spent all the equity and then couldn't afford the mortgages!
So that be a massive reduction in the overall benefit bill
Social housing could be the catalyst for getting the country working..............................only problem is all those pesky migrants that cannot be controlled by the govt.
Hopefully that will change soon.
I am waiting to see what councils do when Romanian gypsies and their 6 kids turn up here in Jan 2014
Will they be seen as being in greater housing need than a single British man who has been on the list for years!!?
Will working self-employed for the Big Issue for 6 months still be seen as 'working' for 6 months and therefore qualifying them for ALL benefits as per their NEED!!!!
You could see scenes that occurred in NI happening here when the local populace booted them all out.
Crime apparently went through the roof.
But of course we don't have para- militaries over here to deal with such a problem................................................shame that!!

Scottish Association of Landlords

17:49 PM, 12th August 2013
About 7 years ago

Well done Property118 for making sure readers are thinking about this - the experience in Scotland is that Landlord Registration has not cleared the bad landlords from the sector as was promised. The enforcement is patchy and the reports of poor practice continue. Very few prosecutions are brought about and local authorities say they can't afford to enforce.

We support the provision of information and training plus accreditation (voluntary) and continue to call for proper enforcement.

England needs to consider how the enforcement will be resourced before thinking licensing will solve all the ills of the bad minority operating in the PRS.

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