Auditor says Selective Licensing DOES push up rents and cause homelessness

Auditor says Selective Licensing DOES push up rents and cause homelessness

11:29 AM, 23rd February 2023, About A year ago 18

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A council’s Selective Licensing scheme has been slammed by an external auditor – just as the council unveils a consultation process to start a new scheme in August – with critics saying the scheme has led to tenants being made homeless but the council says it doesn’t have data on the issue.

The audit was ordered after the council’s 2019/20 accounts were published and a complaint was made about the Selective Licensing scheme by a local landlord.

However, the objection didn’t meet the statutory requirements needed for an investigation because the objector was no longer on the city’s electoral register – but they highlighted that they knew of other landlords who would object to the accounts for 2020/21.

This led to the external auditors Grant Thornton being asked to examine the complainant’s criticisms of Nottingham City Council’s Selective Licensing scheme.

Highlights several issues over the scheme by its critics

The auditor’s report highlights several issues over the scheme raised by its critics, including:

  • The licence fees were largely passed on to tenants in the form of higher rent levels, rather than being borne by landlords
  • The cost and administrative burden have led to some landlords ceasing operations in the city, reducing the supply of accommodation and further impacting rent levels
  • The scheme has led to an increased incidence of homelessness.

In response, the auditor reports that:

  • It is clear, and unsurprising, that many landlords did pass the licence fees on to tenants, as there was a rise in average rent levels in the city following the implementation of the scheme.
  • We are aware that some landlords have indeed ceased operating for reasons connected with Selective Licensing, but this is against the background of a much bigger reported trend of the replacement of many traditional landlords with a smaller number of larger-scale corporate operators and there is clear evidence that the private rented sector in the city has grown during the lifetime of the scheme.
  • Council officers are confident that there has been no significant impact on homelessness, based on the reasons being given by those presenting as homeless, which are many and varied, with no clear trend relating to Selective Licensing, although their conclusion is not fully supported because the data is arguably not specific enough about the reasons for homelessness.

The auditor points out that other issues, including rent increases, may also have led to tenants being made homeless.

The report goes on: “Given the importance which the council attached to reducing the incidence of homelessness, however, it is vital that it continues efforts to confirm conclusively that selective licensing is not having a significant impact [on homelessness].”

‘We need to be asking the homeless staff’

Leading Nottingham landlord Mick Roberts raised the objection that led to the auditors stepping in and he said: “We need to be asking the homeless staff what people are saying when they say they are being made homeless because the tenants never get asked – but nor do we landlords about why we are selling.

“The auditor’s report hits the target when it says that licensing fees do put rents up and the scheme has seen landlords leave the rental sector.

“That means tenants are being made homeless and the council not having the data on the issue doesn’t disguise the fact that Selective Licensing, which the council claims is to improve properties does, in fact, lead to tenants being made homeless.”

‘Putting rents up will make people homeless’

Phil Turtle, from Landlord Licensing & Defence, told Property118: “It is inescapable logic that putting rents up will make some people homeless and a landlord’s fear of what the council will do to them with excessive enforcement on top of the licensing costs means many landlords are choosing to sell up – and making even more tenants homeless.

“How can the council possibly make claims against this inescapable logic? It makes no sense.”

He added: “The only question is how much homelessness does it create?

“There needs to be a proper investigation into how much homelessness is caused by selective licensing – not just in Nottingham but also nationally.”

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11:50 AM, 23rd February 2023, About A year ago

Just received an email from those nice people at Newham Council to "advise me that their current Selective Licensing designation scheme is ending on the 28th February 2023" The cost to Landlords was £500 every 5 years. However not to worry because "After Cabinet approval, a new selective licensing process which is based on housing conditions, significant and persistent anti-social behaviour and high levels of deprivation, will start from o1st May - cost to Landlords £750 every five years. Unfortunately, Newham Council forgot to stipulate the benefits this new scheme will bring for Tenants.

Robert M

12:26 PM, 23rd February 2023, About A year ago

At last it is no longer just landlords pointing out the obvious to councils, now there is independent evidence from external auditors!
- The NRLA should be all over this, it is independent verification of what landlords have been warning about.
Councils, tenants, and homelessness organisations, should all take note.

Heather G.

12:37 PM, 23rd February 2023, About A year ago

Reply to the comment left by Ian Brand at 23/02/2023 - 11:50
Do they not realise that by stating the need for another 5 year SL scheme due to ASB/property condition etc, they're admitting that the last 5-year scheme didn't work?
What are they planning to do differently (other than raising the fee by £250) with this scheme to show actual benefits?
Also, for those councils renewing schemes, why are the costs going up when they already have the processes and staff in place and most of the LLs and properties already registered?

David Houghton

12:39 PM, 23rd February 2023, About A year ago

Two brothers and one of the brothers girlfriend rent a house together. The relationship breaks down between the couple but they decide to house share
The landlord becomes a criminal for not having a selective license Potentially liable for a rent repayment order and in breach of an article 4 direction
All because his tenant and his girlfriend separate.
Anyone surprised landlords stop renting in areas of selective licensing?

Peter Fredericks

12:49 PM, 23rd February 2023, About A year ago

Should we all now object to each CounciI's external auditor about these selective landlord licensing schemes? I have seen no proper business case for these schemes at the start or when they were cynically renewed and no proper statement of benefits versus costs. The schemes just seem to exist to keep an army of jobsworths at the Council in clover.

Des Taylor & Phil Turtle, Landlord Licensing & Defence

12:58 PM, 23rd February 2023, About A year ago


The situation you describe is an HMO the moment the relationship breaks down.

2 brothers and one ex-girlfirend + two households and 3 person = HMO

As they were renting, the property needed a selective licence from the get-go.

The second the breakup happened the landlord became liable under the HMO Management Regulations and better fire doors, fire alarms etc etc were needed.

It may have still needed a selective licence where the council had not put in place an Additional HNO Licence scheme. However if they have such an Additional scheme, the landlord now has the "wrong licence" and they will prosecute/fine for that as if he had no licence at all!

David Houghton

13:45 PM, 23rd February 2023, About A year ago

Reply to the comment left by Des Taylor & Phil Turtle, Landlord Licensing & Defence at 23/02/2023 - 12:58
No, the brothers were related and the couple were related. So it was not originally a. HMO. Further you are wrong on your hhsrs assesment of the fir risk. Check lacors guidance. If they had lockable bedroom doors then yes.

Your point does serve to illustrate how confusing the laws are. I have had to correct the fire brigade in the past it even went to tribunal after the council served an HMO declaration. I won with my costs.
Hence best to avoid selective licensing areas at all costs

David Houghton

13:59 PM, 23rd February 2023, About A year ago

Reply to the comment left by Des Taylor & Phil Turtle, Landlord Licensing & Defence at 23/02/2023 - 12:58

Housing act 2004 s258. Para 3c


14:42 PM, 23rd February 2023, About A year ago

There needs to be a report on each SLS identifying how the schemes have been operated. How many 'bad' landlords have been reported and fined, as opposed to how many have simply been charged?

David Houghton

14:47 PM, 23rd February 2023, About A year ago

Good point, of course the council's don't like to fine people, they don't get the money. It's like speed camera partnerships.

There really is only one way out of this and that's to exit the market in these areas. Then the universities struggle to expand, the rents go up.

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