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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Chris @ Possession Friend

17:26 PM, 23rd February 2023, About A year ago

Anyone who couldn't see the impact of S.L on Tenants, is unable to see the nose on their face.

It should be pointed out that Its Govt who enabled Councils to impose licensing, and whilst not all councils have, the finger should be pointed at the greedy Councils through proven research such as this, as well as more academic research.

Also, Govt should be asked some difficult questions by the media. Whilst on subject of questions, so-called tenant support groups should be asked for comment on this report.

So, so much more mileage could be made from it, ( and it be developed upon as above )

Old Mrs Landlord

18:07 PM, 23rd February 2023, About A year ago

Reply to the comment left by NewYorkie at 23/02/2023 - 14:42
It would also be interesting to learn how many landlords have been prosecuted for the anti-social behaviour of their tenants. How can we be held responsible for the actions or behaviour of others, esecially when it often isn't possible to pin the blame on a specific individual?


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

My local council wrote to me to apply for a selective licence for a property that they became aware that someone other than me have started to live in, but technically I did not rent it to this someone, and so I had not entered into any AST agreement. but I had agreed to home this homeless couple i knew, as a temporary accommodation, whilst they find a more suitable property to rent, they were known to me and I trusted them and wanted to help them stay in my otherwise long term empty property. So I let them in my property on a mutual trust, not as an assured short hold tenants.
I agreed to not charging them any rent, but had asked them to pay me towards the bills, as bills were in my name, so I paid bills through my bank Direct Debit so they had to pay me for their use of gas and electric and water, they agreed to pay all the utility bills except we went half and half on the council tax.
This arrangement suited me because I got rid of the Local Authority threatening to place a CPO on this long term empty property, so it suited me to put in this homeless couple evicted from next door to me. I had known them for 8 years. .
Later on the council got in touch with me asked me to apply for a Selective Licence and since but technically I did not rent this property so I did not apply for one, but when I told them that I did not need a license as technically I was not charging any rent and all this couple paid me was for utility bills and part council tax.
So they warned me that in their eyes if I was charging them for bills, it was seen as rent, so they threatened to take me to court, or apply for a Selective license within 14 days.
So while I was discussing this with an agent from the LA, I thought I might as well apply for one start charging rent, but i was not sure now whether to apply for a Selective Licence or Additional Licence, and whilst I was on the phone to this agent, I asked her what type of licence would be better for my circumstances, since I only have one couple occupying one room, they won't be able to afford full rent for a whole house so I might be better off applying for an Additional Licence as a small HMO, and I then have the option to home a single family if I want to in future.
The agent went quiet, she did not tell me that I cannot put a single family in an HMO, but of course you can put a single family as long as maximum number of persons do not exceed the total number of people allowed in an HMO.
So I got a Licence for 5 Households or 7 persons of any age, so suppose a family of 7 wants to rent my HMO, they can, even though they may be a single family unit but are a couple with 3 children and elderly parents. 7 In total,
Licensing scheme is all a bull crap, its another way to milk money from landlords and tenants, its just like a ULEZ scheme that will do nothing to clean air which is already clean enough.

Mick Roberts

7:32 AM, 24th February 2023, About A year ago

Reply to the comment left by Peter Fredericks at 23/02/2023 - 12:49
Yes please all object, go down every avenue cause those not in the know have no clue the damage SL causes.

Mick Roberts

7:32 AM, 24th February 2023, About A year ago

Reply to the comment left by David Houghton at 23/02/2023 - 14:47
In Selective Licensing, the Council gets to keep all the £30,000 Civil Penalty (fine) I believe.

Mick Roberts

7:38 AM, 24th February 2023, About A year ago

Reply to the comment left by Chris @ Possession Friend at 23/02/2023 - 17:26
Good idea Chris:
, you wanted Selective Licensing, National Audit office says
Licensing does increase rents & homeless. We need to go after the bad Landlords & stop targeting ALL landlords cause tenants are being hurt by this

Mick Roberts

7:40 AM, 24th February 2023, About A year ago

Reply to the comment left by Old Mrs Landlord at 23/02/2023 - 18:07
And the same Council when we go evict for ASB then fights us & won't allow it.

David Houghton

8:30 AM, 24th February 2023, About A year ago

Reply to the comment left by Mick Roberts at 24/02/2023 - 07:32

Thanks for the update on fines and civil penalties. Just glad I left the Hmo market before then

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