Councils warned against profiting from selective licensing schemes

A government minister has insisted councils must disclose selective licensing fees and must not profit from the schemes.

Housing Minister Matthew Pennycook has claimed that councils should make details of their selective licensing fees readily accessible to the public.

However, a previous Property118 report reveals Nottingham City Council spent millions of pounds on selective licensing and failed to ringfence the scheme.

Councils not expected to profit from licensing

In answer to a written parliamentary question, Mr Pennycook said: “Licensing schemes are designed and determined locally, and local authorities have the discretion to charge fees which cover the cost of running these schemes. They are not expected to profit from licensing.

“We would expect local authorities to make details of these fees, along with the rationale behind their determination, transparent and readily accessible.”

Despite Mr Pennycook’s warning, Nottingham City Council had failed to properly ringfence selective licensing fees for years, and only began doing so in 2024.

Previously, Property118 reported, the council published a report by accounting firm Ernst and Young (EY) who accused the council of “inappropriate financial activity”.

The damning report revealed selective licensing fees were only properly ringfenced in 2024.

The report revealed one of the main sources of licensing income for the council is selective licensing.

According to its annual expenditure report, the council spent a whopping £4.2 million on selective licensing between 2020/1 and another £2.8 million in 2021/22.

The council in a statement claimed the report: “It is important to be clear there is nothing specifically identified within the samples tested in the assessment that suggests any allocated funds have been misspent or funding has not been used for its overall intended purpose.

“The council has been open about the nature and seriousness of the assessment’s findings.”

Selective licensing U-turn

The news follows a win for landlords, after Great Yarmouth Council was forced to U-turn and withdraw a number of additional licensing conditions following a successful challenge by the Eastern Landlords Association (ELA).

The council has now reverted largely to the mandatory conditions prescribed by the Housing Act 2004, although its selective licensing scheme remains in place.