Industry body criticises ineffective and costly licensing schemes

An industry body has slammed selective licensing schemes as “ineffective” and a “poor use of public money”.

Propertymark’s policy paper on the effectiveness of landlord licensing schemes claims selective and additional licensing schemes can “risk duplicating existing regulatory functions rather than enhancing them”.

The industry body has also warned that high licensing fees place an additional financial burden on landlords.

Creating additional bureaucracy

In the policy paper, Propertymark points out the PRS Database and selective licensing risks “creating additional bureaucracy that repeats what local authority licensing regimes are already doing”.

The industry body said: “At the moment, licensing schemes require landlords to hand over almost the same information to individual local authorities, often at a cost of over a thousand pounds.

“If councils keep insisting on their own separate applications for the same certificates stored on the national system, it will lead to landlords having unnecessary financial burdens.

“Accordingly, they may end up paying to run two different systems that are both checking the exact same paperwork.

This overlap is also a poor use of public money. Rather than councils spending millions to build and manage their own individual databases, they should be required to pull their information directly from the national one. If these systems are not linked up, the fees charged by councils will stay unnecessarily high.

“We will only see real value for money if the national database takes over the data entry side of things, leaving councils free to get out and actually inspect properties to find the rogue landlords.”

Question of proportionality

Propertymark says a key consideration should be whether licensing simply duplicates enforcement powers councils already have, including HHSRS and Rent Repayment Orders (RROs).

The industry body said: “Selective and additional licensing schemes can risk duplicating existing regulatory functions rather than enhancing them. Where councils already possess both the statutory authority and enforcement mechanisms to investigate, inspect, and penalise non-compliance, licensing may introduce a parallel administrative structure that focuses heavily on registration and fee collection rather than direct intervention.

“This raises an important question of proportionality, particularly where the same outcomes could potentially be achieved through more targeted use of existing powers under the HHSRS and associated enforcement regimes.”

Offer discounts

In its list of recommendations, Propertymark says councils should offer discounts for landlords with multiple properties within designated licensing areas.

The industry body said: “Charging full administrative fees for every unit is disproportionate when a single inspection and one set of background checks cover the entire site.

“A discounted rate for additional units would reflect the reduced administrative burden and prevent the unfair financial penalisation of professional providers.”

Propertymark also recommends a national cap on the proportion of licensing fees allocated to Stage One administrative processing, with these costs limited to 20% of the total fee. It says this would direct the majority of landlords’ money towards Stage Two, covering on-site inspections and enforcement.

The organisation also calls for legislation to be amended to prevent discretionary licensing schemes being renewed indefinitely, proposing a sunset clause with a maximum of two consecutive five-year terms.

It says this would keep licensing as a temporary intervention, as originally intended, rather than allowing it to become a permanent additional cost for landlords.