Landlord Licensing Schemes – Raising Standards or Raising Funds?

by Mark Alexander

9:41 AM, 9th August 2013
About 7 years ago

Landlord Licensing Schemes – Raising Standards or Raising Funds?

Make Text Bigger
Landlord Licensing Schemes – Raising Standards or Raising Funds?

WARNING – this article might make you want to cry, it might make you want to laugh and it will probably make you angry, and for many different reasons depending on who you are. Licensing - Raising Standards or Raising Funds?

This is one of those articles which I would like to be read by every landlord, every letting agent, every tenant and especially every Politician.

I would also like every person who reads this article to leave a comment, share it and help turn it into a HUGE debate.

So what is it all about?

My friend Mary Latham recently wrote a book about the storm she see’s brewing which is heading towards the Private Rented Sector with potentially catastrophic consequences. One of the chapters in Mary’s book is called “Raising Standards or Raising funds”.

There have been many discussions about the effectiveness of licensing which is being introduced into the PRS in it’s various forms and on many occasions, landlords have concluded that licencing has very little to do with raising standards and more to do with Local Authorities raising funds to create “jobs for the boys”

Well you may be pleased to hear that the DCLG have asked Local Authorities to complete a survey about licencing. Have they read Mary’s book one wonders?

When I heard about the survey, intrigue and curiosity got the better of me – what questions were the DCLG asking?

To my surprise,  I managed to get hold of a link to the survey questionnaire, DCLG had used ‘open source’ software for their survey. Being the curious type I obviously felt compelled to take a look, fully expecting to be met with a security screen where I would have to enter a User Name and Password to get any further. I’d have given up at that point as there’s no way I would attempt to hack a Government website. To my surprise though, there was no security! They were using Survey Monkey and that awoke the little monkey in me.

To see the questions being asked I needed to complete the page I was looking at to get to the next set of questions, so I began to fill it in. This is the point at which my curiosity transformed into mischief as I was having a lot of fun with my answers 😉

Here was my opportunity to tell the DCLG what I really think about landlord licencing in the most cynical and mischievous way possible. What an opportunity!

Now before you think about attacking me with some “holier than though” type comments, please remember the DCLG are responsible for the drafting of all of the legislation which has caused the PRS so much grief. Anyhow, enough said on that, it’s done now.

I took screen shots of every page I completed and I have put them together in a slideshow below.

Do take a look and whether you laugh or cry and for whatever reason you get angry, please post a comment or join in the discussion below this article 😉

If I mysteriously disappear, you might just find me at the Tower of London LOL

I hope you will appreciate the irony of my answers!

[thethe-image-slider name=”Raising Funds or Raising Standards”]

Note for tenants – More licensing = higher rents!



Comments

Mark Alexander

11:23 AM, 10th August 2013
About 7 years ago

Reply to the comment left by "Jerry Jones" at "10/08/2013 - 11:18":

Hi Jerry

Presumably you are referring to John Paul from castledean?

As you know, I have massive respect for John, even though we don't agree on absolutely everything. I would love to read his views on this 🙂
.

Jerry Jones

11:54 AM, 10th August 2013
About 7 years ago

No, John's crew took over these properties quite recently because of the changed nature of the area. I have used a well-established and excellent Middlesbrough agent for quite some years, who still handle my other two houses in the town. It is them I have asked if they would like to comment.

Mark Alexander

11:56 AM, 10th August 2013
About 7 years ago

Reply to the comment left by "Jerry Jones" at "10/08/2013 - 11:54":

Thanks Jerry, I look forward to hearing from them 🙂
.

Mary Latham

12:28 PM, 10th August 2013
About 7 years ago

Reply to the comment left by "Jerry Jones" at "10/08/2013 - 11:18":

Jerry that is interesting I am really keen to understand how licensing landlords has changed the ethnic mix of the tenants and indeed how that has improved the area? Is it about the ethnic mix or is it about the behaviour of the individuals regardless of ethnicity? I look forward to reading the Agents post

The reason I believe that Selective and Additional licensing is about fund raising is simply that Licensing landlords does not actually change anything other than to give the local authority their contact details - this is a very expensive (for the landlords) way of compiling a contact list . The ability to enforce remains the same in that the standards that apply to property that is let apply regardless of whether the property is licensed or not. The enforcement powers also remain the same. The only difference is that the local authority can keep the licence fees. They cannot keep the fines imposed on a landlord who they have prosecuted - they only get back their legal costs and the fines go to the treasury. A simple change that would enable the LA to keep the fines would give them the funds needed to carry out more enforcement activities - a bit like landlord recycling deposits to buy more property. As it stands the LAs are in a Catch 22 situation. They have neither the funds nor the manpower to carry out enforcement in the first place and even when they do they do not recover the cost of the manpower - it often takes weeks of work to bring a case to court. By simply reimbursing this cost, through the fines, they could have an ongoing stream of income to fund enforcement.

Government has announced that a pot of £3M is being made available to LAs to increase their ability to enforce against bad landlords but this is a drop in the ocean and a tiny percentage of the potential income they could make from fines following successful prosecution.

My question is simply this; Why should good landlords pay for the enforcement against bad landlords (though licence fees) and where is the money going that is collected in fines at the moment?

Following 2 years of work with Birmingham City Council NLA was able 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 like NLA are given a further discount. This has reduced the licence fee from £1,150 to £850. The cost of these discounts is being recovered by charging the bad landlords like this. When the LA 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 1 year licence is granted. At the end of the year the landlord has to pay the full fee again and will be given a normal 5 year licence. This proposal was made by NLA and BCC accepted the model that it is the landlords who increase their enforcement costs that should pay, not as happens in other areas, the good landlord who come forward in time and provide all the information required. The same structure applies to the licence renewal.

I would like to see this model being used by all local authorities - I am still unhappy with the amount of the fee and particularly the cost of a simple renewal but at least it is a starting point and we will be having the discussion about reducing the renewal fees before the next round of renewals take place. In the meantime if we are going to put pressure on Government, in my opinion, we should keep it simple and ask that the LAs that take the prosecution are allowed to keep the fines to pay for the cost of future enforcement.

Follow me on Twitter@landlordtweets

My book, where I warn about the storm clouds that are gathering for landlords is here >>> http://www.amazon.co.uk/dp/1484855337

John Gell

14:50 PM, 10th August 2013
About 7 years ago

Reply to the comment left by "Mary Latham" at "10/08/2013 - 12:28":

It's even worse Mary in the part of Scotland I live in: The local authority have complied their contact list at a cost of some £600k+ to landlords and seem to do very little with it. Poor practice prevails aplenty, unregistered landlords still practice, tenants still feel beholden to landlords who don't honour their obligations and so hesitate to assert their rights. In short, there's no evidence at all that landlord registration is having any positive effect.

I'm intrigued by the Birmingham City Council model. responsible law abiding landlords need recognition and an easy ride, and local authorities need to get tough on the others.

Jonathan Collins

15:40 PM, 10th August 2013
About 7 years ago

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 enable 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 to fund any related initiatives.

This is nothing but a tax on landlords. I strongly urge landlords to write to their local MP to insist that this initiative should not be funded by landlords.

Regarding Ben's comments about staff shortages I would urge all councils to follow the lead of private enterprise where overheads are kept to a minimum and staff retain their jobs and benefits through performance (which equates to long hours and multi-tasking).

It is no surprise that the economic downturn has reduced revenues across the board. Private enterprise responds by tightening its belt. Councils however seem to take the view that they are entitled to maintain their overheads regardless of dwindling revenues and simply make up the deficit by targeting soft options such as landlords (http://www.kingston.gov.uk/complete_questionnaire_for_pdf.pdf )

Instead of sponging off of landlords Councils should follow the lead of Private Enterprise by voluntarily reducing salaries and increasing working hours. Why the deathly hush?

Mike

18:34 PM, 10th August 2013
About 7 years ago

I am totally against it, it is clearly a money making scheme, it may curb some antisocial behaviour but it has put landlords in the front line to fight off anti-social behaviour instead it is a job of the Councils own ASB teams and the local police,

So all they are doing is making money from landlords and then crucify them for failing to curb anti-social behaviour by terminating their licenses, or issuing them with heavy penalties if and hen things go wrong, which do from time to time.

Further more they may not issue a landlord a license to rent his property if the landlord has a criminal record, now which other business owner has to have a very clean criminal record to trade? a man with a criminal record can open up a business and start trading, so why are landlords any different?

So they not only have imposed many strict conditions on Landlords, but are also charging ridiculous mounts for this ill though scheme, which may or may not drive crime down, and push antisocial behaviour to adjoining boroughs.

So Newham is simply putting its rubbish in others back yards.
Newham council is the first in UK to introduce borough wide licensing scheme, and I have yet to receive my license, a year has nearly passed since I applied for one!

23:17 PM, 10th August 2013
About 7 years ago

Reply to the comment left by "Mary Latham" at "10/08/2013 - 12:28":

How about councils offering the accreditation route and any other appropriate things that the council wishes good LL to do being charged say £50 for a licence every 5 years
Those that choose NOT to partake will NOT be allowed to take HO team tenant referrals or any tenant on any form of HB, even £1.00! and also will be charged the £1500 fee every 5 years.
Most good LL will immediately comply with such strictures.
i wouldn't object as I can appreciate what the council is endeavouring to do.
The lazy LL that don't wish to play ball will suffer the expensive licensing fees and won't be able to take on HB tenants.
This will have the effect of forcing them to improve their facilities and behave or they will have to exit the LL game!!
Good LL who are prepared to play ball with councils via the way s you suggest should be rewarded with next to nothing fees; the other LL that choose NOT to should be penalised with high licensing fees.
As a part-time lorry and coach driver I am REQUIRED to undergo 30 hrs of CPD training to ensure I may receive money as wages for work carried out.
I would not object if the council required a similar level of training as a LL etc to ensure that I pay very little licensing fees.
So a simple process to encourage LL do do the right thing; those that do, pay less or hardly anything, those that don't get clobbered.
Let the situation reward good behaviour and hit those that don't wish to play ball!!
Even LL can be reformed if they see their bottom line being affected if they don't comply with council requirements.
I could see the likes of Ben R Lewis being rushed off his feet giving training to his borough LL who would be desperate to avoid being clobbered by large licensing fees for the sake of not undergoing the training.
Perhaps the LL that do the right thing might not be viewed by councils as a dumping ground for their dross who then don't pay rent and get away with it until evicted.
Just think you could have a symbiotic relationship between good LL and council housing depts where councils would always ensure the LL received the rent irrespective of the tenant spending it on other things.
So all a LL would do is the day after the rent should have been received the council arranges direct payment with NO 'clawback' possibility if it turns out the claim was dodgy.
It then recovers the unpaid rent from the tenant's other benefits until the LL is repaid.
I've just realised I have been in fantasy land!!..................................................sorry about that; I get a bit carried away at times!!!
No back to reality the councils are our enemies trying to rip us off for their own inadequacies and will do whatever they can to obtain monies form PRS LL who they despise.
Most councils have a left-wing agenda and loathe the fact that PRS LL are needed.
We hate them and they hate us.
We hate them because they are always trying to shaft us and they hate us because we exist and they have to use us!!
NOT a very conducive state of affairs as far as the poor old tenants are concerned!!
There certainly needs to be some more enlightened thinking.
Councils should not be attempting to stitch up GOOD LL; they should encourage them by making any fees ; virtually nothing providing the LL complies with simple council requirements.
Good LL are more than prepared to play ball with councils but only if it is an equal relationship.
LL are exiting the HB market as this is patently NOT presently the situation.
When will councils learn that they and the LL are striving towards the same ends!!!
They both wish to provide good quality accommodation for tenants; for which they expect to be paid!!!
A simple concept which councils do their best to prevent; any wonder why PRS LL are so disenchanted with councils!!?
There may well be some more enlightened councils who are struggling to operate in a more enlightened way such as I think as has been mentioned councils in the Birmingham area via this 'Homestamp' thing!!!
Councils have to realise that the PRS does NOT NEED them anymore.
There are more than enough tenants to go around that do not need benefits to pay for rent.
LL will gravitate towards them.
Somehow councils have to encourage; persuade GOOD LL to come to the fore and provide what the council thinks is appropriate accommodation.
Councils by their money-grabbing ways are just deterring PRS LL from engaging with them to assist them.
Ultimately this is a pennywise; pound foolish solution!!
Councils will incur substantially higher housing costs than if they had a sensible approach with GOOD LL in their area.
This means the poor old council tax payer will be clobbered with increases or other council services will be cut to pay for the spiralling upwards council housing costs.
The answers are obvious; but it seems the council collective has still got it's head up it's collective a--e!!!

Ingrid

0:26 AM, 11th August 2013
About 7 years ago

We own a property in an area with mandatory licensing. We live overseas and be and aware of the licensing requirements late. When we tried to register we were told that because we don't live in the UK that we were not "fit and proper" to be a registered landlord, and it was suggested to us that we name anyone we know resident in the UK as the registered landlord (in the end the agent is the registered landlord for us) What a joke. We have had the sane tenant for three years so we must be doing something right. In our area at least a case of revenue raising which will lead dodgy landlords further underground and increased rents for the tenants.

Mike

2:34 AM, 11th August 2013
About 7 years ago

Reply to the comment left by "Ingrid " at "11/08/2013 - 00:26":

Totally agree with you, the scheme is just another bureaucracy madness, any responsible landlord living abroad like yourself would have taken contingency measures and placed someone in charge or to contact in case of any emergency or other maintenance requirements, so who are they to refuse licensing on these bases, it does not discharge your responsibilities as a landlord wherever you live.

I hate to think Council could refuse a landlord license based on many minor factors, and force you to employ a lettings agent, and you end up sharing your income with someone who hardly do much for it, many are just rip offs, employing poorly skilled tradespersons, and put a mark up on any work carried out.

For example, my tenant found that a 2 year old oven did not heat properly, so the tenant demanded a brand new oven, i refused that i paid £400.00 for it less than 2 years ago, and if anything it could be repaired, so i ordered a new element and fitted it myself (I am electrical/electronics engineer) so in the end managed to save a £400 oven/cooker for less than £20.00, but had I given a lettings agent full management, I bet it would have been thrown out and brand new one ordered and funds deducted from my rent!

1 2 3 4 12

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Build, Build, Build! Profit From PD Rights

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More