Landlord licensing

by David Asker

14:33 PM, 10th September 2015
About 3 years ago

Landlord licensing

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Landlord licensing

Sheriffs OficeThere has been a good deal in the media recently about landlord licensing, both with the announcement by David Cameron in the Queen’s Speech in May and the introduction of several schemes by local authorities.

The reasons behind these schemes vary. The principal one for local authorities is to crack down on criminal or rogue landlords. For the Government, the driver is to prevent migrants who have been refused permission to stay from gaining employment and accommodation after that point.

Eviction of migrants who have lost the right to rent

The Government proposal is to make it easier for landlords to evict tenants who have lost their appeal to stay in the UK and therefore have no “right to rent”. This will form part of the new Immigration Bill, although, as you can read in an earlier article, there is no clarity as yet as to how this will be achieved.

The penalties for landlords who do not comply seem to be further thought through than the process of eviction!

Nationwide licensing

Since the Queen’s Speech, where very little detail on the licensing proposals was given, there has been further clarification from the Department for Communities and Local Government. The nationwide scheme will relate to HMOs, or houses in multiple occupation. However, it appears that the definition of HMO will change to widen the scope of properties that fall under that category.

The current definition is properties of three or more storeys lived in by five individuals making up two or more households. This might be reduced to fewer stories, possibly even just one, and the requirement for there to be more than household may be removed. If this were the case, this might cover a large proportion of larger properties let in the private-rented sector.

Local authority schemes

The Housing Act 2004 introduced three forms of licensing:

– Mandatory licensing of HMOs

– Additional licensing of HMOs – a discretionary licence applied at the discretion of local authorities

– Selective licensing – also at the discretion of local authorities

Since the General Approval order in 2010, local authorities have been putting in place increasing numbers of discretionary licensing schemes (additional and selective).

The charges vary, but tend to average £500 for five years, although many local authorities offer an initial discounted rate.

According to a report by the National Landlords’ Association (http://www.landlords.org.uk/sites/default/files/NLA%20Licensing%20Report.pdf) in February 2015:

– 45 councils already have a scheme
– 18 consultations had recently taken place
– 30 councils had schemes under development, either new schemes or extensions of existing ones

The likely impact

While I totally endorse a drive to ensure that landlords are applying best practice and professionalism, I feel that this increased use of licensing is a heavy handed way of dealing with rogue landlords. There are many more “good” landlords than there are “bad”, so why not develop an approach that just targets the bad?

These schemes are not only onerous and expensive for landlords – who are likely to pass the cost on to tenants – they are also onerous and expensive for local authorities to set up and manage, especially at a time when their budgets have been cut to the bone.

In the NLA report, they mention a scheme set up by Swansea City and Borough Council that cost more to manage than it generated in income (from fees)!

If this is true of other local authority schemes, where will they find the budget to enforce against rogue landlords? Because, if the scheme is not enforced, it becomes powerless – a financial burden on landlords with no action to stop the rogues. What you might call a lose-lose

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Comments

matchmade

16:03 PM, 11th September 2015
About 3 years ago

I'm afraid I am very cynical about the motivations behind landlord licensing. I can't help feeling it is primarily about revenue-raising, making work for Environmental Health Officers, and sounding all tough for the benefit of the media and "tenants good, landlords bad" organisations like Shelter.

This suspicion is not helped by the lack of transparency about what actually happens to the licensing fees, and the lack of evidence that licensing definitely leads to a reduction in the number of criminal or rogue landlords, sufficient to justify the heavy financial and time costs imposed on good landlords, who represent the vast majority. There is a crying need for new HMOs, both in the private and the subsidised sectors, and I fail to see how licensing in any way supports and encourages landlords to take on the challenge. HMO landlords are habitually regarded by local authority officers as exploitative and little short of criminal unless proven otherwise; giving these officers licensing powers on top simply encourages all their worst instincts.

The single most effective way to target rogue landlords is to incentivise authorities to employ and train good-quality enforcement staff in how to use the innumerable powers already available to them. The fines should be heavier, there should be clear, real-world incentives to behave well (such as having housing benefit paid direct to the landlord), and local authorities should be able to keep the vast majority of the proceeds of crime, instead of sending much of it to the Treasury.

I also feel housing associations and Housing departments should be required to convert, say, 5% of their stock into HMOs, to create a larger supply and at competitive prices. Why are HMOs so dominated by the private sector? Perhaps if local authorities had experience of running HMOs themselves, they would realise the problem areas and go a little easier on private landlords too, valuing their expertise and the service they provide instead of demonising them.

Dr Rosalind Beck

18:31 PM, 11th September 2015
About 3 years ago

Beautifully put David and Tony.
We have more licensing coming in in Cardiff and I made these kinds of points (albeit less eloquently) to the boss of Environmental Health and he couldn't answer any of the points. As you both say, it is about raising money to pay their staff. I said 'with all the effort going on monitoring the good landlords and making us do expensive works which sometimes the following year you tell us we don't need after all - after we've spent all the money, how are you going to have the time to do anything about the bad landlords?'
'We don't like to differentiate in that way,' was his answer. He knew what was really going on - just like now with the outrageous tax decision - these people are shameless - just bleeding landlords dry all the time, and slagging us off at the same time and lying about their motives

Romain Garcin

20:32 PM, 11th September 2015
About 3 years ago

Reply to the comment left by "Tony Atkins" at "11/09/2015 - 16:03":

Well Tony, 'cynical' is often synonymous of 'realist' and I think that this is one such case.

David Lawrenson

11:19 AM, 23rd September 2015
About 3 years ago

Good points well made by all.

The fact is that good landlords will get a licence and comply, whilst the criminal operators will ignore it all.

So when any licensing scheme operates it still leaves the local authorities the job of actually finding the criminals who let substandard, dangerous and overcrowded property.

Finding the criminals operators is not easy and it needs real resources. This is because the criminals tend to let to people who either don't know their rights or who may know their rights but cannot act on them because they are often dependent on whoever is housing them for work. (Many people living in really bad HMOs will not be in the UK legally, so there is a real disincentive to report abuses).

As already said here - get the local authorities to use the powers they already have, give them the money to back the tools they have, encourage them to get working with immigration authorities, the police (often there will be a cannabis farm) and the utility companies (often electricity is being stolen) and thus take action to knock the criminals out of business.

Then make the penalties for criminal operators really hurt and mean something (including prison) and let the local authorities keep the cash raised from the fines to pay for further investigations and real enforcement.

Plus also to fund an education programme to help the incompetent (but not rogue landlords)... though I must add that am in favour of some kind of one day accreditation programme so all landlords (or at least HMO landlords) know what they should be doing

Surely doing all this is better than just lumping a licence tax on fair landlords that just gets passed on to tenants anyway.

And come on Newham (and the other licensing-mad councils), pray do tell us how much of your alleged improvement actions in the PRS were just due to better enforcement using the powers you already had pre-licensing..... mmm, deafening silence!
David Lawrenson recently posted...Buy to Let Advice: Don’t Trust Anyone

Marlena Topple

9:56 AM, 24th September 2015
About 3 years ago

Please can you provide a link to the 'further' clarification' referred to.
Many thanks
Marlena

Ben Reeve-Lewis

10:55 AM, 24th September 2015
About 3 years ago

Until July 2015 I was part of the London Borough of Lewisham's rogue landlord enforcement team. We were formed with the sole purpose of avoiding licensing by doing exactly what David Lawrenson suggests above.

Lewisham's model is a multi agency unit pooling together TROs (Me) EHOs, planning enforcement, building control and trading standards. We also worked in partnership across boroughs and very closely with the Met Police, immigration police, utility company revenue protection teams etc. We identified 29 existing local authority enforcement powers between us and we used as many as possible in every case.

1 year in, I took Newham's annual figures and broke them down into monthly averages and our targeted approach more or less matched their success rate. Difference is we utilised existing teams where Newham employed around 120 enforcement officers to kick start theirs.

But portfolio counsellors and senior council executives want publicity and good statistics. While we quietly got on with the job (the team is still going) events overtook us.

Last week I attended a meeting of enforcement officers where we were informed that back in April 19 other London local authorities were carrying out consultations on licensing, where a couple of years before it was only one or two and most rejected the idea at that time because they knew to do it effectively means a massive financial investment.

David will recall attending an event a couple of years back where enforcement officers pretty widely rejected licensing for its impracticality. The tide has turned and in councils, enforcement officers now look with grave reservations on licensing as an inevitability.


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