Selective licensing – can a part- time investor landlord fulfil the requirements?

Selective licensing – can a part- time investor landlord fulfil the requirements?

7:57 AM, 8th April 2014, About 10 years ago 54

Text Size

I became a landlord about 10 years ago, as a pension investment. At that time, returns in my local area were relatively poor. I bought in an area that had 8-8.5% returns and had my properties managed locally. Selective licensing - can a part- time investor landlord fulfil the requirements?

I am a Chartered Surveyor with significant property management experience, so I believed that I came into the business with my eyes open. It was nevertheless a steep learning curve. After a few years I had to intervene to protect my tenants and my investments, and I now manage these properties myself. I am always at the end of the phone, even on holiday; most of the work on my properties is arranged as planned improvements or maintenance, usually following on from an inspection; and I hope that I provide as good a service as any managing agent (and I acknowledge that there are excellent agents out there; sadly, mine was not one of them!).

The local council has introduced selective licensing. I must make clear that I am not submitting this article in order to complain; whatever I feel about the policy is quite irrelevant. Most of the requirements are clear, and are either already in place, or easily achievable.

However there are several points that I find troubling, and suspect that other smaller investors like myself will have problems with the same issues. These are the problems I foresee, and my proposed solutions:

1) Requirement for monthly inspections. It would be inconvenient to carry these out personally, so I would contract out interim inspections. I will provide a suitable proforma to be completed, with photographic evidence, by an experienced contractor.

2) Antisocial behavior action plan. I take the view that, as a small investor, I have no choice but to issue warnings and if necessary refuse to renew the tenancy on expiry. Of course, if something serious happens long before expiry I would commence possession proceedings. My action plan will set out the behaviour I regard as sufficiently serious for these two options.

3) The requirement to notify tenants of their obligations. All of this is within the tenancy agreement, so I would propose to write to the tenants restating these terms.

4) There is a requirement for emergency and other arrangements in the event of the holder’s absence. In practice, I have always been at the end of the phone, wherever I am, and able to arrange repairs as normal. However, I propose to “nominate” an alternative contact, who will be another landlord like myself.

5) If I am unable to satisfy the Conditions, then it will be necessary to appoint a managing agent. I expect that I would still be required to submit the application in my own name, but with reference to the managing agent in the relevant sections of the form. I would presumably still be liable for any breaches, my only defence being to prove that I took steps to ensure that said agent were fulfilling their responsibilities under the conditions. In my opinion, it would be better to take full and direct responsibility, contracting others in to carry out parts of the requirement as necessary, so I will seek to obtain a licence on this basis.

I am very concerned that the impact of this new control would be to reject any landlord who does not live in the same town, or nearby, as unsuitable for three reasons:

– Sufficiently regular inspections carried out by the licence holder personally may not be practical (although, as said, I intend to arrange such inspections in a way that would satisfy the requirements)

– There would be a problem in attending a training course in the same town as my properties (although one day would not be an issue). I hope that the Council’s requirement here (which is not specified) would be reasonable.

– It might not be feasible for a landlord who does not live locally to take unspecified emergency action. Although the Conditions make no direct reference to personal availability in emergency, I suspect that this could be an implied criterion in assessing an application. I say “unspecified” because I have worked during evenings and weekends to arrange contractors for gas, electric and plumbing emergencies. However, in theory, there might be something that could require the “person in control” to attend immediately.

In summary, I am determined to personally fulfil the requirements of this licence, and would welcome a discussion on practicality for a small investor who is 1) not based locally and 2) has other employment. I am sure that other landlords like myself have successfully obtained and maintained licences, and are providing the service that the council is looking to achieve. However I have not found any discussion of this issue, and therefore hope that this article – and the responses to it! – will prove useful.


Philip Aston MRICS

Share This Article


Fed Up Landlord

15:24 PM, 9th April 2014, About 10 years ago

As a former "auditor" for the Home Office I found one LAs " ring fenced budget" for anti social behaviour looking like the tunnels Tom Dick and Harry used in the Great Escape. £1 million pounds got "lost" in the budget and ended up in other budget heads. But of course it was all a "misunderstanding" and the Director of Finance decided to take a sabbatical.

So Landlords Licensing money is not a sure fire bet to be spent on licensing!

Philip Aston

0:18 AM, 10th April 2014, About 10 years ago

Referring to Mary's detailed comment on accretitation and ongoing learning, I would in general agree. As a brief digression, I qualified as a Home Inspector in preparation for the doomed HIP legislation. Although the purpose of this accreditation was hopelessly flawed, the course itself was invaluable. On this basis I would not grumble at any reasonable requirement to develop my knowledge of this specialized field.

However, in this specific case, I remain sceptical, because Blackpool Council require an open ended commitment to undertake any learning they may specify. I will be seeking to get this clarified and will be quite satisfied if it is narrowed down to an accreditation/CPD system as Mary describes.

This brings me to the question of the authority's remit as designated in the Housing Act 2004.

As I see it, this is the core of the provision:

(3)The matters are—
(a)that the proposed licence holder—
(i)is a fit and proper person to be the licence holder,

89Tests for fitness etc. and satisfactory management arrangements

(6)The considerations are—
(a)whether any person proposed to be involved in the management of the house has a sufficient level of competence to be so involved;
(b)whether any person proposed to be involved in the management of the house (other than the manager) is a fit and proper person to be so involved; and
(c)whether any proposed management structures and funding arrangements are suitable.

(d)that the proposed management arrangements for the house are otherwise satisfactory.

(Also- provisions relating to any adverse history)

I can't see that there is anything else- am I right?

As a landlord working at a distance I will be expecting to have to make a case to prove that I will satisfy 89.6d and would welcome any comments/suggestions here.

However, the specific legislative requirement makes a nonsense of some of the purported license conditions. In a nutshell, the entire point of additional licensing seems to be to ensure that landlords have the competence to manage, have a workable management setup, and do not have "form" that suggests they are unlikely to manage to an acceptable standard. Reduction of ASB is the ultimate objective,but there is nothing in the legislation empowering the designating authority to directly involve landlords in the policing process. The premise is that, by managing properly, landlords will indirectly contribute to a reduction in ASB- and that appears to be the end of it.

This is important, as it could - and, I suspect, will - form the basis for a challenge to the authority in the event that a licence is refused for reasons that are not related to the purpose of the original legislation.

Returning to my original point, I feel that I, and others like me, are particularly at risk here, as we are not investors by profession, and might be faced with the (my opinion) disgraceful accusation that, ipso facto, we will therefore not be managing to a professional standard. I would suggest that there is no inherent reason why someone holding a rented property as a long term asset, possibly as a pension provision, should not satisfy any reasonable requirement of sound management practice.

I sense I am "preaching to the converted" here and admit that, as of the last few days, I feel a little bit less "at risk" and slightly better prepared for the impending battles. However the devil will be in the detail, so any comments on the above will be invaluable.

John Daley

10:55 AM, 10th April 2014, About 10 years ago

Hi Mark,

I cannot comment on what any particular Council has done. I am aware that each Councill approaches it's various duties in the way that seems best to the elected members. I don't have a view on this at all. This is just how it is.

It isn't a secret that LA's are facing huge budget cuts and if we as a society want to see the worst rogues regulated effectively (or at all) by Councils then one way to pay for that is licensing.

I would have thought that a lot of reasonable LL who are unhappy about being undercut by the rogues are not particularly against a scheme that will help to level the playing field at the bottom of the market.

It is up to the Council to design a scheme that has an element of partnership with the PRS and keeps to a minimum the administrative and cost burdens of licensing.

Bearing in mind that Licensing legislation is intended to reduce ASB and improve the management of the PRS in the Councils area then any term that does not contribute to that should be challenged at consultation.

However, I have stated the law as it pertains to licensing fees and it would be an unwise LA who exposes their licensing scheme to challenge because they were not compliant with the Hemmings ruling. If they were challenged succesfully they would then have to repay all the fees above the amount the court set as reasonable.

Mary Latham

16:35 PM, 11th April 2014, About 10 years ago

Reply to the comment left by "Joe Bloggs" at "09/04/2014 - 14:23":

My "evidence" is the realities of letting a decent sized portfolio across all tenant groups for over 40 years. I have NEVER carried out regular inspections, I only inspect when I feel there is a need or in response to a call from a tenant or neighbour. I am often invited into my tenants homes to look at a repair issue or discuss something that they want to do to the property or garden, I also like to go for a chat when I am planning to increase their rent and these occasions satisfy my need to keep an eye on my properties without causing my tenants to feel that I am checking on their liefstyle. I have only had two properties returned with serious damage (a tiny % of my lettings) and the cost of repairs was more than covered by the time I have saved over these years by not invading the privacy of my tenants.

I want my tenants to "do as they please" in their own homes and that is probably why they stay for so long and treat my properties, the neighbours and me with so much respect.

The law "is" and no term in a tenancy agreement can remove a tenants right to decide who can and cannot enter their home. Only a Court Order can give a landlord access even where there is a statutory obligation to be carried out. I would not be alarmed if a tenant refused entry I would assume that either a previous landlords has invaded his privacy and he is being cautious or that the time I am proposing to come does not suit his lifestyle. I have never actually been refused entry to carry our statutory obligations and therefore this is not an issue that I have had to face. Frankly I would be embarrassed inspecting another persons home, even if I do own the building.


Follow me on Twitter@landlordtweets

The perfect present for property investors @ £4.64. My book, where I warn about the storm clouds that are gathering for landlords is available on Amazon title. Property For Rent – Investing in the UK: Will You Survive the Mayhem?

Joe Bloggs

19:02 PM, 11th April 2014, About 10 years ago

1) so your evidence that regular inspections dont help is based solely on your perception of your experience. that isnt very scientific and i doubt that your experience is typical. it is obvious that the carrying out of regular inspections is more likely to keep untenantlike behaviour in check than waiting for a problem to develop. reasonable proactiveness is preferable to reaction.
2) again i think you are still wrong about legal rights to refuse entry. i asked why why do you say that ‘…is his legal right…’ when tenancies usually expressly provided for this. saying 'The law “is” and no term in a tenancy agreement can remove a tenants right to decide who can and cannot enter their home.' appears rather flippant and ill considered. as you know the tenancy is governed by the law of contract and while some terms such as repairs cannot override the statutory provisions, are you seriously saying there is a statute which overrides the landlords right to inspect the property upon giving reasonable notice? if you are going to cite quiet enjoyment then it is all a question of what is reasonable, which is certainly not what your definitive statement implies.
3) your personal emotions are quite irrelevant to this important question about 'the law'.

Fed Up Landlord

22:43 PM, 11th April 2014, About 10 years ago


Mary is factually a very experienced landlord and as such her experience in terms of being scientific is partly borne out by the qualitative stats in terms of damage etc over her tenancies. If she mathematically worked out her "poor tenant" rate over the number of tenancies and the proportion of those that resulted in damaged properties then this would give a more scientific method. However this would be an individual rather than a collective data set. To be any more would need a far more detailed study over more landlords and more tenancies on the merits of regular inspections. However what she describes is her personal experience and given that it is based on a large portfolio over a number of years then it is worth considering. Personally I inspect other landlords managed properties every three months. More to satisfy due professional diligence obligations rather than objective need. On my own properties I inspect every 12 months usually alongside the gas cert to avoid inconveniencing the tenant. But also to make a physical check of sockets and visible wiring for obvious electrical defects. If I see something dodgy I get the sparky in. I also check hot water temperature settings to ensure its above the level needed to kill off legionella which is another "elf and safety" provision foisted in us by the H and S guardians. Whilst I appreciate Mary's approach is very much risk assessment based and works for her it misses the opportunity to demonstrate due diligence on other aspects of risk to landlords. She may of course have full electrical inspections every 12 months which would help to mitigate this.

Joe Bloggs

23:19 PM, 11th April 2014, About 10 years ago

Reply to the comment left by "Gary Nock" at "11/04/2014 - 22:43":

with respect i would think you know v little about my experience and my success as a landlord (agreed thats my decision but that doesnt mean you can imply what you like). Nevertheless, playing trumps over who is the more authoritative is a bit silly. better to stick to the issues which is that mary (who holds herself out to be an expert) has made IMO two very strange statements, i.e.:
‘There is no evidence to prove that regular inspections have any impact on the behaviour of tenants. If a tenant is doing something wrong in the property he will simply refuse entry to the landlord, as is his legal right.’
These two contentions dont seem to stand scrutiny and Mary hasnt as yet backed up with proper explanations.

Fed Up Landlord

7:21 AM, 12th April 2014, About 10 years ago

Joe these are very strange comments. I have re-read my post to see if I have in any way shape or form disrespected or commented upon your achievements as a landlord, or implied it. I am not "playing trumps" over who is more authoritative and am certainly not "silly". Mary has given her opinion and so have I in a balanced format. To make comments such as yours in response does not help the debate or tbe forum and discourages members from posting.

Mark Alexander - Founder of Property118

8:31 AM, 12th April 2014, About 10 years ago

I would have thought the frequency of inspections is highly dependent on the market operated in.

For example, I often rent a Marlin Apartment if I am working in London. These are serviced apartments and if somebody didn't go in once a day I would complain.

However, if I rented a home and was responsible to utility bills and Council Tax I would hate to think somebody else could let themselves in without good cause and certainly without my permission. I wouldn't refuse permission if I thought an inspection request was reasonable but if I was too often, say more that once a year for a Gas Check or more often if there was a maintenance issue I would find that intrusive.

I think one visit after say 6 to 13 weeks to a tenants home should be fine, then annually thereafter or as required based on maintenance requests, complaints from neighbours, rent arrears or other issues which are best resolved in person.

Monthly visits are way OTT in my opinion. I wouldn't want my mortgage lender to inspect my property every month, would you? In fact, if they wanted just one inspection following completion I would wonder why, especially if that was not part of the T&C's of the contract.

If I was required, as a result of selective licensing, to make monthly inspections compulsory, and put this into my contracts, I don't think my tenants would like the idea any more than I do.

Linda Price

9:10 AM, 12th April 2014, About 10 years ago

Reply to the comment left by "Mark Alexander" at "09/04/2014 - 14:59":

I've just read the link about licensing fees being refunded in certain areas and am wondering what is considered reasonable costs for the council to process the application? We are now being asked to pay £500 (that includes our discount for being accredited landlords) for each property licence renewal. I'm wondering how they can justify that when all of the information is duplicated each time.? Do you think there is a case for refunds in Newport?
This council impose licensing on properties converted into flats as well as traditional HMOs so our bill is £3500 !

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership


Don't have an account? Sign Up

Landlord Tax Planning Book Now