Selective licensing? If I were a criminal…

Selective licensing? If I were a criminal…

9:24 AM, 31st August 2022, About a month ago 15

Text Size

Hello everyone, If I were a criminal I would run a protection racket as a source of funds. It produces a steady income stream with little risk of being caught and requires less actual violence than, for example, robbery or drug dealing.

Local businesses would agree to pay my ‘insurance premium’ and in return I would not bother them. They’d find it cheaper to pay the charge than risk suffering the catastrophic consequences of not complying.

The majority of businesses would pay even if it reduces their viability: okay, there might be some ongoing collateral damage but that’s not my problem. Of course, ‘pour encourager les autres’, it would be necessary from time to time actually to destroy the business of those who are foolish enough to fail to pay.

However, because of the built-in incentive to fall into line, this is not a sanction one would have to apply often and therefore it is an enterprise that involves very little work. The downside is that, however well you implement it, a protection racket is always illegal.

If I were a council I would run a selective licensing scheme as a source of funds. It produces a steady income stream with little risk of generating adverse publicity or being taken to court.

Local landlords would agree to pay my ‘administrative charge’ and in return I would not bother them. They’d find it cheaper to pay the charge than risk suffering the catastrophic consequences of not complying.

The majority of landlords would pay even if it reduces their viability: okay, there might be some ongoing collateral damage but that’s not my problem. Of course, ‘pour encourager les autres’, it would be necessary from time to time actually to destroy the business of those who are foolish enough to fail to pay.

However, because of the built-in incentive to fall into line, this is not a sanction one would have to apply often and therefore it is an enterprise that involves very little work. The upside is that, so long as it is implemented properly, a selective licensing scheme is perfectly legal!

Steve



Comments

TheBiggerPicture

10:15 AM, 31st August 2022, About a month ago

Now you understand the tax system.
Legalised theft.

Snacy

10:45 AM, 31st August 2022, About a month ago

Love it. Thank you for the post!

Robert M View Profile

12:26 PM, 31st August 2022, About a month ago

An accurate portrayal of council behaviour.

Selective licencing is totally unnecessary, as councils already have the legal power to take action against rogue landlords, so any pretence that it is about "improving properties" is total fiction.

Selective licencing is, in my opinion, about extracting money from landlords in order to pay into the council coffers for use towards paying wages and other council expenditure.

Paul Maguire

13:10 PM, 31st August 2022, About a month ago

Brilliant. Thanks.

Jonathan

15:52 PM, 31st August 2022, About a month ago

I am no fan of council licensing schemes however I have to take issue with Robert’s comment “Selective licencing is, in my opinion, about extracting money from landlords in order to pay into the council coffers for use towards paying wages and other council expenditure”

In “An Independent Review of the Use and Effectiveness of Selective Licensing September 2019” from the Ministry of Housing, Communities and Local Government, reference was made to the Housing Act 2004 which stipulates that monies raised can only be used to support administration and enforcement of the scheme

In fairly recent court decisions, it was clarified that the licence fee needed to be clearly separated into the cost of processing the application (Part 1) and then the costs of administration and enforcement including inspections (Part 2).

It is clear from court decisions that licensing is explicitly prohibited as a means of generating revenue over and above that necessary for the operation of the scheme.

Finally, I recall seeing a copy of Waltham Forest Council minutes (don’t ask me where I got them from) that set out the financial projections expected from their first scheme in 2015. There’s a massive influx of cash in year 1 when the scheme goes live as most landlords comply and apply. But for years 2-5, they have to support the staff overhead, but licence fee income reduces to a dribble.

Robert M View Profile

18:12 PM, 31st August 2022, About a month ago

Reply to the comment left by Jonathan at 31/08/2022 - 15:52
The selective licencing fees extracted from private landlords go into the council coffers and pay for the wages of the staff administering the selective licencing scheme, plus other costs associated with running the scheme. - It sounds like we are saying the same thing?

As the cost of the staff, portion of the property costs, operating overheads, multiple layers of management, consumables, utilities, legal team, etc, etc, (perhaps down to the tea and biscuits at their meetings?), are all part of the costs that can be apportioned to the operating costs of the selective licencing scheme, then basically it is a tax on the landlords to pay towards all of this.

The private landlords are in effect paying for/towards the running costs of council buildings and staffing that is perhaps only required for the purpose of the selective licencing scheme. - Putting it another way, if the selective licencing scheme was not in place, there would be less need for all the additional staff and other costs to administer it.

Monty Bodkin

18:25 PM, 31st August 2022, About a month ago

Reply to the comment left by Robert M at 31/08/2022 - 18:12
Not forgetting those lovely gold plated pensions.
It's a huge non-job creation scheme.
Hardly a surprise councils love them.

Peter Fredericks

10:27 AM, 3rd September 2022, About a month ago

Reply to the comment left by Jonathan at 31/08/2022 - 15:52
Interesting Jonathan. What is the legal case?
What is the forum for challenging the selective licensing fees? Judicial review? First Tier Property Tribunal? Local Government Ombudsman? One authority I am dealing with just refuses to say.

DSR

11:02 AM, 3rd September 2022, About a month ago

Reply to the comment left by Peter Fredericks at 03/09/2022 - 10:27
I'm no expert but if you raise a complaint (for anything) with the Council through their own complaints process, a the end if you are still not happy you are told you can go to the Local Gvt Ombudsman.
Issue is here you are 1. you still have to pay the licencing fee and have now raised your head further up the parapet so are likely to also be seen as a 'tricky LL' so they may well look at you/your property more critically...
2. LGO is probably up to their neck in complaints and are you really going to get the reply you seek?
3. The LGO is only going to look at the 'fairness' of your complaint, not the essence of what you are complaint about. At the end of the day if the council applied SL then you have to follow the rules...

philip allen

15:17 PM, 3rd September 2022, About a month ago

Reply to the comment left by Jonathan at 31/08/2022 - 15:52
Councils are also 'explicitly prohibited' from encouraging tenants to remain in a property, even having been given an eviction notice, until the bailiffs arrive. But they do! Using the reasoning that the tenant will be making themselves 'intentionally homeless' should they leave on the date that they have been served notice to quit.
Further, Rent Smart Wales issue the LANDLORD with a 5 year license rather than licensing individual properties. In England they license each PROPERTY. If Wales can cover their costs by issuing just one licence per landlord what are English councils doing with the excess income? And before you make the point that RSW have suspended their phone line service recently that is because of a shortage of staff and not for lack of funds (their excuse).

1 2

Leave Comments

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

or

Don't have an account? Sign Up

Landlord Tax Planning Book Now