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ask tom ...
Resident Agony Uncle, Tom Entwistle,
answers readers’ questions.
Tom Entwistle is Editor of LandlordZONE® and an
experienced landlord of residential and commercial property.
Q
I have just discovered that my
rental property in Liverpool
may be subject to licensing
and I have been told that I should be
paying a fee to the council. I have just
the one property in Aigburth which I
rented to a friend and it’s the first I’ve
heard of this. So do you think I need a
licence, and if so what’s involved?
The Housing Act 2004 provided for
licensing of private landlords in a
local housing authority’s area. Initially,
councils introduced mandatory and
discretionary licensing for rental
properties at highest risk, which are
houses in multiple occupation (HMOs).
The schemes enabled councils to focus
on those properties for safety issues,
raising management standards with
the intention of driving out rogue
landlords, so far with mixed results.
Another category known as selective
licensing was included in the Act,
intended to address ‘the impact of poorquality private landlords and anti-social
tenants’. It was primarily developed with
the need to tackle problems in areas of
low housing demand – though the Act
also allows for selective licensing ‘in
some other circumstances’, a provision
some councils such as Liverpool have
taken advantage of, and implemented
city- or borough-wide schemes.
The upshot is that licensing was
introduced for every rental property
in Liverpool from 1st April 2015, which
means a £400 fee payable for each rental
unit. Despite the fact that landlords
receive a 50% discount if they become
accredited by the council accreditation
scheme, or use an accredited letting
agent to manage, with 50,000 properties
involved the potential income for
Liverpool City Council is said to be in the
region of £20m.
It’s really no wonder Newham and other
councils throughout the country were
keen to introduce city- or boroughwide licensing, but at the end of March
the Secretary of State for Housing,
Brandon Lewis, said that no councils
would be allowed to introduce
city-wide or borough-wide schemes
without first applying to him at DCLG.
Unfortunately, for all landlords in
Liverpool, their selective licensing
scheme was introduced (as was the
Newham scheme and others against
Government
guidelines)
before
Brandon Lewis stepped in.
In an area subject to a selective
licensing scheme, all private landlords
must obtain a licence and if they fail
to do so, or fail to achieve acceptable
management standards, the authority
can take enforcement action. They
can prosecute landlords and saddle
them with a criminal record, resulting
in a fine of up to £20,000, or in some
cases, take control of the property.
The London Borough of Newham
introduced
their
borough-wide
scheme in January 2013 and since
then a number of authorities have
followed suit.
Many
landlords
and
landlord
associations
have
fought
the
implementation of these boroughwide schemes ‘tooth and nail’ but
in most cases to no avail, even after
pointing out the added cost burden
of licensing. This, added to mortgage
payments (now affected by budget tax
implications), insurance, maintenance
and agent’s fees, plus the extra work
involved in compliance with the new
regulations, means many landlords
will be in a loss-making situation.
The danger is that small-scale
landlords like yourself are often
in the dark about these schemes;
councils are bad at communicating
with landlords because, frankly, they
don’t know how many they have – but
uninformed ‘amateur’ landlords are
still subject to the full force of the law.
Despite the fact that councils tend to
deal leniently with those landlords
they see as non-professional, such
as yourself, and in the case of safety
issues they will usually give plenty
of warning to bring a property up to
scratch, having no licence ultimately
means you are subject to prosecution
and a fine, plus a criminal record,
which in some cases might affect an
outside career in employment.
It seems unfair that landlords that let
perfectly safe and well-maintained
properties, plus carefully comply
with all the letting regulations, and
may even be part of an accreditation
scheme, are then subjected to a licence
fee simply because their property is in
a city or borough where the council
has decided to introduce licensing.
There is no doubt that councils are
up against it with rogue landlords; it
takes countless staff-hours to build
a case, endless time to get them
into court, and the often paltry fines
handed out are no deterrent.
But licensing adds little to existing
laws, many councils have been
given extra funding from central
Government to help, and some
councils like Manchester have
concluded that licensing is not
helping with their landlord relations,
and it’s more cost-effective to tackle
the rogues by other means.
My advice, if you have not already
done so, is to apply for a licence
now and enquire about the council’s
landlord accreditation scheme so you
can get the discount. It might seem
over the top for a single letting for
your friend, but I’m afraid there’s no
other way.
If you have a question for Tom, please email [email protected].
30 Landlord & Buy-to-Let Issue 61 • September 2015