The application of selective licensing in certain parts of the UK has resulted in landlords having to apply for a license to let a property to show they are an “acceptable” individual (no previous criminal convictions) and that the living standards of the property they wish to rent out is also an acceptable standard. These areas are chosen by the local council and are influenced by such as factors as persistent anti social behavior, high levels of deprivation as well as lack of housing demand. As such, those who own properties in these areas who wish to let properties to private tenants must apply for a selective license.
How much do these licences cost?
Licenses can depend on the area with Nottingham charging up to £780 whilst Scarborough charges £550 for their licenses. The license is valid for five years before renewing. Failure to obtain a license should a landlord be required one can be fined up to £30,000. They may also be prevented from letting the property in the future.
Why has selective licensing been implemented in some areas?
The introduction of selective licensing can benefit the local community by ensuring the standard of properties being let out in that area is of an acceptable standard. As rental properties must meet a certain standard, landlords are forced to provide a higher quality of accommodation as such increasing the property values for the local area as well as making it safer for tenants. This also reduces the levels of anti-social behavior as well as the prevalence of so called “rogue” landlords. Primarily aimed at areas with a high number of HMO properties, the introduction of the license has been argued to also benefit landlords due to an improvement in the area. The increased property value because of the higher standard should bring greater interest when the property is empty. The license also means the standard of properties among landlords are more equal meaning no landlords can get away with sub-standard living conditions.
Why are some landlords against licensing?
Although the license does improve the quality of properties in areas with otherwise sub-standard living conditions, many landlords also claim that the honest, regulation abiding property owners are being penalized for the actions of a select few just to rent their properties out meanwhile criminal landlords continue to evade detection (and will most likely fail to obtain a license). Many councils however have stated landlords with accreditation will be offered discounts on licenses. The hefty fee spent in purchasing the license arguably could be spent in renovation work and improvements to the property along with straining the already strained profit margin. It has also been argued that the license is nothing more than a “scheme” for the council to obtain extra money whilst doing very little in terms of improvement for the local area.
Who are exempt from selective licensing?
An alternative to paying for a license for a property would be to invest in commercial property. A commercial property can range from university/college accommodation to buildings managed by the public sector and are certainly a viable alternative. With commercial properties under £150,000, landlords can escape the dreaded stamp duty as well as selective licensing. A full list of exceptions to selective licensing is as follows:
holiday lets
the building is occupied by student controlled/managed by a university/college
the occupiers share amenities (such as a bathroom, kitchen ect) with the landlord or a “member of the family” of the landlord/licensor
agricultural tendencies
a property managed by a public body or local housing authority
the building is registered under other legislation (e.g. care homes)
licensed premises
business tendencies
prohibition order in force
the occupier is a “member of the family” of the landlord/licensor who himself holds under a lease of the property for a minimum of 21 years
Although the introduction of selective licensing will be seen as a nuisance for law abiding landlords, the license rules will surely create a more level ground among landlords and hopefully will help areas in dire need of regeneration. However for now only time will tell.
