There are three categories of licencing for rental properties:
- Mandatory national licencing, which applies to ‘large’ Houses in Multiple Occupation (HMOs) that house five or more people from more than one household
- Additional licencing, which permits councils to extend mandatory licencing conditions to any size of HMO
- Selective licencing, where councils can require any rental property in their area to be licenced, regardless of size or occupants.
Additional and selective licencing schemes can cover anything from just part of one street, to the whole area.
They were introduced as a tool to help councils ensure there is the right balance of housing and occupancy in each part of their area.
There are certain criteria that must be met before a licence is granted by the local authority.
Properties must be fit for purpose and meet specific minimum health and safety standards, and landlords must be able to prove that they and whoever is managing the property is a ‘fit and proper person’.
Without a valid licence, the property cannot be let. Landlords who breach the rules can be fined anything up to £30,000 by their local council – which will rise to £40,000 after the Renters’ Reform Bill is passed.
What were the old rules?
Until the end of last year, if a local authority wanted to implement a selective licencing scheme that covered more than 20% of the area or affected more than 20% of privately rented homes, they had to get approval from the Secretary of State.
What are the new licencing rules for rental properties?
In December, it was announced that government approval would no longer be necessary, meaning councils can now introduce larger schemes more quickly and easily, and there is the potential for every local authority to require all rental properties to be licenced.
Understandably, there are concerns within the industry that some councils will do this simply because the licencing fees and landlord fines will provide a valuable extra revenue stream.
It also seems at odds with the introduction of a landlord database, as proposed in the Renters’ Rights Bill (and the Renters Reform Bill before it).
It was previously suggested by the government that the new Private Rented Sector (PRS) portal would help councils monitor privately rented properties within their area without the need for selective licencing schemes.
While councils have to consult for a minimum of 10 weeks on any proposals, there’s a huge variation across the country in terms of how widely and well new licencing rules are publicised, and a new scheme could be introduced at any time.
That means landlords in some areas have to be very proactive in seeking out the latest changes, or risk falling foul of the rules and being fined.
According to Yuno – a company that helps property managers, lettings agents and landlords comply with lettings legislation, including whether you need a licence or not, Barking and Dagenham will be one of the first local authorities to introduce borough-wide licencing under the new rules, with a selective scheme beginning on 6th April.
A total of 37 councils currently have selective licencing schemes under consultation. Licence fees ranging from £350 in Ashfield to £1,090 in Leicester for a five-year licence.
Although it’s relatively uncommon, the council can refuse to grant a licence, so it’s essential to check the local rules before buying any property to make sure you’ll be able to let it in the way you intend.
Your local authority website should have information about any licencing schemes currently in effect or under consultation, but this is not always easy to find.
Given this change and the huge number of new rules that will start to come into force once the Renters’ Rights Bill is passed, it’s well worth working with a qualified agent that can help you continue to let legally and safely.
At Your Move, our agents are trained and kept up to date with legal changes, supported through our membership of Propertymark, so we’re well placed to help you navigate the new rules.
If you’d like to discuss our services or any aspect of licencing or the RRB, just get in touch. Find your local lettings team to get started.
The Your Move Content Marketing Team
