Rented acreage licensing: crackdown on rogue landlords or money grab?

Landlord licensing schemes are popping up all over the country as local authorities attempt to crack down on rogue operators.

Nottingham city council’s scheme starts next month, while the London borough of Bexley’s begins in October, and Brighton is awaiting official approval for a scheme that would affect 27,000 properties. Luton is one of a number of other areas discussing the idea.

How these typically work is that all landlords pay several hundred pounds for a licence, and they, and their properties, are subjected to legal checks – with penalties of up to £30,000 if they don’t comply.

Councils say these so-called “selective licensing schemes” are a key weapon in the battle to improve standards in the private rented sector, weed out landlords putting tenants at risk, and to deal with crime and antisocial behaviour – rubbish in front gardens, noise and so on – often associated with bad-quality accommodation. And some want even stronger powers.

However, some owners claim these schemes are a money-making exercise simply designed to boost council coffers. A quick number crunch suggests Brighton’s would bring in between £12m and £16m, while Nottingham will raise between £14m and £23m. Some argue that the worst criminal landlords will simply carry on staying under the radar.

Late last month the government announced a review to look at how selective licensing is being used and whether it is working well.

What exactly are these schemes?

Selective licensing allows councils to make it compulsory for every private rented property in a specified area to have a licence. (There are two other types of landlord licensing, mandatory and additional, that only apply to people letting out so-called houses in multiple occupation, or HMOs).

In these areas, a landlord must apply for a licence if they want to rent out a property. This means the council can check whether they are a “fit and proper person”, as well as laying down other requirements concerning the management of the property and health and safety.

The schemes work in different ways, but things a landlord might be required to provide include a valid gas safety certificate, an electrical installation condition report, a copy of the tenancy agreement and evidence of landlord insurance. Typically, a licence lasts five years.

How many councils are doing this?

Lots. At least 55 either have a scheme in place or would like to set one up, according to the Residential Landlords Association (RLA).

A number of London local authorities run them, including Brent, which earlier this year won approval to extend its scheme into five more wards. Meanwhile, the new Bexley scheme covers four areas – Thamesmead North, Abbey Wood, Lower Belvedere and parts of Erith. It started accepting licence applications earlier this month ahead of the 1 October start date.

However, it’s not just in the capital. Gateshead has several schemes, Blackpool council runs one, and Brighton has applied for approval for a scheme that would cover 12 wards, including Preston Park, St Peter’s and North Laine, and Hanover and Elm Grove. Nottingham’s will cover “most” of the city – more than 30,000 homes – and comes into force on 1 August.

How much is a licence?

It varies. In Nottingham they are £780, or £480 if you are a locally accredited landlord, and a separate licence is needed for each property, even if it’s one person who owns several homes.

Gateshead’s standard fee ranges from £550 to £1,000, depending on how early or late you apply, while Bexley’s is £690, with an “early bird discount fee” of £371. The London borough of Waltham Forest’s is £650, while Brighton is proposing a standard £460, or £600 where the council has to do a lot of legwork.

What about good landlords who already manage their properties well? Many of the councils say they accept that lots of property owners or managers already deliver good-quality and well-managed homes, but that they can’t exempt them from the schemes. However, in many cases councils offer a discount to landlords who have accreditation.

Are landlords unhappy?

Yes, some are. David Smith, policy director for the RLA, says the schemes rely on landlords pro-actively making themselves known to their local authority. “Criminal landlords who fail to provide secure and safe accommodation to their tenants will not come forward,” he says. “Councils need a much smarter system to find and root out those who will never willingly make themselves known.”

A Guardian Money reader told us that he and his wife have a one-bed buy-to-let property in the Belvedere area of Bexley. He claims the council is “cashing in” on the Crossrail project by “fleecing” buy-to-let landlords, adding: “It appears that the council has deliberately picked the four wards most likely to benefit from any ‘Crossrail bounce’. We bought the property earlier this year and spent more than £13,000 doing it up to provide a really nice place for a young couple. It’s to be commended when councils crack down on HMOs [houses in multiple occupation] and rogue landlords, but … why are they going after private landlords with one or two tenants rather than the main (potential) offenders? It can only be a money-making exercise. How can they possibly justify such an outrageously high charge?”

Bexley council says it received strong support from owner-occupiers, tenants and businesses. It adds that its fees “are among the lowest in London”, with discounts to support good landlords who come forward. It says it has been working to identify what it can do to support responsible private renting.

What’s the view of other councils?

Newham in London – the first council to license all private properties – probably spoke for many last week when it said it wanted tougher civil penalties to discourage rogue landlords letting dangerous and overcrowded properties, and the power to confiscate properties from the worst offenders.

What of the “money-making” claim? Local authorities firmly reject this: Brighton says it is only allowed to cover administration costs, while Nottingham says it is not permitted to make a profit.

I’m a tenant. Can I check the property is licensed?

Yes. By law, councils have to keep a register; Newham has an online searchable database. In theory tenants will be able to “shop” landlords and land them with large fines.