Landlord licensing…What is the REAL motive??????

This year, local authorities are looking to spend tax payers money on consultations to prove they meet the requirements to introduce Landlord Licensing within their borough. In order to introduce this license, they must prove that there is either a serious anti-social behaviour issue in the private rented sector (PRS)or low demand for the accommodation offered by private landlords.

A landlord license is required for each individual tenancy agreement issued within that borough. This license is made up of two parts; the first part is the license holder must be a fit and proper person, capable of managing the tenancy and license conditions and the second part is the condition and standard of the rental property.

On the surface, landlord licensing sounds like a fantastic solution to the reoccurring issue of rogue landlords however when you delve a little deeper there would appear to be massive flaws in this scheme.

In a recent case in Oldham, a landlord was found guilty of 13 breaches of Management of a HMO. The landlord was fined £115 for each breach equalling a total of £1495 and Oldham council were awarded £2700 in costs. You would think that the fine would be awarded to the local authority in addition to the costs however this is a common misunderstanding. In these cases, the fine is awarded to central government and ONLY the costs are awarded to the local authority. This raises one key question, what incentive do local authorities have to actually fine said ‘rogue’ landlords if they don’t receive any of this money?

Local authorities can fine up to £20,000 for landlords found without a license however these levels of fines are yet to be seen. Could this be because local authorities do not benefit from the level of the fines? It would appear that instead of using hefty fines as a deterrent for these landlords, local authorities are offering a licensing fee of £500 with the addition of enforcement fees (£300 in Newham) which goes direct to them rather than central government. In addition to this, they can generate extra revenue under a ‘rent repayment order’ for all the rent paid to the landlord whilst the property was not licensed.

Numerous local authorities are looking to introduce this scheme at present and this is predominantly based on the results found by Newham council. What local authorities are failing to mention is that Newham council were given funding from central government to tackle the ‘beds in sheds’ issue they were overwhelmed by. This allowed them to invest in 120 enforcement officers and 40 police officers to assist with dawn raids. In order to sustain this level of enforcement, local authorities will have to set aside significant funding to allow for this recruitment however, my understanding is that local authorities are already having to make cutbacks due to limited funding. How are they going to afford this additional cost? Is this the reason local authorities have so far failed to detail the cost of enforcing this scheme? And would tax payers support such a scheme if knowing the full extent of the cost?

Under the current Housing Act 2004, councils have the authority to prosecute ‘rogue’ landlords, however, they are suggesting that with the new landlord licensing scheme they are given greater powers but I am yet to see any difference in this enforcement.

I will leave you on this note…will landlord licensing really improve PRS or is this just a revenue generator in times of austerity cuts?

Steven Latham

Liverpool Property Management Professional