Local authorities in England and Wales are able to designate specified areas within their jurisdiction for selective licensing schemes. Landlords need to be aware of and understand their obligations in respect of selective licensing, as if the requirements are not complied with there can be significant consequences.
The Law
Selective licensing was first introduced by ss79 – 81 of the Housing Act 2004. The provisions came into force in April 2006, therefore is not a new development. The aim of selective licensing was to tackle problems of low housing demand and improve the private rental market by ensuring certain conditions must be met by Landlords renting out property in the select area.
Selective licensing was principally employed by London borough local authorities and district councils in larger populated areas in its early years. Further conditions have subsequently been added to the legislation via the Selective Licensing of Houses Order (Additional Conditions) (England) 2015.
If an area is designated to a selective licensing scheme, the landlord is required to obtain a license from the local authority in order to rent it out. s3 (1) of the Order specifies the conditions local authorities must take into consideration when making a designation:
- The area contains a high proportion of private rented properties;
- The rental properties in the area are occupied either under assured tenancies or licences;
- That one or more of the sets of conditions in articles 4 to 7 of the order are satisfied. These conditions relate to: housing conditions, migration, deprivation and crime.
Consequences of non-compliance
Private landlords should be aware that they are required to obtain a licence prior to renting out their property in an area subject to selective licensing. Failure to obtain a license can result in the landlord being prosecuted and losing the right to rent out their property.
Heavy fines and / or financial penalties can also be levied against the landlord. Under the Housing Act 2004, landlords can face prosecution and a potential liability on summary conviction for a fine of up to £20,000 if they rent out their property without a license. The Housing Act 2004 also grants local authorities the ability to issue a Rent Repayment Order for rent received whilst the property was not licensed.
Landlords can also be fined up to £5,000 for breaching any conditions of a license granted. The amount of any fine on this basis is subjective and is determined by the local authority on a case-by-case basis.
In addition to the potential penalties and / or fines for renting out property without a license in an area designated for selective licensing, if a license is required and not obtained no valid s21 notices can be served.
Advice
In light of the above, the stakes are high and it is important for landlords to ensure they are aware of and understand selective licensing. Landlords should enquire about areas designated for selective licensing by contacting their local authority. If a landlord’s rental property is located in an area designated for selective licensing, they ought to also check with the local authority for any exemptions. If there are no exemptions upon which a landlord can rely, a license must be applied for. Upon approval of the license, landlords must ensure they comply with all the terms and conditions of the license.
For further information and advice on selective licensing, contact our expert team.
