Whilst the tax changes, right to rent checks and the soon to be implemented approved form of long term AST may be thought to be the start of the Governments influence on the Private Rental Sector, this is certainly not the case. The government has always influenced and regulated, in one way or another, the private rental sector. However, under the radar there was a change in legislation in 2006, and I believe that this change is likely to come more to the fore over the next few years. So what is this change? Well it is the Private Landlord Licensing Scheme. This was originally introduced under Section 79, 80 & 81 of the 2004 Housing Act, and the Act itself came into force in April 2006.
It was originally intended to address the impact of poor quality private landlords due to low housing demand and also to reduce levels of anti-social behaviour by tenants. So why has something that has been in force since 2006 reared its head again? Well unsurprisingly it comes from a governmental review of the private rental sector, The Communities and Local Government Committee’s inquiry into the private rented sector (2012-13) included a look at the Selective Licensing scheme, triggered undoubtedly by the growth in the sector so that it is now the second largest form of tenure.
Landlords are aware of the requirement to licence HMO’s (also introduced under the 2004 Act), and the licensing criteria for properties selected for the licensing scheme is unsurprisingly similar to that for HMO’s. Quite simply if a local authority decides that their area meets the relevant criteria under the 2004 Housing Act, it can designate an area suitable for the Private Landlord Licensing Scheme. Once a Local Authority has considered the position and decide that it is appropriate to impose the scheme, all private rental properties need to obtain a licence from the local authority. Usually such licences cost around £500.00 and are valid for no more than 5 years. If the landlord does not have one, it is an offence that can be punishable by a fine of up to £20,000, breaches of the terms of the licence can also incur penalties in the sum of £5,000.
Sceptics may say that this all serves to increase revenue generation for local authorities, particularly at a time when their budgets are coming under more and more threat. An example of this can be seen from the actions of Newham Borough Council, which in 2013 designated all of the rental properties in their area as requiring a licence. The one thing that the Communities and Local Government committee did, was recommend that such a wide implementation of the scheme by a local authority was not appropriate and should only be applied “selectively” and would need national approval to implement. However the recommendation didn’t last too long and on the 1 October 2015, Croydon followed suit in putting all its private rented properties in to the scheme.
So the question arises who’s next? Well as local authorities from Blackpool to Cornwall and Durham to Brighton have implemented or consulted upon licensing schemes it’s a very good question, the answer to which is probably everywhere. If you require further information please contact me, David Eminton or Nicola Davies.