The four nations of the UK each have national mandatory licensing requirements for the private rented sector:
England: Any ‘large HMO’ – that’s a property housing five or more people from more than one household, who share toilet, bathroom or kitchen facilities – must be licensed.
Wales: Large HMOs (as above but, with the additional requirement that the property have three or more storeys) must be licensed, and anyone (landlord or agent) letting and/or managing property must apply for a Rent Smart Wales licence.
Scotland: Every HMO must be licensed – that’s any property rented out by three or more unrelated people who share the bathroom or toilet and kitchen.
Northern Ireland: All HMOs – defined as a property occupied by three or more people forming more than two households - require a licence.
However, England is the only country where each local authority also has the power to impose its own licensing requirements, on top of the national ones:
‘Additional licensing’ powers mean councils can extend the ‘large HMO’ mandatory licensing requirements to smaller HMOs, where three or more unrelated people are sharing a property. They also have ‘selective licensing’ powers that allow them to require any rented property to be licensed – and this is where things can become tricky for landlords in England.
These selective licensing schemes can apply to the whole local authority area, specific wards or boroughs, or even just certain streets. More than one scheme can be in operation at a time, each with different start and end dates, and they can be introduced, replaced or scrapped with very little notice or publicity, making it incredibly difficult for landlords to stay up to date. And if you’re found not to have a licence when it’s required, that’s classed as a criminal offence.
Although the penalty is unlikely to be severe for a first-time breach, if the council considers it serious enough, they could fine you up to £30,000, issue a rent repayment order or even prosecute you in court.
Some examples of schemes that have recently changed or are due to do so:
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In Greenwich, London, the current borough-wide additional licensing scheme for HMOs is coming to an end on 1st October this year. On the same day, a new selective licensing scheme is coming into force for all private rented homes in five wards in the east of the borough. The council estimates that it will receive 4,400 licence applications at a cost of £780 per property, although they’re planning to run an ‘early bird’ discount period, reducing the cost by 60% to £312.
- The additional licensing scheme in the London Borough of Redbridge ended on 12th April this year, but the council is currently considering responses to a consultation on the introduction of a new one to replace it. They also have two selective licensing schemes in operation: one covering two wards, which ends on 12th July this year, and another covering 12 wards, which runs until 30th October next year. To further complicate things, some ward boundaries have changed since the schemes were introduced!
- In Manchester, there are several different current and proposed schemes, including:
Moss Side and Rusholme ward: a small scheme covering 1,200 homes, ending in January 2023
Old Moat ward: a scheme covering 12 streets, ending in April 2023
Harpurhey ward – a scheme covering 20 streets in the Trinty area, which began at the start of May and will run until the end of April 2027
A proposal for a scheme covering 11 streets in the Clayton and Openshaw ward
Two separate proposals for the Gorton and Abbey Hey ward.
If you’re in Greater London, the London Property Licensing website should be very helpful in keeping track of licensing schemes. Some local authorities have a mailing list for landlords, so check if yours does and make sure you’re on it! But in some parts of the country, it may be harder to get information from your council, in which case, having a good local agent to keep you updated and make sure you stay compliant with licensing requirements can be invaluable.
If your property is already let and managed by us, we’ll let you know as early as possible about any schemes that might affect you. If you have any questions about licensing or you’d like to discuss our Fully Managed service, we’re always here to help. Just get in touch with your local Reeds Rains branch and speak to one of the team.
Leasehold reform being introduced at the end of June 2022
In April, the DLUHC confirmed that the Government intends to bring the Leasehold Reform (Ground Rent) Act 2022 into force on 30th June this year.
This will essentially scrap ground rent on new leases for residential property by restricting it to a ‘peppercorn’ rent of zero. For retirement properties, the Act’s provisions won’t apply before 1st April 2023, and for lease extensions, the current ground rent will continue until the end of the old lease period, then it must be zero for the additional period.
Progress on the Renters’ Reform Bill
The Government has announced it will at last be bringing forward the long-anticipated Renters’ Reform Bill in the third session – that’s in the autumn of this year. The Bill will focus on four key reforms for the private rented sector in England:
- Abolishing section 21 evictions
- Introducing a landlord registration scheme
- Introducing a new Ombudsman covering all PRS landlords
- Making the Decent Homes Standard applicable to the PRS for the first time.
We will cover this in more detail in our next newsletter. Meanwhile, more information is available at GOV.UK.
The Reeds Rains Content Marketing Team
