What is Property Licensing?
A license to rent a private property is given by local UK councils to landlords with HMOs or in selective licensing areas. For example, areas covered by Selective Licensing Schemes.
Under The Housing Act 2004, it is a legal requirement to hold the correct property license and demonstrate that the property is kept to a good standard. This is to protect the health and safety of tenants and improve the quality of rented homes. There are three schemes under which landlords may need a licence:
- Mandatory HMO licensing
- Additional HMO licensing
- Selective licensing scheme (SLS)
By law, councils must keep a register that tenants can access and search. This can result in landlords being hit with hefty penalties for not having a licence and fines up to £30,000 if found in breach of the license.
Mandatory HMO licensing
A HMO must have a licence if five or more people occupy it, and it includes two or more households where some individuals share facilities like a kitchen and bathroom.
Additional HMO licensing
The Housing Act 2004 also outlines that local councils can extend licensing to include HMOs not subject to mandatory licensing. From 1 October 2018, all large HMOs fall under the mandatory HMO licensing scheme, regardless of how many storeys it has.
Section 56 of The Housing Act 2004 states that the local authority may implement additional licensing if it considers that a significant proportion of HMOs are being managed insufficiently and if particular problems, either for those occupying the HMOs or for members of the public, may arise.
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Selective licensing schemes
This scheme is not only relevant to HMOs, it also relates to privately rented properties in a specific area. Local councils have the power to introduce this scheme whereby a landlord in a particular area is required to obtain a licence before renting out private property.
Selective licensing may be introduced where one or more of the issues below are present:
- low demand for housing
- anti-social behaviour
- high turnover of tenants in rented areas
- houses that are in a poor condition
The scheme can be applied to a whole area or specific streets, and you will need to contact your local council to find out if there is a particular license requirement in your area. Before introducing an SLS, councils must consult everyone affected and, in some cases, even the government.
Local councils must consider if landlords fail to take appropriate action to resolve the anti-social behaviour problems and show that they are taking reasonable steps to combat the issue raised. It must be clear that the SLS will significantly solve the problems faced.
According to The Housing Act 2004, the local council can enforce penalties of up to £30,000 for breach of the legislation. It could also result in a criminal conviction.
Any conviction can affect the ‘fit and proper person’ test required to hold the licence and, therefore, affect the ability to manage a licensed property.
If the HMO is not licensed, landlords can be subject to a rent repayment order (RRO) requiring them to repay up to 12 months' rent. It can also invalidate a section 21 order (two months' notice to evict).
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