Newsroom

Landlords dismayed at changes to licensing powers for local authorities

Landlords have reacted with anger to the news that local authorities have been given carte blanche to introduce licensing schemes within their areas.

Landlords are concerned that authorities may introduce licensing schemes without undertaking sufficient consultation with them and other stakeholders, and may view the licensing of landlords as an easy way to boost their revenues.

Following an announcement made by the Department for Communities and Local Government (CLG) on 1 April 2010, the current requirement for local authorities to seek the permission of the Secretary of State before introducing licensing schemes is to be removed.

Landlords had previously viewed this requirement to be a good check in the system as it forced authorities to engage with CLG before introducing licensing schemes. The result was that authorities were fully informed of their obligations before introducing licensing schemes.

With no requirement to engage with CLG under the proposals, landlords are worried that it could lead to poorer licensing proposals coming through and less consultation with stakeholders.

Though CLG do state there to be a role for LACORS – the Local Authority Coordinators of Regulatory Services – to support councils as they look to meet the requirements for establishing licensing schemes in an area, exactly what this means is unclear at the current time.

Commenting on the proposals, Ian Fletcher, director of policy at the British Property Federation said:

“Licensing schemes should not be entered into lightly. The requirement for local authorities to seek the permission of the Secretary of State before entering into licensing schemes reinforced this. Following this announcement, however, a crucial check in the system has been removed. The Government maintains that local authorities still have to undertake consultation with stakeholders ahead of introducing licensing schemes. Should an authority fail to do so the only way for stakeholders to challenge it is through judicial review – a hugely costly process. The Government has tampered with a system that did not need changing.”

Shad Ali, development consultant for East Midlands Property Owners, said:

“A general consents regime for additional/selective licensing will not help the private rented sector, and it will not help address the problems it hopes to resolve. Landlords have every right to be angry and concerned as we have still to see the benefits of mandatory licensing. The idea of consulting local stakeholders is becoming myth, as more and more decisions appear to be pre determined. This attaches no real value to the expression of stakeholders and isn’t the way to go about law making.”

Margaret Collier from the North West Landlords Association said:

“It is no secret that some authorities in England originally intended to license entire local authority areas. Blanket coverage wastes scarce local authority resources and burdens good landlords with unnecessary costs, which are ultimately passed onto the tenant. An authority used to have to justify its decision to the Secretary of State. By removing that scrutiny a local authority is now judge and jury in its own case. We fear this will affect the quality of the decisions made, impacting all involved in the renting of decent properties.”

Notes to editors

The Department for Communities and Local Government made the announcement on Thursday 1st April 2010. The CLG press release can be found here:
http://www.communities.gov.uk/news/corporate/1530588

The announcement follows a CLG consultation on the issue – ‘General consents for licensing schemes under Parts 2 and 3 of the housing Act 2004’ – which closed on 12th March 2010. The consultation is available here:
http://www.communities.gov.uk/documents/housing/pdf/1446853.pdf

Part 3 of the Act gives powers to local authorities to designate areas, or the whole of an area within their district, as subject to selective licensing in respect of private rented accommodation provided that the area;

• suffers or is likely to suffer from low housing demand; and/or
• suffers from significant and persistent anti-social behaviour related to the private rented stock.

Local authorities are able to charge licensing fees on landlords of properties in licensing areas and in the case of selective licensing are able to impose conditions on these landlords to manage their property correctly etc.

Local authorities currently have to seek approval from the Secretary of State (delegated to officials) to introduce such schemes. In order to gain approval local authorities are required to follow the procedures as prescribed by the legislation and set out in the Departmental guidance document Approval Steps for Additional and Selective Licensing Designations in England.

The legislation and guidance sets out in detail the steps local authorities must follow when establishing such schemes. Currently, the Department works with local authorities to help develop the most appropriate solution for the problems they have identified. This will be removed under the proposal.

Discretionary licensing designations are intended as highly targeted measures and therefore local authorities must demonstrate that their proposals fit in with their overall strategic approach to dealing with problems in the private rented sector. Discretionary licensing designations are not intended as a ‘panacea’ to the issues local areas face.

Licensing schemes last a maximum of five years. Local authorities are then required to monitor the impact of designations to identify whether the issues the licensing designation is intended to tackle, such as management standards in privately rented properties, have been addressed.

To date 16 local authorities have been granted approval to operate discretionary licensing schemes. Approval has been granted to Peterborough City Council and the London Boroughs of Hounslow, Hillingdon and Ealing to operate additional HMO licensing schemes in parts of their area.

The Department has also approved 17 selective licensing designations in 12 local authority areas. These are Salford City Council (two designations), Middlesbrough Borough Council, Manchester City Council (three designations), Gateshead Council (two designations), Sedgefield Council, Burnley Borough Council, Bolton Council, Easington District Council, Blackburn with Darwen Council (two designations), Hartlepool Borough Council, Leeds City Council and London Borough of Newham.
A general approval does not mean that a local authority can in any way reduce the amount of preparation and consultation which must be undertaken before making a designation. Nor does it mean that any scheme which they implement may not be challenged if it fails to comply with these requirements.

For more information contact James Anderson on 07784376888/ janderson@bpf.org.uk or Andrew Teacher at ateacher@bpf.org.uk or on 020 7802 0364.