What is selective licensing and what does it mean for Landlords?

Landlords have a lot of regulations to bear in mind and a failure to do so can have negative consequences for their business. One issue that many landlords across the country have to contend with is selective licensing. At my own agency Liberty Gate in Nottingham, we are working closely with landlords regarding the incoming Selective Licensing and we know that many professionals in this sector have concerns about what it means for them. In this episode we aim to outline what the selective licensing scheme is and what you need to be aware of.The selective licensing scheme requires private landlords to hold a licence, and this will enable them to rent property to tenants when a licensing scheme is in force in an area. This move places local council authorities in greater control over the rental market and will require landlords to meet certain standards if they wish to act in this role.Selective licensing can be used only when the local authority believes that the scheme will aid in reducing or eliminating problems within the housing market.Some of the problems that are deemed relevant to the issuing of the licence scheme include:The area has a low level of housing demandThere has been a persistent and significant anti-social behaviour problem in the areaThere is a significant volume of privately rented properties that are in poor conditionThere are prominent levels of deprivation in the areaThere has been a significant level of migration in the areaThere are significant levels of crime in the areaA licence is granted on properties for a maximum of five years’ time and the licence is not transferable to a new landlord or property owner.How can a landlord obtain a licence?As you would expect, there are conditions attached to the licence and the authority will be looking to prove that:The licence holder is a fit and proper personThe licence holder is the most appropriate person to hold the licenceIf the proposed manager of the property is different from the licence holder that they are also an appropriate personThe proposed management arrangements are deemed to be satisfactoryThere are also conditions attached to the licence that must be met. The mandatory conditions are:A gas safety certificate must be supplied if there is a gas supply to the propertyAll electrical appliances are maintained in a safe conditionAll furniture is maintained in a safe conditionA written statement of the terms of occupancy is provided to the tenant or occupier of the houseThat references are obtained from people wishing to occupy the houseThere are also discretionary conditions attached to the scheme, including:A requirement for the landlord to undertake reasonable steps to ensure anti-social behaviour doesn’t occur at the propertyRestrictions may be placed on the use of certain parts of the propertyIf these conditions are met, it is likely that the licence will be granted but it should be remembered that the issuing of a licence is still at the authorities’ discretion.Can a licence be revoked?The short and obvious answer to this question is yes. There are several reasons why a licence may be revoked including where there has been a serious breach or repeated breaches of any condition of the licence. If the licence holder is deemed to no longer be a fit and proper person, the licence can be revoked, and it is also possible for the licence to be revoked if the property becomes structurally defective.What sanctions are available when a property has not been licenced?If a person who manages or controls a property does not have a licence when they are required to have one, they are committing an offence. This could lead to the offender being faced with a fine on conviction but as of 6th of April 2017, it has been possible for local authorities to impose a civil penalty of up to £30,000 on offenders. This stands as an alternative to prosecution.Some of the sanctions that offenders could receive include:A Rent Repayment Order, or RRO, and this applies when a property has been let without a licence when it should have a licenceA banning order may be imposed on a landlord or agentA landlord may be prevented from serving a Section 21 notice when they don’t hold a licenceIf a landlord or owner has a right of appeal, the appeal should be made within 28 days of a decision being made and the appeal is made to the First-Tier Tribunal.There are good intentions behind the selective licensing scheme, but a lot of landlords naturally worry about the impact on them. Whenever there is a new regulation in place, there tends to be some financial cost to landlords and even though the long-term benefits should improve, there will be costs and issues to contend with in the short-term.So that concludes todays episode on selective licensing. I hope you’ve found it useful and that it’s given you a few pointers whether you’re already a landlord or if your considering your first investment property. This topic is certainly one to understand and factor in when choosing a location to purchase your investment properties.As a listener we want your questions to answer. Whatever your worries, concerns or needs are, contact us via our social media channels or our website below and we’ll answer your questions in our future episodes.Facebook: www.facebook.com/asktheestateagentInstagram: www.instagram.com/asktheestateagentTwitter: www.twitter.com/asktheEAWebsite: www.asktheestateagent.co.ukSo don’t forget to contact us with any subjects you would like us to cover or questions you would like answering in the coming episodes and until next time I would like to thank you for listening and goodbye for now. Hosted on Acast. See acast.com/privacy for more information.