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Property Licensing in 2023

Property licensing rules are different in every council in England and Wales. This fact in itself makes it incredibly difficult for landlords to navigate.

The Housing Act 2004 gives councils the power to introduce and define the scope of additional HMO licensing and/or selective licensing in their area. This has led to wide variations in licensing from one council to the next.

With different rules for landlords to keep track of, and large penalties for non-compliance, it poses the question whether a centralised approach from the government would be a more sensible and effective method in dealing with poor housing.

Additional and Selective Licensing

Most landlords will be familiar with HMO licensing – licensing for Houses in Multiple Occupation.

An HMO is a property that has three or more residents, who make up two or more households, and who share facilities such as a toilet or kitchen.

All properties considered to be a large HMO – HMOs with five or more occupants – require mandatory HMO licensing.

However, under the Housing Act 2004, every council in England and Wales also has the power (subject in some cases to central government approval) to introduce additional HMO licensing and/or selective licensing schemes in their area.

If required, Additional HMO licences relate to smaller HMOs made up of three or four occupants, whereas selective licensing can cover all privately rented properties in a specific area. Therefore, you could be required to have a property licence, even if your property is not an HMO!

Selective licensing schemes are often extremely, well, selective in terms of the area which they cover; with some schemes only applying to a couple of streets within a council.

The Expansion of Licensing in 2023

Each year more councils look to introduce new, or extend existing, additional and selective licensing schemes.

Before implementing an additional licensing scheme, councils must undertake a consultation lasting at least 10 weeks in order to give those who are likely to be affected the chance to give their opinion on the proposal. 

This is a good opportunity for any landlord to try to influence changes on renting in their local area.

Some of the councils running consultations or introducing new licensing schemes in 2023 are:

  • Warwick – consultation on new additional HMO licensing scheme: 9 January – 20 March
  • Newham – new additional HMO licensing scheme: 1 January 
  • York – new additional HMO licensing scheme: 1 April
  • Birmingham – new additional HMO licensing scheme: 5 June
  • Kensington & Chelsea – new additional HMO licensing scheme: 1 June
  • Newham – new selective licensing scheme: 1 June
  • Barnet – consultation on new selective licensing scheme: 22 February – 23 May

A Centralised Approach?

The current government approach to licensing in England and Wales has led to variations in licensing up and down the country. 

Some of these variations are larger than others, but sometimes the smaller differences can be even harder to keep track of.

For example, in Hackney, for buildings converted into self-contained flats where the conversion didn’t meet the standards of the 1991 Building Regulation, an additional HMO licence will only be required if all of units of accommodation are privately rented, however, in Lambeth, an additional HMO licence may be required if less than two thirds are owner occupied.

This is such a specific distinction that it can be difficult for landlords to navigate, and therefore comply with, the regulations – especially where they have multiple properties in different areas.

As such, in order to make it easier for landlords to comply, should the government be centralising the regulations of these schemes? 

A centralised approach could see a standardisation of licensing and, therefore, housing across the country. Any method that is easier to follow will be easier to implement and comply with.

At the very least, it seems that the government should be making it easier for people to check whether their property needs licensing. They could do so by making a national database of all of the licensing schemes readily available.

Penalties for Non-Compliance

It is extremely important for landlords to comply with local and national licensing regulations.

Without the necessary licensing, landlords may be unable to use a section 21 notice to evict their tenants. They may also face fines, rent repayment orders or a property rental ban.

In January 2023 one landlord was hit with a rent repayment order and ordered to repay their tenants £9,880 after it was found that they served a section 21 whilst unlawfully renting out the property as an unlicensed HMO.

Therefore, it is incredibly important for landlords to keep up-to-date with regards to property licensing in their area. 

The best way for you to do so is to go on your council’s website or contact them directly if you’re not sure whether you need a licence. Again, it is important to remember that even if your property is not an HMO, you may still require a licence if your council has a selective licensing scheme. 

Notable Replies

  1. My HMO will now require AFDD electrical protection of dubious efficacy costing about £1000 if it not done before it will be mandatory at the next five year licence then insurance pay out after an electrical fire is very doubtful. Where I live in ipswich rooms can be found at £75 a week inclusive, of course not licensed. The more costly regulation imposed the more rent will be charged for licensed places,people will be forced into unsafe overcrowded property. At one time ipswich council imposed sprinkler system fire suppresion on HMO property,Anglia water could not guarantee water pressure so back to detection. HMO profitable? less so now maybe why I no longer have offers to buy mine several times a year have not had one for months and HMO properties increasingly up for sale

  2. HMO licence conditions are guidance, not absolute requirements. You may be able to decline this and still get the licence. You should probably take advice from a specialist solicitor or HMO company.

  3. I’m not sure if a license is needed for a single occupancy property with one bedroom, one bathroom, and one kitchen in Chelmsford, Essex. I’m confused because it seems that even non-HMOs require a license. I have already written to the county council about this.

  4. I dont think Chelmsford operates a Selective Licensing scheme at the moment and a single occupancy property wouldnt need any other licence.

  5. Where licencing was introduced previously, how did it benefit tenants and landlords, to what extent? Any reliable data? I would like to know where that is published

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This article is not intended to form legal or investment advice. Investments in property are not guaranteed and can decrease in value as well as increase.