Some landlords are still not aware of their selective licensing obligations and are bearing significant consequences
The Housing Act 2004 (as amended) (“the Act”) gives local authorities powers to designate areas for selective licensing of privately rented homes, unless exempt.
Selective licensing is a regulatory regime that applies to the private rental sector in a specific area designated by the local housing authority (LHA) under Part 3 of the Act. This licensing applies to all private rental properties in the designated area, unless exempt. The purpose of these provisions is to improve the standards of rental stock available for private sector tenants by imposing licence requirements on private landlords who let property in such designated areas.
Whilst local authorities have consultation obligations when they set out to designate an area for selective licensing, they are not obliged to write to each and every landlord in the area. Landlords are expected to have systems in place to ensure they keep up-to-date with their legal obligations.
Being unaware of your legal obligations is not a defence.
Selective licences are not transferrable and therefore new landlords should establish whether their properties fall within an area designated for selective licensing before they let out their properties to tenants.
Similarly, if landlords take on properties with tenants in situ, they should ensure they have thoroughly checked the legal position and their obligations.
Landlords may find themselves committing an offence if they fail to do so.
Why has selective licensing been introduced?
Selective licensing has been put in place to help councils crack down on rogue landlords and to improve the standard of privately rented properties available to tenants. It seeks to assist tackling issues such as poor housing conditions, low housing demand, significant and persistent problems caused by anti-social behaviour and high levels of crime.
What does selective licensing mean for Landlords (or managing agents)?
Selective licensing means that landlords (or managing agents) who privately rent out properties which fall within these designated areas, must obtain a licence from the local authority to be able to rent out their properties lawfully. Landlords with multiple properties falling within an area designated for selective licensing, must apply for a licence for each property.
What are the consequences of not applying for a selective licence?
A person managing or having control of an unlicensed privately rented property which falls within an area designated for selective licensing is committing an offence. Failure to licence a property within a designated area is a criminal offence and could lead to enforcement action being taken by the local authority against the Landlord. Action against a landlord may result in a criminal conviction and a fine or a civil penalty of up to £30,000. Landlords could face a Rent Repayment Order (“RRO”) being made against them. A RRO could be sought by the local authority or a by a tenant, to repay rents collected during the period that the property was unlicensed (for up to 12 months). Further, landlords could find themselves in a position where they cannot serve a valid Section 21 Notice to end a tenancy if they do not have the appropriate licence in place.
Landlords (or managing agents) should note that a retrospective application does not resolve the issue of not having the requisite licence at the relevant time and they may still face enforcement action.
What can Irwin Mitchell do to assist?
* We can provide advice to landlords, managing agents and tenants on the subject of selective licensing, whether or not a breach has occurred
* We can assist landlords with the application process for applying for selective licensing.
* We can advise landlords who face the threat of prosecution and/or financial penalties. We have assisted landlords who have got it wrong to put forward mitigation, which has resulted in significantly reduced financial penalties.
