London Borough of Newham to Proceed with Licensing

Following months of speculation and latterly consultation with the local community and interested stakeholders, the London Borough of Newham has decided to proceed with the implementation of borough-wide Selective and Additional Licensing of private-residential landlords. 

Mayor of Newham, Sir Robin Wales, and his cabinet colleagues took the decision to pursue these joint designations based on their determination that: 

“The area of the London Borough of Newham suffers from significant and persistent anti-social behaviour related to the private rented housing stock together with poor tenancy and property management.”

(cabinet minutes 21/06/12)

Commenting on Newham Council’s proposals to introduce borough wide landlord licensing, David Salusbury, Chairman of the National Landlords Association said:

“It is deeply disappointing that the London Borough of Newham has taken the decision to license all landlords in its area.

“The NLA realises that there are significant issues present in Newham, which the Council is right to want to address. But, Selective Licensing of landlords is designed to address distinct problems relating to housing management by targeting specific areas. Newham’s blanket approach goes beyond the intention of the legislation and has not gained the support of local landlords.

“Newham Council has provided no solid evidence to support their argument that such drastic proposals will have the impact it expects. Indeed, they will only increase the burdens on those who already comply with the law, without having any bearing on those who blatantly ignore it.  The NLA offered an alternative strategy which would have enabled the Council to focus their resources squarely on the rogue operators.

“This decision has wider implications for the supply side of the private-rented-sector. The NLA will be consulting with other stakeholders to assess the potential impact and how best to respond as an industry.”

According to outline plans released by the Council, landlords will be required to obtain a license for every one of the area’s estimated 40,000 rental properties by 1 January 2013. 

The NLA objects to these proposals on a number of grounds, not least because they are contrary to our understanding of the legal intent behind discretionary licensing.  

Selective Licensing is intended as a tool of last resort, designed to target particular areas with distinct and significant problems associated with the management of private rental properties. Far removed from this, Newham Council has proposed to capture its entire geographical areas within the remit of such a scheme. 

Parallel to this Selective Licensing Scheme, the Council also intends to introduce a system of Additional Licensing which will duplicate the functions of the former unnecessarily. 

The significance of Newham

As most landlords are only too aware, Newham’s is not the first proposal to license rented property. There are currently 17 Additional Licensing schemes and 24 Selective Licensing schemes operational in England and Wales. 

However in casting its net wide enough to encapsulate the entire area, the Council has granted itself the status of a ‘gateway’ local authority. 

Essentially this means that Newham’s proposals will serve to prove, or disprove, the viability of local authority wide licensing. To this end, we are aware that neighbouring London Boroughs are watching their progress intently, and it is likely that should Sir Robin Wales succeed with these plans others may follow swiftly on his heels. 

What’s so wrong about Newham’s proposals?

In order to meet the criteria for discretionary licensing, a local authority must satisfy the requirements of Section 81 or 57 of the Housing Act 2004 in connection with Selective and Additional Licensing respectively.

We do not believe that the London Borough of Newham has accomplished this, in particular we are concerned that:

(1) The Borough plans to license every landlord within its borders using tools designed to selectively target problem areas and/or types of property.

(2) The proposal’s architects appear to have fundamentally misinterpreted the relevant legislation and therefore plan to introduce overlapping areas of Additional and Selective Licensing – despite this creating no additional benefit.

(3) Virtually no evidentiary basis for the proposals has been provided to support them. The legal justification appears to rely upon vague references to anti-social behaviour in lieu of empirical data.

(4) No explanation of how the licensing designation will assist in dealing with perceived problems is provided.

(5) In respect of the required ‘fit and proper person test’ the Council has exceeded its authority by means of the inclusion of contravention of planning regulations.

In all, the NLA raised more than 30 individual queries in respect of the proposals and is awaiting a comprehensive response from Newham’s housing team – despite the proposals having received Cabinet approval. 

For more information about the proposals and to read the NLA’s response in full please download the PDF below. Also included are the Council's own response to the consultation process and the cabinet minutes outlining the decision to proceed.