Landlord Licensing - Incidence & Cost of discretionary licensing in England

Licensing Report (2015) Cover Image

The NLA aims to provide a bridge between landlords offering private accommodation around the UK, local government and national policy makers. Its national network of local and regional representatives provides comprehensive intelligence about factors influencing market behaviour and the experience of landlords impacted by public policy.

Above all, it seeks a fair legislative and regulatory environment for the private rented sector while aiming to ensure that landlords are aware of their statutory rights and responsibilities – to ensure that the private rented sector is a place where people choose to work and live for years to come.

In response to member concerns about the impact and effectiveness of landlord licensing schemes throughout England, the Association undertook to obtain information about the incidence and cost of HMO, Selective and Additional Licensing throughout the country.

Overview of Findings:

  1. Fees. The level of fee charged for a five-year licence varies significantly between areas and schemes. This is particularly apparent in respect of mandatory HMO licensing.
  2. Discretionary licensing. The incidence of discretionary (Additional and Selective), schemes has increased considerably since the General Approval order was signed into law in 2010.
  3. Borough-wide licensing. Proposals for borough-wide schemes have become more common, following the introduction of the first in London.
  4. Enforcement. Insufficient enforcement is taking place by local authorities in parallel with licensing activity.
  5. Politics. There is a definite correlation between the political control of a local authority, its propensity to introduce discretionary licensing and the fee charged to landlords.

Summary of Recommendations: 

  1. Exploit economies of scale. The administration and processing procedures employed by a number of local authorities are inconsistent and appear inefficient. According to the cost breakdowns provided in response to the NLA’s FOI requests, it can take anywhere from fifteen minutes to more than one hour to process and validate an application. Given this variation in efficiency the NLA would like to see centralisation of these back office functions, adopting a ‘shared services’ model to minimise the cost to independent licensing authorities. This could take advantage of the systems and efficiencies developed in well-run authorities or outsourced entirely to a central processing centre within central government or the private sector.
  2. Reverse ‘general approval’. The incidence of discretionary licensing has increased dramatically since housing minister John Healey approved ‘The Housing Act 2004: Licensing of Houses of Multiple Occupation and Selective Licensing of Other Residential Accommodation (England) General Approval 2010. Unfortunately, this increase in volume has been accompanied by the removal of objective oversight in the form of a central regulator. Without this oversight function there exists no mechanism to hold licensing authorities to account or question their justification – short of the pursuit of judicial review, which is out of the financial reach of most landlords and their representatives. The NLA believes that a central, impartial, authority should have oversight of proposed schemes and the ability to withhold approval of inappropriate licensing schemes. This could be achieved by rescinding the above order.
  3. Incentivise local enforcement. Local authority budgets are increasingly limited leaving little available funds to undertake enforcement activity. Furthermore, licensing fee revenue may not be used to fund enforcement activity, and enforcement agencies are unable to recover sufficient costs to make regular enforcement against criminal landlords cost effective. The NLA believes that the ‘polluter pays’ philosophy should be applied to regulation of the PRS, insofar as those found guilty of transgressions should be held financially responsible for enforcement. It is already the case that many authorities charge recipients of enforcement notices. The NLA would like to see a mechanism developed whereby local authorities which successfully pursue comprehensive enforcement strategies are able to share in the proceeds of fines currently the preserve of the Exchequer.
  4. Promote best practice & co-operation. The DCLG consultation on proposals to remove the requirement for central government approval of new discretionary licensing schemes cited the important role played by the Local Authority Coordinator of Regulatory Services (LACORS) in sharing best practice. The subsequent re-organisation of Local Government Regulation (LGR) and dissolution of the Private Housing Group, which facilitated this collaboration, has further reduced the transparency and accountability of licensing scheme development. The NLA believes that if licensing is to continue, a facility for sharing best practice and consulting with impacted parties is essential.

 

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