Response to Nottingham City Council’s proposal for additional licensing  

July 2018

The National Landlords Association (NLA) exists to protect and promote the interests of private residential landlords.

Representing more than 72,000 individual landlords from around the United Kingdom are members of our organization. We provide a comprehensive range of benefits and services to our members and strive to raise standards within the private rented sector.

The NLA 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.

Overview

The ability to introduce additional licensing is a powerful tool. If used correctly by Nottingham city Council, it could resolve specific issues. By extending the scheme, you are indicating that it the previous scheme was not a success, yet you have not produced any quantitate date to refute this assertion. Equally if you claiming it were a success why are you repeating the scheme?   

This proposal should be put on hold until after the roll out of the mandatory extension by government in October this year, which will be within the same period as the council’s, to avoid confusion. Especially when you are rolling out selective licensing.

One of the dangers of the proposed additional licensing scheme is that the costs may be passed on to tenants, thus increasing costs further to Nottingham residents, especially the most vulnerable, along with the Council’s costs. The fee increase will result in higher rents. We are aware of councils placing tenants out of borough due to high costs. The further expansion will see more pressure on council budgets.  

This policy could also have an impact on house prices in the area, with the market placing a premium on those with permitted development rights. This has been seen in other areas of the country and in the areas where additional licensing has already been implemented. This policy will benefit those landlords already in place and prevent new entries into the market. As demand increases following government policy of placing people in shared housing, the lack of supply will increase prices. Equally it will discourage those with shared housing stock to move to renting to families as they will not have shared housing status reappointed. This policy will crystallise the housing stock rather than allowing landlords to position there properties appropriately to the need of the communities. This has been seen in Nottingham, with the previous additional licensing.

The scheme does not take into account Airbnb or those who practice rent-to-rent. These matters have to be addressed, if the scheme is to work. Subletting is a problem for landlords in Nottingham. What policies will the council put in place to support landlords who are the victims of tenants who sublet or who permit overcrowding to take place?

With civil enforcement powers the council can remove the criminals and poor landlords and keep the money within the council. This approach would be more appropriate, delivering results and punishes those breaking the law.

The council does not need this scheme. With the change in the law over mandatory HMO regulation to removing the height condition will bring many of these properties under statutory HMO licensing also the council introducing selective licensing. The council already knows where these properties are and with an article 4 direction in place no new properties can legally enter the market. If the council has delivered under the original scheme why does it need to extend.

Societal Impact  

In addition to young professionals and students, migrants make up an important part of the shared housing market in Nottingham. For obvious financial reasons and for flexibility, shared housing is an important housing segment for these groups. However, demand is not static. The impact of these policies will have an impact on the less well-off within Nottingham. What measures are the council taking to mitigate these issues (including increases in housing costs)? The introduction of the scheme originally pushed an expansion of HMO’s into neighbouring councils.

The issue of overcrowding is difficult for a landlord to manage. A landlord will tell a tenant(s) how many people are permitted to live in the property, and that the tenant(s) are not to sublet it or to allow additional people to live there. This is also spelt out in the contract.  Beyond that, how is the landlord to manage this matter without interfering with the tenant’s welfare? Equally, how will the council assist landlords when this problem arises? It is impractical for landlords to monitor tenants’ household activities every day, or their sleeping arrangements. Where overcrowding does take place, they know what they are doing and are criminals, not landlords.

The cost to rent via local housing allowance in Nottingham is already very difficult in the city. A policy such as this will further limit supply at the same time as it prices out local people. HMO’s are cheaper than the halls of residence that are being built but more expensive than the LHA rate. This is pushing vulnerable people further from the city centre and increasing their cost.

Schemes such as additional licensing have put houses that are shared at a premium; that added value depends on them remaining shared. The council’s policy will prevent new entries into the market, thus creating a monopoly. Properties that have shared usage will have a higher value than those that do not. Landlords will be disinclined to return them to family use, as they have higher value in shared usage and landlords will wish to preserve that status.

The council should look to allow a landlord move between shared usage and to families without losing shared housing status. A landlord will leave a property empty for a period and preserve the shared usage than lose the shared status, by renting it to a family or single occupant.  

The use of additional licensing that is landlord/property-based will not resolve many of the issues that are caused by tenants – they are tenant-based issues. Landlords have limited powers to address them, as any direct action by the landlord to address issues such as ASB can be considered by the tenant to be harassment. By re-designating these areas the council is saying these areas have significant and persistent issues which will affect all residents in relation to house/car insurance.

The NLA believes that any regulation of the private rented sector must be balanced. Additional regulatory burdens must focus on increasing the professionalism of landlords and the quality of private rented stock, and driving out the criminals who blight the sector. The shared objectives of all parties should be to facilitate the best possible outcomes for landlords and tenants. As such, good practice should be recognised and encouraged in addition to the required focus on enforcement activity. In the current economic climate, the last thing that good landlords need is yet more regulations or licensing schemes, particularly where there appear to be limited direct or immediate benefits to landlords or to tenants.

Creating tension in relationships

In relation to ASB reduction and the authority landlords have to tackle such activity within their properties, it should be pointed out that landlords and agents can only enforce a contract. They cannot manage behaviour (ref: House of Commons briefing note SN/SP 264, paragraph 1.1). In most circumstances, the only remedy available to landlords who are confronted with cases of serious ASB in one of their properties will be to seek vacant possession and, in many instances, they will need to serve a Section 21 notice, rather than a Section 8 notice which identifies the grounds for possession. The former is simpler and cheaper and repossession (at present) is more certain. No reason need be given for serving a Section 21 notice and, in this case, the perpetrator tenant can hypothetically approach the local authority for assistance to be re-housed (ref: Homelessness Guidelines cl 8.2). Crucially, no affected party needs to offer evidence against an anti-social householder, thereby reducing the risk of intimidation, harassment and, ultimately, unsuccessful possession claims. The issue of ASB will thus not appear as a factor in the repossession. However, in providing evidence to support a licensing application, the document should clarify, for the respondents, the position of all the relevant issues under landlord and tenant law.

Landlords are usually not experienced in the management of anti-social behaviour and do not have the professional capacity to resolve tenants’ mental health issues or drug and alcohol dependency. If there are allegations about a tenant causing problems (e.g. ASB), even if the tenant has any of the above issues, a landlord ending the tenancy will have complied with their obligations under the additional licensing scheme. This moves the problems around Nottingham but does not actually help the tenant, who could become lost within the system. There cannot be an obligation within additional licensing for the landlord to solve an ASB allegation. Rather, a landlord has a tenancy agreement with the tenant, and this is the only thing that the landlord can legally enforce.

This was reaffirmed in February 2017 when the House of Commons library published a briefing paper entitled ‘Anti-social neighbours living in private housing (England)’. This explains: ’As a general rule, private landlords are not responsible for the anti-social behaviour of their tenants.’[1]

It would be useful if the council could clarify its policies and put in place a guidance document which would outline the council’s position on helping landlords to remove tenants who are causing anti-social behaviour. This is worse in shared housing, when a tenant has to share parts of the house with other tenants.

The ability of a landlord to enforce the law against a tenant who is causing anti-social behaviour comes from the civil court, where the burden of evidence differs from that of a criminal court. Although the burden is lower, the length of this process will often exceed the period of the tenancy. Why would a landlord continue to pursue a case against a person who is no longer a tenant? A landlord also risks the tenant causing damage to the property by starting legal proceedings against the tenant. The fact that a landlord has started such a process will not appear on any council document, so how will the council expect to measure this?

Conclusion

The NLA agrees that some landlords, most often due to ignorance rather than criminal intent, do not use their legal powers effectively in the management of their properties. A more appropriate response would be to identify issues and help landlords to develop the required knowledge and skills to improve the sector through schemes such as the NLA Accredited Landlord Scheme. This would enable Nottingham city to target criminals, where a joint approach is required.

With the council having already undertaken a scheme so these properties are up to standard then the council does not need to continue the scheme, with the council having the powers and other schemes in place.

The continuation of additional licensing could further reduce the amount of shared housing. This would probably increase the costs for those who rent, as it would further prevent new entries into the market. A more erudite approach to dealing with nuisance, and a separate policy to tackle criminals, would be a better way to resolve the issues. Enforcement is required against those landlords who do not meet housing standards. The proposed policy will increase the council’s costs along with that of tenants.

Again, the NLA thanks Nottingham City for the opportunity to respond to this consultation. We hope you find our comments useful.

 

[1] http://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN01012