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Buy-to-let: do you need a licence to be a landlord in your area?

70 councils in England operate licensing schemes

London, UK -April 10th 2016: Commercial real estate rental signs attached to the wall of apartments To Let in the Camden, Mansfield Road NW3

An increasing number of councils are launching additional and selective licensing schemes as they look to improve standards in the private rented sector.

To date, 70 councils in England – or a little over one in five – have brought in schemes that go above and beyond the mandatory landlord licensing enforced by the government.

Here, we explain the different types of licensing in England and highlight which areas either have a scheme in place or are consulting about bringing one in.

 


The three types of landlord licensing

Just last week, Tower Hamlets council became the latest to announce a public consultation on whether it should expand its selective landlord licensing scheme.

Consultations look at the scope of how schemes would work alongside the specific issues faced by the area in question. Generally speaking, though, licensing schemes fit into these categories:

1. Mandatory licensing

If you’re letting out a large HMO (house in multiple occupation) you are likely to need a licence to do so. Previously, properties over three storeys high that were occupied by five or more unrelated tenants needed a licence. But from April, the scope of mandatory licensing will be extended to cover properties with shared bathroom facilities.

These changes are subject to a six-month grace period, and you can find further details on the National Landlords Association website.

2. Additional licensing

Additional licensing schemes also apply to landlords letting out HMOs.

The 2004 Housing Act allows local authorities to apply stronger rules in their area if they believe HMOs aren’t being properly managed or that mandatory licensing doesn’t go far enough.

These licences vary in cost from area to area but you are likely to pay £500-£600.

3. Selective licensing

Selective licensing can apply to all landlords in an area.

Before awarding you with a licence, your local council will make you undergo checks to prove you are a ‘fit and proper person’, and you’ll need to agree to adhere to various regulations around property management and tenant safety.

In some areas you’ll also need to sign up to a charter.

Your council will set the cost of the licence, but you could pay around £500-£600.

Properties exempt from selective landlord licensing

Some property types are exempt from selective licensing. These include:

  • Properties already licensed as HMOs under the mandatory scheme
  • Properties let by a local authority or social landlord
  • Properties subject to a management order
  • Holiday lets
  • Business tenancies.

HMO-related licensing breaches can result in fines of £5,000 to £20,000. For selective schemes your council will set its own penalties, up to a maximum of £30,000 per offence.

Mapped: areas where you need a landlord licence

One of the main criticisms of additional and selective licensing schemes is that not all landlords will be aware that they need to sign up.

The map below features data provided by the Residential Landlords Association showing the councils where licensing schemes are currently in operation or are set to launch later this year.

If you’re based in the capital, there’s a zoomed-in London version below it.

Will my council bring in a licensing system?

MPs will debate how selective licensing is working in England when they return from their Easter recess.

This will involve a review of the mechanics and effectiveness of the schemes currently in operation.

Despite speculation, it seems unlikely that local licensing will be replaced by a national register, with homelessness minister Helen Wheeler describing such a suggestion as ‘bureaucratic’.

You can search the table below to see if any schemes are under consultation – or have previously been rejected – in your area.

 

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Categories: Money, Mortgages & property

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