1. What is Licensing?

Licensing is a means by which councils can exert a certain level of control over the quality and performance of landlords, property standards and management of rented properties in their area. It therefore creates an excellent opportunity for the Local authority to provide targeted support to vulnerable tenants living in the private rented sector whilst overall improving the standards and management of properties and tenancies.

The Housing Act 2004 (Part 2) introduced Mandatory HMO Licensing and Part 3 introduced Discretionary (Additional and Selective Licensing) Licensing.

The only mandatory (countrywide) licensing scheme in England is for HMOs (Houses in Multiple Occupation) but under the Housing Act 2004 (Part 3), local authorities have the power to assign their own licensing requirements to particular areas, meaning every landlord must apply for a licence, regardless of the type of property. This is known as 'selective licensing'.

For the Council to be able to self declare a Selective Licensing designation it must be able to satisfy one or more of the following criteria as set out by Government legislation:

- low housing demand (or it is likely to become such an area)

- high levels of migration

- a significant and persistent problem caused by anti-social behaviour

- poor property conditions

- high levels of deprivation

- high levels of crime.

2. Why consider Selective Licensing?

It can be an effective tool to help regulate the PRS and provide fundamental support to vulnerable tenants living in the sector. Often tenants living in the sector are reluctant to complain or raise issues about their landlord. A Selective Licencing scheme introduces a robust inspection regime that will proactively identify issues without the reliance on tenants making a complaint.

There are many potential benefits to a Selective Licensing Scheme including:

• The cost of any scheme can be off-set against a fee charged to the landlord thus meaning the scheme will be cost neutral to the Council.
• The licence fee will cover the administration and implementation of the scheme and allow for additional specific resources for the scheme.
• It allows the Council to gain extensive knowledge on the PRS housing stock in the area and can be a significant operational tool to support the sector.
• It allows targeted enforcement against the “worst” properties / landlords. This targeted enforcement can be tied into the existing enforcement regime and Civil Penalty / Prosecution policy operated by the Council and can actually lead to generation of income. Any income generated through enforcement of the scheme is legally required to be ring fenced to private sector housing enforcement so can lead to further investment.
• It will allow the authority to engage with the landlord sector and create better working relationships.
• The inspection regime allows for the collection of extensive stock condition data that can help frame future initiatives or strategies such as those to address energy efficiency.
• Tenants living in the scheme area can rely on an independent (if using a Delivery Partner) inspection of their property leading to improved living conditions without fear of reprisals from the landlord.
• The Council will be seen to be active in the area covered by the scheme and it can help to attract further investment and resources to the area without additional specific Council costs. This additional involvement can often lead to complimentary community benefits and wider community improvements.

3. How to Introduce Selective Licensing?

There is comprehensive guidance from the Government on criteria and conditions that must be followed in order to implement a selective licensing scheme but it is also a policy decision for your council decided by your determination to protect vulnerable Tenants in your Council’s area.

A comprehensive business case must be evidence based to support the need for any proposed scheme. The evidence will take account of numerous factors including local intelligence, deprivation indices, Local Super Output areas (LSOAs), crime statistics and housing stock conditions for example and identify the criteria that will be most relevant for the Council.

Full consultation with all key stakeholders must then be undertaken within specified timescales and again, comprehensive guidance is readily available.

Designation of any scheme can be authorised by a Council if it represents less than 20% of the Council’s geographic area and less than 20% of their total PRS. Otherwise, it will have to get formal approval from the relevant Government Department (currently DLUHC) before proceeding.

4. Delivery of a Selective Licensing Scheme

There are a number of ways that a Local authority can deliver a scheme once it is approved:

• It can use existing staffing and resources
• It can use existing IT resources to process applications
• It can outsource some or all of the processing procedures
• It can use a delivery partner model to deliver the processing and inspection regime.
• It can use a partner to help deliver just the inspection regime or provide support in doing the inspections.

It is possible to work with a delivery partner in such a way that it does not include any direct payment to the partner from the Council and does not therefore have any procurement requirements.

We are aware of the potential complexities of introducing any licensing scheme and the time and resources this can take, particularly when the team is already so busy providing its core functions.

The Home Safe Scheme can provide expert advice on the use and implementation of licensing schemes. Its staff have decades of experience of working in local authority private sector housing teams managing housing strategies, enforcement and regulation, licensing and landlord consultation.

It is possible to work with a delivery partner in such a way that it does not include any direct payment to the partner from the Council so The Home Safe Scheme does not provide a “commissioned” service but rather a registration and inspection service that is unique in the marketplace and therefore allows the Council the option of issuing a VEAT notice which then mitigates the risk of any procurement challenge.

We would be happy to discuss the options available to you and how you could proceed with an effective licensing scheme moving forward.