It is now widely recognised how important the private rented sector (PRS) is in the overall housing provision for all local authorities. However, it is also important to recognise that the PRS also contains some of the worst, often hidden, housing conditions providing poor homes for many vulnerable tenants often reluctant to raise issues with their landlords.

The question for all those responsible is how to improve the PRS and maximise the housing options in the face of ever decreasing resources? Most, if not all, private sector housing teams are faced with increasing complaint work and yet have reduced staff resources. How then, can these teams consider taking on yet more work to take more enforcement and regulation of the sector?

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.

All authorities will be aware of Mandatory HMO Licensing (Part 2 of the Act) that covers HMO properties that have 5 or more tenants, forming 2 or more households who share facilities. This is a mandatory scheme and is in place to regulate the HMO sector and improve management standards.

However, the Act also introduced the concept of Discretionary Licensing, that is either Additional Licensing of certain property types (often smaller HMOs) or more frequently, Selective Licensing of certain areas of the Authority where all PRS properties need (or should need) to be licensed. The clear intention of any Selective Licensing Scheme is to improve the quality and standard of housing, performance of the landlords and bring about general improvements to the area covered.

Many authorities have stayed clear of discretionary licensing due to the perceived complexities, costs and bureaucracy associated with such schemes. However, this does not need to be the case and indeed, the cost of licensing to an authority is always intended to be off-set against a licence fee payable by the landlord which should make any scheme cost neutral.

What to consider before introducing Selective Licensing?

There is comprehensive Government guidance available to explain how licensing works and the criteria that must be met.

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

- 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.

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

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

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 the DLUHC) before proceeding.

What are the main benefits of introducing Selective Licensing?

• It allows the authority to put, and be seen to put, dedicated resources into an area known to need regulation and support.
• The licence fee will cover the administration and implementation of the scheme and allow for additional specific resources for the scheme.
• The robust inspection regime will clearly identify issues of concern and those landlords failing to comply at an early stage.
• It allows for support to be provided to the majority of compliant landlords and their tenants. It ensures a level playing field for all landlords as they all need to comply with specific property standards and conditions.
• 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.
• It provides an opportunity to attract further investment and involvement in the area from various Departments within the Council thus maximising the overall impact without creating additional costs and yet will lead to additional community benefits and wider community improvements.

How to implement 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 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 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 is staffed by experts in the field of housing regulation and licensing. Its officers have many decades experience in the field of housing strategies, licensing, enforcement and landlord consultation.

We believe that the use of a delivery partner such as Home Safe helps utilise a two-pronged approach to changing landlord behaviour, the very essence of Selective Licensing. Home Safe will support and develop the engaging landlords whilst acting as a filter to identify the worst performing landlords in a fair, transparent, consistent and objective way which will then allow the authority to enact its enforcement powers in a more targeted, effective and efficient way.

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