When Michael Gove published the government’s Levelling Up White Paper, we reported that private rental properties would soon have to meet the Decent Homes Standard. While we don’t yet know how this policy will be put into practice, The Telegraph argues that it is likely to be a new landlord licensing scheme.
The Property Portal
Following the passing of the Renters Reform Bill which is slowly making its way through parliament, all landlords will be legally required to register themselves and their property on a portal.
Any Landlord who fails to register will be subject to penalties, potentially fines of up to £5000 are being mentioned or more for repeated failures.
There will be a charge on Landlords to use the portal but the level of this charge is yet to be decided.
Why? In a nutshell, it’s because some local authorities already run licensing schemes designed to ensure private rentals meet decent standards.
The Telegraph points to the first major licensing scheme for the private sector. Newham Council launched its first scheme in 2013, which ran until 2018. Its second scheme – which will also last five years – began in 2018. For the latter, private sector landlords had to pay £750 for a licence (£450 if they signed up early). This money funds the scheme.
Existing licensing schemes
Assuming existing schemes will become blueprints for any national landlord licensing scheme, Newham’s website makes interesting reading.
In particular, the penalties for renting out an unlicensed property are hefty. Landlords who haven’t complied can face a financial penalty of up to £30,000 or an unlimited fine from a court. Newham also says: “You could also have control of your unlicensed properties taken away from you and be ordered to repay up to 12 months’ rent to us or your tenants.”
Will a national landlord licensing scheme work?
The Telegraph raises concerns that a national scheme based on one like Newham’s could be unworkable. There are about 4 million social housing properties that already have to be held to the Decent Homes Standard by local authorities. Adding the UK’s 4.4 million privately rented homes to a licensing scheme will be challenging, to say the least.
The newspaper quotes Chris Norris of the National Residential Landlords Association. He points out that each local authority has an average of only two environmental health inspectors. In short, upgrading the infrastructure to handle private rentals would require huge investment.
Newham has developed its infrastructure since 2013 to include 70 dedicated officers. The council’s Helen Masterton pointed out: “It has taken us eight years to hone this. It is very resource intensive and any national scheme must recognise that.”
Are local landlord licensing schemes a good blueprint?
In a separate article for The Telegraph, The Secret Landlord casts doubt on whether a national scheme will be effective. The writer suggests that while many council licensing schemes are introduced, few are properly enforced. Landlords have paid out for licences, but in some cases councils haven’t event conducted basic checks. In addition, there are still many unlicensed properties. The writer suggests that about of third of properties in some schemes don’t have a licence. In other words, good landlords are paying to join these schemes, while large numbers of bad landlords are not.
Of course, we don’t know exactly what shape a national licensing scheme will take. But for it to be effective, it will need significant investment and take time to introduce properly. Most importantly licensing will need to be properly enforced to ensure homes meet the Decent Homes Standard.
- Do you own buy-to-let properties? Check out this guide from the Accountants for Landlords.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.