The recent clarification by the housing minister, Jacob Young, has indicated that the planned property portal in the Renters (Reform) Bill will not negate the need for selective local authority licensing. This signifies that non-compliant landlords and managing agents will continue to endure heightened financial risk even after the Bill’s enactment.
There has been uncertainty surrounding the new digital compliance measure, with some under the impression that it would abolish the variety of licensing schemes introduced by numerous councils in areas with inadequate housing or high levels of anti-social behaviour. However, Young’s announcement has confirmed that there will be an evaluation of council licensing schemes to minimize redundancy with the property portal once the Bill is enacted.
As for the timeline of the evaluation, the government has not provided any indication, particularly with the possibility of a general election in the latter half of 2024. Young has suggested that certain licensing fees could be reduced and certain schemes could be downsized. Until the evaluation is concluded, selective licensing will remain in effect, leaving non-compliant landlords and managing agents vulnerable to fines of up to £30,000.
The selective licensing schemes were instituted in 2006 as part of the Housing Act 2004 in an attempt to enhance the quality of homes in the private rented sector. Since then, the number of councils implementing these schemes has notably increased, particularly in recent years, with landlords in London alone facing fines amounting to over £10 million for non-compliance. The cost of license fees varies but typically amounts to around £750 and lasts for five years.
Some local authorities have been stringent in enforcing these licenses, transforming the revenue gained into a valuable source of income for the councils. This trend towards stricter regulation of the private rented sector is likely to persist in the future, regardless of the outcomes of the evaluation and the political party in power after the general election.
The amendment to the Renters (Reform) Bill also introduces more rigorous regulations for owners of Houses in Multiple Occupation (HMOs), holding them accountable for non-compliance even if they do not directly manage or control the property they own.
With all these changes, landlords are facing an escalating financial risk through non-compliance, whether through fines, rent repayment orders, or both. This heightened regulatory burden underscores the importance for landlords to stay abreast of the changes and to consider enlisting the services of a professional letting agent to oversee their property portfolios. It is no longer merely a matter of affordability, but rather a necessity for landlords to stay on the right side of the law and ensure their properties are properly managed.