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Are landlord licensing schemes actually a good idea?

Licensing schemes can serve purposes which are indisputably genuine and valid. They can, however, also be used as money-making schemes, particularly during times when regulatory authorities are strapped for cash. Licensing schemes can, therefore, often be controversial, especially in situations when there are arguments on both sides. Landlord licensing schemes are a case in point.


The argument for landlord licensing



What we would now call rogue landlords have existed for hundreds if not thousands of years.  You only need to take a look at classic literature to see fictional examples of them, which were presumably modelled on real-world people. There is no doubt that they exist today or that their ranks are supplemented by landlords who might not, technically, be rogue in the sense of deliberately bad, but unprofessional due to laziness, incompetence or general lack of interest in their tenants’ welfare.


A well-implemented licensing scheme, could, in principle, turn up the heat on landlords who fail to manage their properties in a reasonable manner and either encourage or force them to leave the market, to be replaced either by more professional landlords or by residential buyers. This is certainly the point of view taken by housing charities such as Shelter who have expressed themselves in favour of licensing schemes, seeing them as a way to protect vulnerable tenants.


The argument against landlord licensing


Perhaps it would be better to say the argument against landlord licensing in its current form. Any form of licensing is only as effective as its enforcement and at this point in time landlord licensing is reliant on landlords coming forward and identifying themselves to their local council. This raises the obvious question of whether genuinely rogue landlords will choose to do so if they know that they are highly unlikely to be granted a license and instead will put themselves at risk of losing a lucrative source of income. 

In principle, by failing to register, they face the risk of criminal prosecution, but, this will only happen if they get caught, which therefore raises the question of how likely it is that their operation will be discovered. The simple truth of the matter is that we can never know how many landlords manage to avoid getting caught by licensing agents for the simple reason that they do not get caught. 

We do know, however, that at present time the significant increase in local authority licensing schemes has not resulted in a corresponding increase in prosecutions for breaches of the housing act.  For example, out of the 26 prosecutions brought by Thanet Council in 2016, only three were for breaches of the housing act, the other 23 (that’s 88%) were for failure to hold the correct license. 

Croydon, by contrast, only made one prosecution in the whole of 2017, the cost of which should have been more than covered by the £6m it collected in licensing fees - licensing fees which, ultimately, would have been paid by the tenants of licensed landlords as a part of their rent.

Mark Burns is the managing director of property investment firm Hopwood House.

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    I am totally against this. Not because I don`t think high standards should always be applied but because it would be councils applying them. I simply don`t trust them. This would just be another way of extracting cash to pay those big salaries and pay for other things.
    They have all the power they need already to ensure standards are maintained.

  • icon

    Actually, in Wales, the Assembly Government runs the scheme.
    I am of the opinion though, that it is only genuine landlords that register and not the 'rogues' that it is supposedly designed to catch?
    Also, to justify its existence, Rent Smart Wales is considering imposing up to 24 new regulations.
    Where will it all end I ask myself?

  • John Cart

    They're money making scams for the greedy, grasping, money grabbing Local Councils, we all know that. Look at the figures for Croydon, £6m income, ONE PROSECUTION. That speaks volumes. How else are they going to continue to pay their bloated salaries and fund their ludicrous pension scheme, you know, the one that no one else can afford to fund because to do so they have to have their thieving hands in the pocket of the local population.

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    HMO licencing for 3 persons in blocks below 5 stories is no longer a requirement. This is after council Took £500, implemented lots of stupid rules and regs so stupid they dont even apply the same rules to their own properties. Completly useless, this will be another opportunity for the councils to steal further money from us the same way they do for an empty property but still charge full council tax not even offering 25% discount as they do for a single person in occupancy. We are the thick stupid ones for putting up with it and following like sheep.

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    I don't have a problem with the idea. I pay my taxes, try to keep my houses up to the current legislation. Local councils should not receive all the funding from them, government to set the fee i.e. £50-100 and if we have a licensing scheme for landlords lets make this democracy we live in fair and I want a list of tenants that are known to not pay rent, cause a nuisance and have been kicked out of council and housing association properties.

  • icon

    what is the definition of an hmo?

    what properties need licensing?

    is there a website with all detail?

    Richard Tacagni MCIEH

    You can visit www.londonpropertylicensing.co.uk which contains free guides to licensing schemes in every London Borough. If you are outside of London you can visit the Resources section to find free guides to mandatory HMO, additional and selective licensing schemes that have been introduced across various parts of England.

  • icon

    Ask the Council!!! They don't even know

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    thats my point!

  • icon

    It’s Extortion end of story another Tory stealth tax

  • icon

    pile on extra cost and red tape, and the result? up go rents again, more homeless sleeping in shop door ways.


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