A growing number of local authorities are using selective licensing to introduce penalties for buy-to-let landlords that go well beyond the mandatory government landlord licensing rules, according to Kirwans.
The law firm suggests that legislation introduced by part three of the Housing Act 2004 in areas affected by poor-quality rental properties, irresponsible landlords and anti-social behaviour, have enabled to local authorities to routinely pursue the most serious enforcement option open to them, which can sometimes result in unfair penalties for landlords.
David Kirwan, managing partner at Kirwans, commented: “There are a number of ways in which councils can penalise landlords who fail – for whatever reason – to comply with the rules of selective licensing. These range from providing advice, guidance and support or issuing a simple caution to prosecuting landlords through the courts and refusing or revoking licenses.
“A trend is emerging of councils choosing to enforce the harshest options as they seek to make an example of landlords who those who don’t abide by the rules.”
Kirwan explained he has acted for clients investing in property to raise additional income or to provide a pension in retirement who he says have been ‘utterly devastated’ to find themselves hauled before the courts, simply for failing to apply for a licence.
He added: “It is heart-breaking to watch some landlords going through completely unnecessary criminal proceedings, simply for failing to apply for a licence.”
In worst-case scenarios, landlords could be handed a criminal record, an order to repay 12 months’ rent, or be banned from renting out a property in the future.
Even if councils choose to avoid the courts, civil penalty fines of up to £30,000 can be imposed.
Selective licensing schemes apply to a designated area for a period of five years and landlords have to apply for a license for each home affected.
They are then awarded a licence to operate a property only after an assessment which must deem them to be ‘fit and proper’, as well as satisfy stipulations around the management and funding of the property and health and safety considerations.
The schemes, which opponents claim are a way of boosting council funds, have faced criticism for both the cost of licenses - which usually run to hundreds of pounds - and for the fact that they may drive the very rogue landlords they are supposed to weed out further underground.
They have also proved confusing for landlords, who are often unaware that their property even lies in a selective licensing area.
For those operating numerous properties across different areas, the situation can be more bewildering, as each council can create its own set of rules for each scheme.
Rogue landlords, ironically, may simply choose to avoid the licensed areas, moving their poor practices to areas where such schemes are not currently in place.
In June the government announced a review of selective licensing and how well it is working, with the findings due to be published this spring.
Kirwan commented: “While we would all agree that unethical landlords must be weeded out to ensure protection for society’s most vulnerable tenants, councils must be careful that they don’t throw the baby out with the bath water.
“Rogue landlords operate in an entirely different manner to the many decent men and women, some of whom are only just entering the rental sector, who are finding their way in the rental market and may be unaware that such schemes have even been introduced in their area.
“To suddenly find themselves in a situation where prosecution with outrageous penalty fines is a distinct possibility is absolutely terrifying.
“It’s also counter-productive, as landlords are now telling me that, rather than face this sort of frightening action, they will either sell-up, or choose not to invest in property in affected areas in the first place. This will then reduce the choice of accommodation on offer for those renting, leading to a lose-lose situation for all.
“My advice to all landlords would be to check with their local council as to whether their property requires a licence, and to seek legal advice immediately if they receive a letter from their local authority threatening fines or prosecution.”