What Is Selective Licensing?
Selective licensing is a property licensing scheme introduced by local councils in the UK to regulate private rental properties. Empowered by the Housing Act, it applies to landlords renting out homes in designated areas where the local authority has identified problems such as poor housing conditions, antisocial behavior, or low housing demand. Unlike mandatory HMO licensing, which applies only to larger shared houses, selective licensing can apply to any privately rented property, even if it is let to a single household.
The purpose of selective licensing is to improve housing quality, tenant safety, and overall community well-being. By requiring landlords to meet certain conditions, councils aim to eliminate rogue landlords and ensure properties are maintained to an acceptable standard. The scheme also helps councils monitor rental properties more effectively, ensuring compliance with legal and safety requirements. The selective licensing scheme is a regulatory framework for landlords managing privately rented properties in designated areas.
For tenants, selective licensing provides reassurance that their landlord has been vetted and that their home meets the necessary legal and safety standards. It also gives councils more authority to take enforcement action against landlords who fail to comply with the rules.
When Is Selective Licensing Required?
Local councils have the power to introduce selective licensing in areas where they believe it is necessary to improve the private rental sector and benefit private landlords by raising standards and supporting responsible landlords. Before implementing the scheme, they must meet at least one of the following criteria:
- The area has high levels of antisocial behavior linked to rental properties.
- There are poor housing conditions that need addressing.
- The area suffers from low housing demand, leading to empty or neglected properties.
- The community experiences high levels of deprivation or crime.
Selective licensing schemes regulate private rented properties to ensure tenant safety and community standards. Councils usually conduct public consultations before introducing selective licensing, allowing landlords, tenants, and local residents to provide feedback. If a property is located in a selective licensing zone, landlords must apply for a licence before letting it out. Failure to comply can lead to significant penalties.
Key Differences Between Selective and HMO Licensing
Selective Licensing vs. Mandatory HMO Licensing
Selective licensing covers all private rented property in designated areas, regardless of the number of tenants. In contrast, mandatory HMO licensing applies to large Houses in Multiple Occupation (HMOs) where five or more unrelated tenants share facilities.
For example, if a landlord owns a three-bedroom house rented to a single family, they may need a selective licence if the property is in a designated area. However, if they rent the same house to five unrelated tenants, they will likely need an HMO licence instead.
Selective Licensing vs. Additional HMO Licensing
Additional HMO licensing is introduced by councils to cover smaller HMOs that do not fall under mandatory HMO licensing. While selective licensing applies to all rental properties in a designated area, it specifically includes landlords who privately rent properties. Additional licensing only applies to shared houses and flats where three or more unrelated tenants live together.
Understanding the difference is crucial, as applying for the wrong licence can result in delays and penalties. Landlords should always check with their local authority to determine which type of licence applies to their property.
How Long Does a Selective Licence Last?
A selective licence typically lasts for up to five years, although some councils may issue shorter licences depending on the circumstances. The licence is property-specific, meaning landlords must apply separately for each rental property they own in a designated area.
Licence holders have specific responsibilities and must comply with regulations to avoid serious breaches. Before the licence expires, landlords must apply for renewal to continue renting legally. Councils may refuse to renew licences if landlords fail to meet required standards or breach licensing conditions. In such cases, licence holders may be forced to stop letting their property or face enforcement action.
Consequences of Not Having a Selective Licence
Failing to obtain a selective licence in a designated area is a serious offence. Landlords who fail to comply can face:
- Fines of up to £30,000 per offence issued by the local council.
- A rent repayment order, requiring them to refund up to 12 months’ rent to tenants.
- A banning order, preventing them from renting properties in the future.
- The council taking over property management through an Interim Management Order (IMO).
Tenants should be aware of the concept of ‘unlicensed property’ and the importance of licensing requirements starting December 2023. Reporting properties that should have a Selective Licence but do not is crucial, as unlicensed properties can lead to significant consequences for landlords.
In addition, landlords without a valid licence may struggle to evict tenants, as courts can refuse possession claims if a property is unlicensed. This makes it even more important for landlords to ensure they meet licensing requirements.
How to Apply for a Selective Licence
The application process for a selective licence varies between councils, but landlords generally need to follow these steps:
- Check if the property is in a designated area – Visit the local council’s website or contact their housing department.
- Complete the application form – Provide details about the property, the landlord, and the managing agent (if applicable).
- Submit supporting documents – These may include a gas safety certificate, electrical safety report, energy performance certificate (EPC), and proof of landlord insurance.
- Pay the licence fee – The licence fee is £555 per property and is payable in two installments. This fee is intended solely to cover the costs of administering and enforcing the licensing scheme, without any financial gain for the holders.
- Undergo a property inspection – Councils may inspect the property to ensure it meets safety and management standards.
Once approved, the licence will be issued, and the landlord must comply with all conditions set by the council.
Designated Areas and Properties
Selective licensing does not apply to all rental properties but only those located in designated areas. Councils use local data to identify problem areas where licensing can help improve housing conditions. In some cities, over 30,000 privately rented homes are covered under the scheme.
Typically, properties that require a selective licence include:
- Privately rented homes occupied by one or two tenants or a single-family unit.
- Flats and houses in areas identified as having housing-related problems.
- Properties where complaints have been raised about poor management or tenant safety.
For properties in transition, such as those about to be sold, landlords may need to apply for a temporary exemption notice. This notice helps prevent legal issues during property sales and changes in ownership by providing a temporary exemption from the licensing requirement. The application procedures and associated fees for this notice should be carefully reviewed.
Landlords should check local council guidelines to determine whether their property falls within a selective licensing zone.
Licence Requirements and Eligibility
To be eligible for a selective licence, landlords must meet specific requirements set by local housing authorities. Firstly, the property must be located within a designated area identified by the council as needing regulation due to issues like poor housing conditions or antisocial behavior. Additionally, the property must be privately rented, meaning it is not owner-occupied or part of a social housing scheme.
A crucial criterion is that the landlord must be deemed a “fit and proper person.” This involves a background check to ensure the landlord has no previous criminal convictions related to fraud, housing offences, or violence, and no history of poor property management or unlawful discrimination against tenants. Furthermore, landlords must have the necessary permissions and consents to let the property, ensuring they are legally allowed to rent out the premises.
The property itself must meet certain standards, including safety and maintenance requirements. This typically involves having up-to-date gas and electrical safety certificates, functioning smoke and carbon monoxide alarms, and ensuring the property is in good repair. Landlords who meet these requirements can apply for a selective licence, which will be valid for up to five years. During this period, they must comply with all conditions set by the local housing authority, including maintaining the property and ensuring tenant safety.
Licence Holder Requirements
Every licensed property must have a designated licence holder, who is responsible for managing the property and ensuring compliance with the licensing conditions. This person could be the landlord, a letting agent, or a property manager.
To be eligible, the proposed licence holder must be deemed a “fit and proper person”. This means they must not have:
- Previous criminal convictions related to fraud, housing offences, or violence.
- A history of poor property management or failing to comply with housing regulations.
- Any involvement in unlawful discrimination against tenants.
If multiple people own a property, they must nominate one person as the licence holder.
Property Licence and Conditions
Each property in a designated area must have its own licence, and it cannot be transferred to a new owner. The licence includes conditions such as:
- Installing and maintaining smoke alarms and carbon monoxide detectors.
- Ensuring electrical appliances are safe for tenant use.
- Taking action against tenant antisocial behavior.
Failure to comply with these conditions can result in enforcement action or the revocation of the licence.
Licence Management
Selective licences are managed by local housing authorities, which play a pivotal role in enforcing the conditions of the licence. These authorities are responsible for conducting regular inspections of licensed properties to ensure they comply with all stipulated conditions. This proactive approach helps maintain high standards in the private rented sector and ensures tenant safety and well-being.
In addition to inspections, local housing authorities investigate complaints from tenants regarding property conditions or landlord behavior. If a landlord is found to be in breach of their licence conditions, the authority can take enforcement action, which may include issuing fines or prosecuting the landlord. This ensures that landlords are held accountable and that tenants’ rights are protected.
Local housing authorities also provide guidance and support to landlords, helping them understand and meet their obligations under the licence. This support can include training sessions, informational resources, and direct assistance with compliance issues. Furthermore, authorities maintain a public register of licensed properties, which promotes transparency and allows tenants to verify whether a property is properly licensed.
Landlords who fail to comply with the conditions of their licence may face significant consequences, including fines, prosecution, and potentially losing their licence. This underscores the importance of adhering to all requirements and seeking support from local housing authorities when needed.
Enforcement and Penalties
Letting a property without a required licence is a criminal offence. Councils can:
- Prosecute landlords, resulting in an unlimited fine.
- Issue financial penalty notices of up to £30,000 per offence.
- Refuse or revoke a licence if landlords fail to meet the required standards.
In severe cases, councils can take over property management, removing the landlord’s control over their rental income.
Benefits and Support
Selective licensing ensures tenants have access to safe and well-maintained homes. It also helps councils identify and remove bad landlords, improving the overall quality of the private rental sector.
For landlords, compliance with the scheme can help increase tenant confidence, reduce complaints, and prevent costly legal issues. Many councils offer support, guidance, and training to help landlords meet licensing requirements and manage their properties effectively.
Additional Licensing Schemes
In addition to selective licensing, there are other licensing schemes that may apply to privately rented properties. One of the most common is mandatory licensing for Houses in Multiple Occupation (HMOs). This applies to larger properties where five or more unrelated tenants share facilities such as kitchens and bathrooms. Mandatory HMO licensing ensures that these properties meet specific safety and management standards.
There is also additional licensing for smaller HMOs that do not meet the criteria for mandatory licensing. This scheme is introduced by councils to cover properties where three or more unrelated tenants live together and share facilities. Additional licensing helps ensure that even smaller shared houses are safe and well-managed.
Beyond HMO licensing, some councils may introduce other property licensing schemes to address specific local issues. These schemes can apply to properties that are not classified as HMOs but still require regulation to improve housing conditions and tenant safety.
Landlords should always check with their local housing authority to determine which licensing schemes apply to their properties. Understanding and complying with the relevant licensing requirements is crucial to avoid penalties and ensure the property is legally let.
Conclusion
Selective licensing is an essential tool for improving the management and condition of privately rented properties. By requiring landlords to meet specific standards and conditions, selective licensing helps ensure that tenants have access to safe and well-maintained accommodation. For landlords, compliance with the scheme can enhance tenant confidence, reduce complaints, and prevent costly legal issues.
Landlords subject to selective licensing should diligently comply with the conditions of their licence and seek guidance and support from their local housing authority when necessary. This proactive approach not only benefits tenants but also contributes to the overall quality and reputation of the private rented sector.
