Ruling out the path many other councils have gone down by introducing selective licensing, which Manchester City council says is “very expensive and produces mixed results”, the council plans to “crackdown” on slum landlords, whilst at the same time introduce a ‘rental pledge’ that will spell out the expectations of both the industry and tenants – a measure which has been introduced in Liverpool and London.
Manchester’s planned strategy aims to support growth in the city’s private rental sector, with 55,000 new homes created in the last 13 years, but remains concerned about the market’s image which is ‘fragile’ with much good work “undone by a few rogue landlords and letting agents”.
The crackdown will in particular target landlords, agents and neighbourhoods’ where there is a growing number of flats above shops, and council concerns over living conditions within them.
As reported in the Manchester Evening News by Jennifer Williams, Manchester City Hall bosses are to launch a radical ‘zero tolerance’ crackdown on slum landlords, but at the same time potentially giving a tax break to the good ones.
As part of the region’s Devolution Agreement, agreed last year with Chancellor of the Exchequer George Osborne, the council is considering asking the government for new powers to give good accredited landlords a tax break – and take tougher action on the bad ones.
Manchester wants to introduce ‘tailored’ powers to deal with the ‘small number’ of rogue landlords within the city, arguing it is currently restricted by a one-size-fits-all approach from central government. The council wants to retain money it collects in fines from landlords found to have broken the law, instead of handing it over to the Treasury.
The move by Manchester is in contrast to the route taken by several other councils which have chosen to go down the controversial road to borough-wide selective licensing.
Selective Licensing was introduced by the 2004 Housing Act and was intended to address the impact of poor quality private landlords and anti-social tenants in “selected” areas of a borough. It was primarily developed with the need to tackle problems in areas of low housing demand.
In an area subject to selective licensing, all private landlords must obtain a licence and if they fail to do so, or fail to achieve acceptable management standards, the authority can take enforcement action – e.g., issuing a fine of up to £20,000 or in some cases, assuming management control of the property.
The London Borough of Newham was one of the first to introduce a selective licensing scheme covering ALL private rented properties in the borough in January 2013 and since then upwards of 30 councils have either introduced selective licensing, or are seriously considering doing so.
Most landlords see this as a cynical move on the part of many of these councils, using selective licensing as a money raising exercise to pay for the running of their environmental health departments. Landlords can see little direct benefit for the £500 per property they pay every 5 years for every property they own. In some locations the charge has been as high as £800.
In Enfield Council’s case there was strong and reasoned opposition to its licensing proposals at public consultations and on 11 December 2014, Enfield Council lost a judicial review of its additional and selective licensing schemes in the High Court following private landlord, Constantinos Regas’ challenge.
In his judgment, Judge McKenna found that Enfield Council had failed to consult the persons who should have been consulted (including in the 6 surrounding boroughs) and did not consult for the required time. At the end of the hearing at the Royal Courts of Justice, HHJ McKenna refused permission for Enfield to appeal against the decision.
Constantinos Regas is the landlord of just one property, which is in the borough. He brought the case against the council after repeatedly speaking against the proposals at council meetings.
Constantinos had said:
“I have always maintained my view that good housing standards are a human right. But Enfield Council have not gone about this the right way. They have accused tenants of being antisocial and have sought to criminalise landlords for tenants’ behaviour.”
A Communities and Local Government Committee’s inquiry into the private rented sector (2012-13) considered the operation of selective licensing and recommended that the Government should bring forward proposals for a reformed approach. In the February 2014 consultation paper, Review of Property Conditions in the Private Rented Sector, the Government criticised borough-wide licensing schemes and expresses a preference for voluntary accreditation.
The Residential Landlords Association (RLA) has drawn up a 20-point ‘action plan’ for private sector landlords who are facing a selective licensing proposal by their local council.
1 – Ask the council what action they will take to pre-warn people of the need for licensing.
2 – Ask to see the statistics on which a selective licensing proposal is based … and challenge them.
3 – Propose accreditation as part of the solution. Linking to an accreditation scheme – such as the RLAAS – could be more effective all round.
4 – If the council is arguing anti-social behaviour as a factor this has to be shown to originate from private rented sector properties – not social landlords – and that it’s a result of poor management by PRS landlords.
5 – Carefully examine whether crime and anti-social behaviour really does emanate from PRS properties. Could there be other causes – particularly people coming in from other areas?
6 – Tenants and unsatisfactory people from one area may be displaced to others and there are concerns about how this could affect mortgage lenders attitudes.
7 – Check that selective licensing is not being pursued in isolation. Other plans should have been attempted – such as face lifts, environmental improvements or working with other agencies including the police and anti-social behaviour teams.
8 – When councils say they have already done a lot of work in the area concerned, a big question is – what else could selective licensing achieve that other existing powers have failed to deliver?
9 – Look carefully at what standards of housing, amenities and space are imposed. These will need investigation.
10 – Check that a monitoring system and proper planned outcomes are in place because councils need to consider other ways of achieving their objectives. Selective licensing was successfully countered in Hull, for instance, where specially trained landlords self-inspected and assessed properties to agreed standards under supervision from Environmental Health Officers. Resulting work programmes, for individual properties, were done in conjunction with area improvement programmes.
11 – Watch out for the bureaucracy that can be inherent in licensing schemes. A huge amount of effort is put into processing paperwork, issuing licensing applications and chasing people up.
12 – Ask – will it actually work? What will it achieve? Particularly – what can it achieve that cannot be done in other, less bureaucratic ways?
13 – Is it really about property conditions? If so, there are already other powers available to councils – such as Housing Health and Safety Rating powers.
14 – Is the council simply using selective licensing as a way of forcing landlords into the open? This is often the real reason because it gives them statutory control to identify who owns, or has responsibility for, individual properties.
15 – A selective licensing scheme is limited to five years – so challenge the council over what they hope to achieve, and how, within this timescale. What resources are they devoting to the area and, importantly, what impact will these have on anti-social behaviour?
16 – Does the scheme have a job creation or preservation element for council employees that may otherwise be curtailed by cuts?
17 – Watch the licence conditions – detailed wording is necessary to ensure that proposed conditions are lawful and reasonable.
18 – Look at licence fee levels in relation to average rents in the area. How many weeks rent does the fee represent? Is it sucking money from an area that could, instead, be invested in upgrading properties?
19 – Beware of penalties – such as for late applications – which are of dubious legality. Fixing a higher fee, and then discounting when things are done on time, is often better practice.
20 – If the council professes ‘zero tolerance’ on the issue of prosecutions, bear in mind that such a policy is strictly unlawful.
How to Handle Selective Licensing – RLA checklist