Charnwood Council in Leicestershire has given two licensing schemes the go-ahead despite opposition from local landlords about its effectiveness and fees.

The council hasn’t made it easy for landlords wondering how much it’s going to cost, as details about the £700 fee for each scheme weren’t provided in the recent announcement and had to be searched out in previous proposal documents.

This is not a surprise – £700 is at the upper end of licensing scheme costs in the UK. For example, similar licensing schemes recently launched in South Tyneside cost just £550 for five years.

Charnwood council, which covers the student town of Loughborough, will introduce both schemes in January 2022: an additional HMO licensing scheme for those properties occupied by three or four unrelated tenants and buildings converted into self-contained flats which are occupied by tenants, as well as a selective licensing scheme which focuses on privately-rented accommodation in the Hastings and Lemyngton wards.

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East Midlands landlords in EMPO believe it will only increase rents, as landlords faced with additional costs to comply with licensing will probably pass these on in rent, meaning that those on low incomes won’t be able to afford to stay in the properties and could lose their homes.

paul mercer licensing

However, councillor Paul Mercer (picture) lead member for private housing, says the schemes will help improve the standards of properties for tenants and the impact HMOs have on the local area.

He adds: “I am pleased the conditions for these licensing schemes have been approved and we can now move forward with implementing the schemes from January 2022.

“There are many good landlords in the borough who care about their tenants and understand their broader responsibilities, but we have some properties which are poorly managed or have a negative effect on the community.”

12 COMMENTS

  1. This is simply a tax it will not benefit the area or the condition of properties. The council has seen the opportunity to raise money from an unpopular section of society ie landlords. In reality this cost will be passed across to tenants as higher rent.

  2. Councillor Paul Mercer said above: “we have some properties which are poorly managed or have a negative effect on the community”. So presumably they know who they are and could tackle them now, without introducing such a scheme which will penalise good Landlords and subsequently their tenants. Another way to tax people by the back door.

  3. Few years ago, Boston Council in Lincolnshire tried to introduce a licensing scheme and they faced such a barrage of complaints that the proposals were scrapped. I know about it because I had a property within the borders of that scheme.

    Just for reference Boston has the highest level of EU migration in the country with a population increase at one point of 16% those people were entirely accommodated in the PRS the council built zero housing in that decade. Most were low paid farm labourers.

    The more I looked into the scheme and spoke to council administrators it became clear that they had no idea how the PRS works. They didn’t understand their own rules around anti-social behaviour etc. Their view was that a license would make landlords sort out anti – social behaviour, subletting and overcrowding etc yet when I pointed out that the council are the body with the legal powers and authority to enforce overcrowding etc and that the landlord had virtually no powers they seemed surprised. The council can issue fines for anti-social behaviour, I as a landlord cannot.

    It was also clear that they thought landlords were “Charging high rents” and the other usual stereotypical mantras dished out against landlords.

    I had to show (With basic examples) how the rent is directly related to the price of the property. I’m sure everyone is familiar with the formula.
    Annual rent divided by cost of property x 100 to give the percentage of annual gross margin.

    The staff at the council were totally unaware of that formula therefore had the notion of “High rents” …it was just a finger in the wind exercise and a comparison with their own (Taxpayer subsidised) council house rents and council officers were genuinely surprised at how low the actual margins are.

    They also seemed to think that landlords encouraged overcrowding… again I had to explain that overcrowding and subletting works against the landlord. I don’t get any extra rent when tenants sublet but the property would suffer more wear and tear at my expense. Standard landlords (Not HMO’s) charge rent for a property not per person. Plus, HMO’s require different standards and again the council have statutory powers to enforce these standards.

    As a landlord I can’t be visiting the property every week to check who is living there… Surely the tenants would claim harassment, complain to the council and the council would be taking me to court.

    The council officers were also surprise when I said to them STRAIGHT that if they brought in a license then I would simply sell and invest in another locality. They were genuinely surprised, almost to the point of suggesting “You can’t do that” as if I was “Cheating” somehow. Like a naughty schoolboy.

    They hadn’t figured that out because they had their own “Council housing” as a base model. Clearly the council cannot sell up their rental stock and move unlike PRS.

    I have now sold the property mainly because of issues around sub-letting and EPC’s and the potential for another licensing scheme to re-emerge.

    The property was sold to a married couple, as their family home so it is no longer available as a rental property. That sale was about three years after Boston council scrapped the proposal but I still wrote to the council officers involved so that they truly understood that “They can make whatever rules they like” and I can simply sell up and invest elsewhere.

    Many councils are left wing labour and have a class war mentality and simply do not take time to actually learn about the PRS they are blinkered and have tunnel vision. That is clear by the number of proposals that are put out there only for them to crash and burn after consultation.
    In the end good landlords leave licensed areas and the vacuum is taken up by dodgy characters providing dodgy accommodation, so in the end the council have more problems not less.

    Councils already have enough enforcement powers they just don’t use them properly and are trying to push the responsibility onto landlords… (Just at the Home Office cannot control borders but force us to do right to rent checks)

    If the govt and councils want landlords to sort out problems then give us the power to issue asbo’s etc. They won’t do that because that would weaken their own power base of course.

  4. All decent law abiding private landlords know very well Selective Licensing is a money making exercise for local councils.
    If they truly wanted to clean up dodgy areas, they should go after the individual landlords responsible and make them comply or shut them down.But of course, that would not generate the huge income they get from legally authorised robbery like the licensing schemes.
    We have recently had to pay around £600 for the second time, to Rotherham BC, even though the property complied completely with all regulations etc. To my knowledge, they have never even visited the property to check anything! The license was supposed to run for 5 years but after only 4 years, they were demanding a new one.
    They seem to be completely clueless regarding how difficult it is to make any profit in these areas anyway and in our case all we have achieved is constant overall losses.
    The property is now on the market, at a huge loss on what we paid for it 13 years ago so that will be one more property the council will have to find for their residents!
    Councils need to be run by more intelligent people who take time to understand the problems of the people they are taxing and continually changing regulations which simply load more and more financial weight onto landlords.
    Wake up guys!

    • “Councils need to be run by more intelligent people….”

      Everyone knows that the council is staffed by those that can not hack it in the private sector… 🙂

  5. LL would do well to avoid low quality areas.

    The allure of potentially higher yields somewhat pales when Councils introduce licensing schemes for these low quality areas.

    All that supposedly higher yield disappears along with reduced property values.

    Most higher yielding properties will cost fortunes to achieve EPC C status.

    Far better to sell them to FTB.

    Invariably lenders don’t like properties in Licensing areas.

    Personally I believe EVERY rental property should be licensed at no more than £100 per property every 5 years.

    That should be more than sufficient income to carry out all required enforcement activity.

  6. Councils already have the finance to carry out enforcement activity – from council taxes. They just don’t use it because enforcement is “difficult”.

    • Exactly…
      They have powers to issue fixed penalty fines and they have the power of govt on their side yet try to push their responsibilities onto LL’s

      They can shut down HMO’s if they want but of course if they do that then they are making the folks homeless and therefore will have to re-house them.

      Blanket licensing does nothing to improve things… London Borough of Newham has effectively licensed the whole Borough… but go and have a drive round Newham… its a wall to wall ghetto.

      Most of Beirut look better than the whole of Newham

      • Agreed blanket licensing does nothing in itself to improve standards.

        But if EVERY residential rental property was required to be licensed upon pain of RRO then for £100 for a 5 year licence most properties would be licenced.

        Councils would then know where all the licenced rental properties are.

        If they discover an unlicensed rental property then the Council could apply for a RRO.

        For criminal LL the mere threat of being discovered and being subject to a RRO makes being a criminal LL pointless.

        Most savvy criminal LL will regularise their affairs.

        Having every UK residential rental property licensed would be useful for so many reasons.

        Abolish all other licensing.
        schemes

        EVERY Council would receive £100 for EVERY rental property in their area EVERY 5 years.
        Plus every LL should be licensed.

        If they AREN’T then RRO for all the properties the LL owns.

        This would be far more than just having certain areas licenced.

        Blanket cheap licensing as I have suggested would be a very good idea.

        Of course it will never happen.

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