Research carried out for safeagent (formerly NALS) by London Property Licensing finds that over 130,000 properties in London remain unlicensed. Landlords whose properties should be licensed under selective, additional or mandatory HMO licensing schemes are breaking the law in large numbers, it says.
safeagent reckons there could be a non-compliance rate of as much as 75% in unlicensed HMOs in London and is calling for a rethink by Government of licensing in the private rented sector (PRS).
The research, which was carried out using Freedom of Information (FOI) requests, found that there are over 310,000 private rented properties in London that require licensing under one or other other of the mandatory HMO, additional and selective licensing schemes implemented under the Housing Act 2004.
Mandatory HMO licensing applies to all HMOs right across England, whereas additional and selective licensing schemes apply selectively when introduced by local authorities on a Borough by Borough basis. The aim is improve standards in the Private Rented Sector (PRS), where greater control is deemed necessary.
Non-compliance in the capital is rife claims safeagent. Its says that licence applications have been submitted for only 25% of the 138,500 private rented properties that require licensing under mandatory HMO or additional licensing schemes. That, if correct would imply a non-compliance rate of 75%. Without a mandatory licence approval in place, these lettings are being operated illegally, potentially putting lives at risk.
Landlords and or agents caught operating unlicensed properties face heavy penalties with a criminal prosecution, hefty fines, or a civil penalty of up to £30,000 and rent reclaims of up to ordered to repay up to 12 months rent. safeagent thinks that some landlords many be falling foul of the law through ignorance of the complex regulatory framework.
Since October last the mandatory HMO licensing scheme applied to most HMOs shared by five or more people, whereas it was previously restricted to properties three or more storeys in height.
In some boroughs, additional licensing schemes have extended licensing to properties rented to just three or four unrelated people. This complicated picture also makes it hard for council enforcement teams to assess which properties should have a licence says safeagent.
The picture for selective licensing is markedly different says safeagent. These schemes extend licensing to all private rented properties including single family lets within a certain geographical area. Licence applications have been submitted for 85% of the 173,000 private rented properties that require licensing under selective licensing schemes in London- a non-compliance rate of just 15%.
Added to the confusion over licensable properties, many London Boroughs are struggling to process over 24,000 licence applications – a huge administrative burden that can lead to long delays in issuing licence approvals. Currently, about 40% of boroughs still rely on paper applications.
Consequently, safeagent is calling for a simple, streamlined licensing process which would make it more cost effective for the public purse, easier for councils to enforce, and clearer for landlords and agents to understand whether a property should be licensed.
Isobel Thomson, safeagent CEO, says:
“The results of the survey are concerning. Consumers are not being well served and indeed many are being placed at risk through this mish mash of licensing schemes. Right now, the system isn’t fit for purpose and Councils are drowning in paperwork. Landlords needing property licences are either deliberately evading the schemes or are in the dark concerning their legal responsibilities and tenants are being placed at risk.
“If the compliance rate for HMO licensing schemes is only 25%, how can these schemes be effective? Ultimately this is about proper use of public money and consumer protection. Where are the assessment procedures for Councils who have schemes in place? Isn’t it time we went back to the drawing board to come up with a simple, streamlined system that works for all?“
Types of licensing
HMO Licensing Mandatory HMO licensing applies throughout England under Part II of the Housing Act 2004. The licensing scheme applies to most Houses in Multiple Occupation (HMOs) occupied by five or more people – an estimated 220,000+ properties across England. http://www.londonpropertylicensing.co.uk/mandatory-hmo-licensing
Additional Licensing Each council has the power to introduce additional licensing under Part II of the Housing Act 2004. Additional licensing schemes apply to certain Houses in Multiple Occupation (HMOs) that fall outside the scope of the mandatory HMO licensing scheme. For example, HMOs with only three or four occupants. Each scheme has different terms and conditions.
Selective Licensing Councils have the power to implement a selective licensing scheme under Part III of the Housing Act 2004. These schemes apply to all private rented properties within a defined geographical area. Larger schemes required approval from the Secretary of State.
Research methodology – safeagent commissioned London Property Licensing to carry out research on mandatory HMO, additional and selective licensing schemes implemented by the 32 London Boroughs plus the City of London.
Freedom of Information requests were submitted to all 33 London local authorities seeking information about their property licensing activity as of 1 May 2019. Responses have been received from every council.