Local Authorities now have the power to introduce a Selective Licensing Scheme for rental properties within their jurisdiction.
Under the Housing Act 2004, Nottingham City Council have introduced a scheme which will last for a period of 5 years, commencing on 1 August 2018.
The purpose of the scheme is to raise the overall standards of privately rented properties in Nottingham.
What does this mean for landlords?
Under the new scheme, all landlords of privately rented properties within the scheme boundaries (details of the boundaries are available on the Nottingham City Council website), will require a licence to rent that property to tenants.
This is a legal requirement, and all landlords of properties within the boundaries must obtain a licence.
How do you apply?
There is a fee payable of £780.00 per rental property, and a landlord will need a separate licence for each rental property they own. Landlords who are accredited with DASH or UNIPOL will be eligible to pay a discounted rate of £480.00. The fee is only payable once and will cover the full 5 years of the scheme.
Any person with an interest in the property (such as a lender or freeholder) has the right to be informed about the licence application. The Housing Act 2004 requires the local authority to notify all concerned parties.
Applications need to be made via the Nottingham City Council website. You can check if you need a licence, and apply if required here:
Who holds the licence?
Landlords can either hold the licence themselves, or can nominate someone else (such as their managing agent), to hold the licence on their behalf. Agents would usually charge an additional fee for this service.
It is important to note that whomever holds the licence must attend, or have attended relevant training on the law and legal requirements relating to managing privately rented housing. The licence holder must have the legal right to reside in the United Kingdom.
Licences are not transferrable. Upon the sale of a property, the new owner will need to apply for a licence if they will be renting it out.
What are the conditions of the licence?
There are a significant number of licence conditions which landlords must comply with. There is an extensive list of conditions which can be downloaded from the Nottingham City Council website.
The list includes conditions relating to matters such as:
- Gas Safety
- Electrical Safety
- Smoke Alarms
- Emergency Escapes
- Provisions as to refuse
This is not an exhaustive list, and there are over 30 conditions which landlords must ensure they comply with. It is also important that landlords are aware that the local authority can amend and update the conditions throughout the scheme.
Are there any exceptions?
In short, yes, but they are limited. In some rare circumstances, a Temporary Exemption Notice (TEN) may be granted if the building is to be used in such a manner to as that it will no longer fall within the definition of a licensable house. A TEN will be valid for 3 months from its grant.
Housing Associations, Registered Social Landlords and Nottingham City Homes properties are exempt.
What are the penalties if a landlord does not obtain a licence?
Landlords who do not comply can be fined, and the Council can pursue a prosecution through the Courts. The Council has the power to impose fines of up to £30,000 under the Housing Act 2004.
Alternatively, the Court can impose a fine of up to £20,000 in addition to prosecution, as it is an offence not to apply for a licence where one is required.
In addition, the Housing and Planning Act 2016, which came into force on 6 April 2017 expanded the scope of Rent Repayment Orders (RRO’s).
Speaking before the legislation came into force, Brandon Lewis MP said:
“The Bill will enable councils to issue civil penalties amounting to up to £30,000 and remedy payment orders for up to 12 months. That will give them a resource that they have never had before, and one that I hope they will endorse and use.”
“Local authorities should be using the powers that they have. By far the majority of landlords provide a good service, but authorities should be using those powers to crack down on the rogue landlords whom all of us, including good landlords, want to see driven out of the system.”
Clearly, the intention is that local authorities will utilise all powers available to them to deal firmly with rogue landlords. It may well be the case that the Council will look to make examples of those landlords who do not comply early on in the scheme, and so landlords would be well advised to ensure that they comply in full with the legislation.
An RRO can be applied for by either the housing authority or by tenants. An RRO can be made, requiring repayment of up to 12 months’ rent. An RRO can be sought for a number of offences, but in relation to the selective licensing scheme, an order can be sought for offences in relation to licensing of houses under Part 3, Section 95(1) of the Housing Act 2004.
The standard of proof required to obtain an RRO is that of ‘beyond a reasonable doubt’. Alternatively, if the landlord has already been convicted of the offence for which the application is made, then the offence is, of course, considered proven. If the landlord has not been convicted, then the tribunal will consider a number of factors in determining what rent, if any, should be repaid, including: punishment, deterrence, financial benefit.
It is also important to note that the Housing Act 2004 does not prohibit the local authority from publicising when a RRO has been made, against whom, the reasons and the amount, subject to Data Protection Legislation.
Key Points for Landlords
- You should immediately check to see if your rental property is within the scheme boundaries.
- If so, you must apply for a licence before the deadline of 1 August 2018.
- There is a broad range of sanctions and penalties available and local authorities are likely to look to make an example of landlords who do not comply with the legislation.
- The scheme should be viewed as a positive measure which will encourage competition and increase standards in the private rental market, however, conditions are extensive and you should take immediate action to ensure that you are complying.
If you require any advice or guidance on the conditions, application process, or anything else in relation to the scheme, please contact a member of the team who will be happy to assist.
If you’re interested in any of the topics raised in this article, please call and ask to speak to a member of the Dispute Resolution team on 0115 9888 777.