Government curbs landlord licensing powers

The Prosecution
Landlords vs Tenants

The Residential Landlords Association has welcomed an amendment to Selective Licensing rules that now requires local councils to seek approval from the Housing Minister for any scheme that would cover more than 20% of their geographical area or would affect more than 20% of privately rented homes in the local authority area.

Selective Licensing powers were introduced in 2004 in a bid to raise standards in the private rented sector and uncover rogue landlords by requiring rental homes to meet certain standards.

When the legislation was being drawn up, the government reported: “Low house prices in areas of low demand have resulted in an influx of unprofessional landlords purchasing properties to rent. These people frequently show no interest in managing their properties properly, often letting to anti-social tenants who cause a range of problems. This, in turn, can create misery for the local community and cause further destabilisation of these areas.”

All private landlords with rental property in areas where selective licensing has been introduced face a £20,000 fine for failing to comply with the legislation and the prospect of the local authority assuming management control of the property.

However, many landlords argued that the fees to hold a licence, which can cost several hundred pounds per property, act more as a ‘tenant tax’ than a tool to raise the standard of rental homes.

RLA chairman Alan Ward says he hopes the rule change, which came into force on 1 April, will “curb the trend of local councils using licensing schemes out of context of their proper use, and will force councils to only consider schemes in areas they are really needed, as opposed to blanket taxes on private landlords”.

The latest move, announced by Conservative Housing Minister Brandon Lewis, follows a surge in the number of councils, including Liverpool and Newham, introducing or applying to introduce local authority-wide legislation.

A spokesman for the Department of Communities and Local Government confirmed: “Selective licensing can play an effective role in tackling criminal landlords and linked activities, for example illegal immigration. When it is applied in a borough-wide fashion and not properly enforced, it can affect the majority of landlords who provide a good service. The government is mindful of this when considering the use of selective licensing.”

Ward adds: “The RLA has always opposed blanket licensing schemes that are more about creating council jobs than improving standards and tackling criminal operators in the private rented sector.”

Having to seek government approval for the introduction of a selective licensing scheme should ensure a more meaningful consultation period and introduction of these schemes only where appropriate, the RLA chairman adds.

It should be noted, however, that the selective licencing scheme remains in force and buy-to-let landlords are advised to check with their local authority whether the legislation applies to any or all of their portfolio of investment properties.

Rental homes that do require a licence will need to meet a number of mandatory conditions. These can include:

1. A valid gas safety certificate

Under the Gas Safety (Installation and Use) Regulations 1998, it’s a landlord’s legal responsibility to obtain a Gas Safety Certificate every 12 months.

You must get this from a Gas Safe-registered engineer for all pipework, gas appliances and flues installed at a rental property.

Legislation also forces landlords to keep a record of the safety inspection for two years, and give a copy to all tenants within 28 days of the safety check taking place. If new tenants move in mid-tenancy, they will need a copy of the Gas Safety Certificate.

The Health & Safety Executive is the enforcement authority for the Gas Safety Regulations and breach of any of these regulations is a criminal offence.

2. Electrical safety checks

Landlords of houses in multiple occupation are required by law to ensure that all electrical installations in the property are safe when tenants move in and maintained in a safe condition throughout its duration.

Inspections by a registered electrician must take place every five years to ensure any appliance provided is safe and has at least the CE marking.

3. An Energy Performance Certificate

Landlords must provide an EPC to all new and prospective tenants. There are fixed penalties of £200 per dwelling for failing to provide an EPC or make one available when required.

These regulations are not the only pieces of legislation that can drain a buy-to-let investor’s income. In addition to having to take note of strict HMRC rules relating to profits from rental property, landlords also need to handle tenancy deposits with care.

Under the Housing Act 2004, landlords offering a property on an assured shorthold tenancy that started after 6 April 2007 must place tenancy deposits in a government-backed tenancy deposit scheme. The legislation was introduced because tenancy deposits are the most common cause of disputes and court actions between landlords and tenants.

Defence of a claim relating to a tenant’s deposit stands far greater chance of success if it is accompanies by legitimate proof. An independent property inventory inspection can be used to record the state of the rental premises before a tenant moves in and after they move out. These two pieces of evidence are key in determining whether a tenant has caused any damage to the rental property, has left it in an unhygienic condition, has left any excess or unwanted belongings inside or any other condition that might result in a deduction from the deposit.

For more information about tenant check-in and check-out procedures, contact Tick Tick Check Inventories London.