Councils have a role in enforcement against “rogue landlords” – those who fail to meet their legal obligations to provide safe properties and carry out the repairs that are required. The laws are there and councils should enforce them. However many Labour councils are instead diverting their energies into virtue signalling. They are adopting licensing schemes which impose financial penalties and bureaucracy on good landlords. Government rules have scaled back the scope of these schemes. But they still amount to a stealth tax on landlords – which ends up as Tenants Tax as the extra cost results in rents being pushed up.
There are tow forms of licensing councils are using.
One option is Selective Licensing where particular streets are chosen (covering no more that 20 per cent of households in the local authority.)
Another option is Additional Licensing which covers a particular type of tenancy throughout the local authority area: For instance “houses in multiple occupancy” where there are a particular number of people sharing a kitchen and bathroom but they are not one “household”.
Neither form of licensing has any merit for landlords or tenants.
Councils have to show “evidence” to justify their schemes. But all that means is evidence of there being a problem – that there are bad landlords and that they are concentrated in some places more than others. However, the point should be to provide evidence that licensing would be a solution.
The financial temptation for councils to introduce such schemes is significant. If a London borough imposed it on 20 per cent of private rented properties (typically in the poorest area or type of properties such as flats above shops) that might hit 5,000 properties. The fee for a five year licence could be £500. So that is £2.5 million. Such schemes are supposedly “revenue neutral” but there is not any terribly robust check of that proposition. What is beyond dispute is that it is job creation scheme for the Council – and the bigger the department running it the higher the salary of the director of the department that runs it.
Staff will then carry out box ticking inspections on those registered to ensure the law is being obeyed. But who do you think will be those who comply and register, coughing up the £500? Not the beds in sheds merchants. They stay off the radar – the number of prosecutions is tiny.
Ah, some will retort, but if the good landlords are licensed this is a “kitemark” that guides the potential tenant in their direction. I can see the theory. But anyone wanting to rent will look at the property before hand. They can ask for the safety checks – which if they are booking through an agency will probably already be in order.
The difficulty is not tenant ignorance. Tenants will tend to know if they have a rogue landlord. They will certainly notice, for example, if they are sharing five to a room. Instead the problem is that the tenant is complicit – for instance due to being an illegal immigrant or only being able to afford a low rent.
Licensing doesn’t solve the problem – indeed it makes it slightly worse in that it pushes up the rents charged by legitimate landlords making their properties still less affordable to those trapped in squalor.
Some councils will grandly retort that the scheme “only costs £2 or £3 a week”, as it is spread over five years. But an extra £3 a week rent for a low income tenant on a tight budget is not so trivial a matter. Also the cost is higher as there will be the admin cost to the landlord. Landlords will be more likely to use agents to cope with it all for them – which tends to push up costs.
Furthermore there will be the impact of higher rents due to the reduction of good, well managed accommodation as a result of the extra charge distorting the market. Consider if someone is going abroad for six months or a year and is inclined to rent out their house while they are away. They would have to pay the full £500 for the five year licence as well as filling in a ton of forms. They might decide not to bother.
The Scottish Government is already declaring war on the private rented sector. The new regulations they are imposing will bring in inflexibility. It poses a threat to the future of the Edinburgh Festival as the availability of temporary accommodation could dry up.
Designating a particular area a Designated Licensing scheme can create a stigma, discouraging property developers from coming forward to build new homes. This was why Manchester City Council abandoned their scheme. The Council added:
“Both the legislation and the City Council’s approach to introducing Selective Licensing (SL) have created difficulties. Members and landlords have rightly criticised the scheme as being overly bureaucratic, with too much effort focussed on the paperwork and administration and not enough on tackling the poorer landlords through enforcement and prosecution.”
One of the supposed benefits of these licensing schemes is ensuring that landlords require good conduct from their tenants. Where tenants are involved in anti-social behaviour I am all for them being evicted. It is argued that the licensing will help – as landlords will be obliged to get rid of problem tenants in order to keep their licence.
The trouble is the practicalities are not thought through. If required to evict a tenant for anti-social behaviour (for example, noise) the landlord will tend to seek vacant possession serving a Section 21 Notice rather than a Section 8 Notice identifying the grounds for possession. The former is simpler and cheaper. Reposession is a formality rather than a matter of doubt. No reason needs be given for serving a Section 21 Notice. Thus once thrown out the tenant can approach the local authority for assistance to be re-housed.
With the Section 21 Notice nobody need offer evidence against an anti social tenant – who can then carry on being housed by the Council a few streets along.
There is also the risk of malicious claims of anti-social behaviour being made, resulting in tenants losing their tenancies. The Council tells the landlord they have had complaints. Under the Selective Licensing system hearsay evidence is enough for them to demand an eviction. The landlord must comply, even if he believes the tenant to be innocent, or the landlord will be banned.
A better way is for councils to use their existing powers – such as Interim Management Orders. They can still secure an eviction but the case must be proven. That protects the innocent. It also means that the guilty are proven guilty.
Of course when landlords – or their tenants – are engaged in criminal behaviour there are already powers available to councils to act.
No doubt they could make better use of those powers and there could be ways that those powers could be usefully strengthened.
Nor do councils need a licensing scheme to discover who owns a property. A Land Registry search is a quick and easy way to do this – and one that can identify the owners of the properties that really need to be targeted for enforcement action.
But these extra licensing schemes are not of any benefit. They punish good landlords with more admin and good tenants with higher rents. Councils get a new revenue stream and claim to be “doing something”.
Meanwhile too many of the law breakers continue to be ignored.