A Simpler Selective Licensing System for Landlords is Needed, says PayProp

PayProp, the automated rental payment provider, has stated its opinion that as part of the Government’s current review of selective licensing schemes, it might be beneficial if a simpler system for landlords is considered.

The company believes that a consistent landlord licensing policy may be more effective and easier to enforce.

Rental Standards

Does licensing contribute to the improvement of current rental standards? The Ministry of Housing, Communities and Local Government (MHCLG) has recently announced its plan to assemble a panel of independent commissioners, which will be responsible for gathering evidence on existing selective licensing schemes from key stakeholders.

The aim of the review is to determine whether the schemes currently in place have managed to achieve the aim of improving the safety of tenants, as well as overall standards in the private rented sector (PRS).

2006 saw the introduction of selective landlord licensing schemes, and allow local authorities to require landlords within a designated area to hold a licence for each rental they own. This can usually cost around £500 per property.

The aim of selective licensing schemes is to not only limit overcrowding, but to reduce anti-social behaviour. They are in operation throughout the country, with well-established operations in several London locations, as well as cities further north, such as Leeds and Liverpool.

Neil Cobbold, chief operating officer at PayProp in the UK, has said: “There is certainly a place for selective licensing in the PRS but 12 years after being introduced, it’s the right time to review its effectiveness.

“The review comes at a particularly pertinent time when considering the extension of Houses in Multiple Occupation (HMO) licensing being introduced in the autumn.”

Improvement of Enforcement

As it stands, selective licensing schemes are enforced by local authorities. They have the ability to issue significant fines to landlords who fail to comply.

“One of the biggest challenges for selective licensing is enforcement and having the required resources to operate schemes effectively,” Cobbold explains.

“Implementing a ‘one-size-fits-all’ approach could make projects easier to enforce and level the financial playing field for landlords.”

“What’s more, partnering licensing schemes with initiatives like the Rogue Landlord and Agent Checker in London as well as the national blacklist of criminal landlords could help them be more effective in achieving one of their main objectives – identifying rogue operators and raising PRS standards.

“We hope these are the kinds of issues that will be explored as part of the ongoing review,” he says.

Update due in autumn

The MHCLG stated during its announcement of the licensing review that a presentation of the full findings would not be made available until spring 2019, however, it does plan to release an update on the review’s progress at some point this autumn.

Elsewhere in the development of licencing schemes, Houses in Multiple Occupation (HMOs) will see a change in the specification for the mandatory licencing scheme. From October onwards, it will be extended to include all properties let to five or more people, from two or more households. An estimated extra 160,000 properties across the country will require this licence.

Neil Cobbold said: “The proposed update on the review looks like it will be coming at the right time. Prior to the extension of mandatory HMO licensing, it will be interesting to see what stakeholder feedback the review has taken on board and whether there are plans to bring selective licensing and HMO licensing under a similar framework.”

Feedback from agents

PayPop has stressed the importance of agents providing proactive feedback. Cobbold commented: “Letting agents could be among the most helpful stakeholders in this process. This is due to their significant client bases and the likelihood of their having a range of different experiences of selective licensing over a number of years.”