How to avoid a hefty fine from selective landlord licensing

Old licensing schemes can sneak up on you

Though you may not have heard of it, the Selective Landlord Licensing Scheme has been around since 2006. Under the scheme, a local authority can insist that you register all your buy-to-let properties in its borough with it.

The scheme was originally set up to ensure landlords of rental properties in deprived areas keep those properties to a satisfactory standard. Now, however, it appears to be a money raiser for cash-strapped local authorities. If a local authority adopts the scheme, you are obligated by law to obtain a licence. And you’ll be charged for it – per property.

If you fail to get the correct licensing, you could be fined as much as £20,000. With this size of the penalty, it’s essential that you know whether you are required to license your properties or not.

Where can selective licensing be introduced?

Local authorities can designate the whole district or part of the district for selective licensing, subject to certain criteria being met. These are that:

  • The area is an area of low housing demand (or is likely to be)
  • The area is one where anti-social behaviour is a persistent problem

Also, the local authority might consider:

  • The average condition of homes in the area
  • High levels of migration
  • High level of deprivation
  • Crime rate is high

Yes, apparently obliging landlords to pay for Landlord Licences will lead to a reduction in crime and anti-social behaviour!

What if your buy-to-let property is in a Selective Landlord Licensing area?

If your property is within a designated Selective Landlord Licensing area, you will have to apply to the local authority for a licence. The local authority is allowed to charge what it likes, but the average is around £500 per property. If you own several properties in a designated area, you might get a discount for a bulk purchase!

When making the application, you’ll need to provide a ream of supporting information about the property to show that it complies with:

  • Gas safety regulations and that gas appliance are regularly checked and have a gas safety certificate
  • Fire extinguishers and smoke alarms where required
  • Furniture and furnishings fire safety standards
  • Required standards for internal and external maintenance
  • Electrical equipment regulations

 

You will also need to obtain an Energy Performance Certificate, a check for Legionnaires’ disease, and show that you have conducted the appropriate right to rent immigration checks. Licences last for five years.

Just to make things a little more complicated, local authorities can have their licensing procedures in place, so long as they are within the law. In other words, the process varies from one local authority to another.

Can Ezytrac apply for licences for you?

In the majority of cases, yes, we can. The applicant is usually the person in control of the property. It is commonly the person who receives the rent (the owner or landlord) but can also be the investment property manager employed by the property owner.

Who pays for the licence?

You do, but, like so many short-sighted, hair-brained, politically-motivated schemes today, the cost will eventually fall on those the scheme seeks to benefit.

Why should you foot the bill for this? Your budget may already be tight, and the tenant doesn’t have to live in your property. In reality, all that is going to happen is that you will increase the rent to cover your increased costs. If they want to live in your property, then they will have to pay the price of you becoming licensed.

How do you know if your properties need to be licensed?

Ignorance is no excuse under the law. If your property or properties should be licensed and they aren’t, you could be hit with that extortionate fine (per property). There are two ways to establish if your properties must be licensed: first, contact the local authority and ask them; second, ask us!

Can you get an exemption from the need for selective landlord licensing?

There are some exemptions available, but most wouldn’t apply to landlords of properties let as single-family dwellings. Fortunately, if you’ve inadvertently found that you own a property in a selective landlord licensing area, the local authority is likely to be lenient and grant a Temporary Exemption Notice (TEN). A TEN lasts for three months, during which time you will need to put things right – either ensure that the property no longer needs licensing, or get a licence!

4 steps to avoid hefty licensing fines

The last thing you need is a hefty fine because you didn’t keep on top of your property portfolio. Here are four things you should do:

  1. Keep a constant eye on local authority websites and property news where your properties are located.
  2. When a local authority designates an area as a selective landlord licensing area, don’t delay in taking appropriate action.
  3. Make sure that you maintain your property in good condition.
  4. Fulfil all your landlord obligations (gas safety certificates, smoke alarms, etc.).

Most of these requirements under selective landlord licensing simply put into law what you are already doing as a good landlord. But it’s another piece of red tape that you must cut through, and if you don’t it’s going to be costly. Contact one of the Ezytrac team today on  +44  01522  503  717, and we’ll help you devise a strategy to ensure you don’t get hit by an unnecessary fine.

Yours in effortless property management,

Nick Rossington

About the Author:

Nick Rossington
Nick has been with the group since 2009, joining as director of financial services and appointed as managing director of Ezytrac Property Management in 2013. Nick has a background in account management, property management and is a qualified financial adviser. Since taking on the role of MD of Ezytrac, Nick has overseen the doubling in size of the property portfolio under management and taken great pride in helping the business gain its Association of Residential Letting Agents (ARLA) accreditation. Being members of ARLA shows the company has the necessary standards and professionalism and Ezytrac encourages all staff to take the ARLA professional qualifications to ensure that all in the business are at the forefront of industry developments and working to the highest standards possible.Away from work, Nick is married with 3 children and keeps relatively fit by going to the gym and running (when injuries allow). Nick has completed 2 marathons and numerous half marathons and 10ks.