Local authority rules for selective licensing schemes

An authority may designate either the whole or a part of its district as subject to selective licensing of residential accommodation.[1] Properties let by local authorities and private registered providers of social housing (PRPSHs) are exempt from the licensing requirements.

Before making a decision to introduce selective licensing the local authority must:

• consult with those who are likely to be affected, including those who live, work or operate businesses in adjoining local authority areas where they will be affected[2]

• consider whether there are other effective methods of achieving the intended objective[3]

The authority has a wide discretion as to how the consultation process of persons likely to be affected by the designation is carried out; the nature and extent of its duty to consult is to take 'reasonable steps to consult', rather than 'all steps' or 'all reasonable steps' to consult every person likely to be affected, as long as the consultation is widely publicised using a variety of channels of communication.[4]

Department for Communities and Local Government (DCLG) non-statutory guidance explains the criteria for making a selective licensing scheme.

Approval by the Secretary of State

A decision to designate an area subject to selective licensing must be approved by the Secretary of State, unless they fall under general approval.[5]

Local authorities are allowed to designate an area for selective licensing without the Secretary of State's approval, provided there is a minimum 10-week consultation period.[6] A general listening and engagement exercise does not constitute consultation for this purpose. The 10-week period does not commence until the local authority produces a draft proposal identifying what is to be designated and its consequences.[7]

With effect from 1 April 2015, general approval is given for selective licensing scheme which would cover less than 20 per cent of the authority's area, or affect fewer than 20 per cent of privately rented homes in the authority's area.[8]

Schemes which do not meet both of these conditions require consent from the Secretary of State.

Selective licensing can come into force no earlier than three months after the designation has been approved or it falls under the general approval.[9]

With effect from 27 March 2015, in order for a local authority to introduce a selective licensing scheme it is requirement that the area has a high proportion of property in the private rented sector let under assured tenancies, including assured shorthold tenancies, and licences.

The private rented sector does not include properties let by PRPSHs.[10]

DCLG guidance advises that a high proportion means more than 19 per cent. This figure is based on the English Housing Survey 2013/14 and local authorities are advised to consult the latest available English Housing Survey.[11]

In addition, it also a requirement that one of the following conditions must be met. The local authority's area:

• is an area of low housing demand[12]

• has a significant and persistent problem of antisocial behaviour[13]

• has a significant number of privately-rented properties in a poor condition[14]

• is experiencing an influx of migration. Migration refers to movement within the country or from overseas[15]

• has high levels of deprivation[16]

• suffers from a high level of crime[17]

Each condition is considered in some detail in the DCLG guidance.[18]

Before granting a licence, the authority must be satisfied that the:[19]

• proposed license holder is a fit and proper person and is the most appropriate person to hold the licence

• proposed manager of the property (if different from the licence holder) is a fit and proper person

• proposed management arrangements are otherwise satisfactory

The tests for being a fit and proper person and of satisfactory management arrangements, although in a different section of the Housing Act 2004,[20] are the same as for the licensing regime for HMOs.

Even when all the conditions above are satisfied, the granting of a licence and its precise terms and duration is discretionary.

Breach of planning control

An authority is entitled to take into consideration the planning status of a dwelling when deciding whether or not to grant a licence and when considering the terms of that licence.

In a case where a landlord had applied for a licence for a property that he had converted to residential use without planning permission, the authority was entitled to refuse the licence, or to grant it for a limited period of time so to allow the landlord to resolve the planning issue and then reapply.[21]

Licenses are non-transferable. A new licence must be applied for if the licence holder ceases to be involved in the management of the property.

Mandatory conditions

The following are mandatory conditions that must be attached to every licence:[22]

• the production of a gas safety certificate (if there is a gas supply to the house)

• keeping any electrical appliances and furniture in a safe condition

• the installation of smoke alarms in proper working order

• a requirement that the licence holder supplies the occupiers of the house with a written statement of the terms of occupancy

• a requirement that the licence holder obtains references from persons wishing to occupy the house

• such other conditions as may be imposed by regulations, for example the provision of Energy Performance Certificates

Discretionary conditions

The local authority can impose further conditions regulating the management, use or occupation of the dwelling, including:[23]

• restrictions or prohibition on the use or occupation of particular parts of the house

• a requirement for the landlord to take reasonable steps to prevent antisocial behaviour by occupiers or visitors

• attend a training course in tenancy management[24]

The Court of Appeal has held that management of the dwelling in this context refers only to operational matters such as who is responsible for its upkeep and does not refer to whether facilities and equipment are provided. A local authority could not, for example, require provision of carbon monoxide detectors in the conditions of a selective licence. However, where facilities such as carbon monoxide detectors were present it can require, as part of its ability to specify conditions around the management of the dwelling, the licence holder to specify whether the landlord or tenant is responsible for their functioning.[25]

Licence duration

Licences can be granted on properties for a maximum of five years.[26]

A local authority can have a policy that says it will consider matters relevant to the question of whether a landlord is a fit and proper person in deciding the duration of the licence to be granted to any individual landlord. However, the extent to which such matters are relevant depends on the facts of the individual case.[27]

Revocation of a licence 

Licences may be revoked:[28]

• where there has been a serious breach or repeated breaches of a condition of the licence

• the license holder is no longer a fit and proper person

• the property becomes structurally defective

Fines and penalties 

Where a property should be but has not been licensed, or a license has been obtained but its conditions are breached, a range of sanctions may be available.

These are:

• offences can be punished on conviction by a fine[29]

• a local authority can impose a civil penalty of up to £30,000 as an alternative to prosecution[30]

• a rent repayment order (RRO) can be obtained but only in respect of a period where a property has been let unlicensed when it should have been licensed[31]

• the landlord could be subject to a banning order [32]

• the landlord cannot serve a section 21 notice requiring possession of an assured shorthold tenancy during the unlicensed period[33]

A tenancy granted by a landlord who has committed an offence relating to the licensing of a property is a lawful tenancy.[34] The tenant’s obligation to pay the rent is binding. To terminate the tenancy a landlord must follow the lawful procedure for ending the type of tenancy granted.

In one case, a landlord owned a building containing 22 flats and had not applied for a licence. The local authority served separate fixed penalty notices for breaches in five of the flats. The landlord submitted that only one penalty should have been imposed covering the entire building. The Upper Tribunal held that the landlord could be subject to separate fixed penalty notices, as each flat was a dwelling and the authority has flexibility in how it carries out its licensing functions.[35]

Local authority policy

The local authority's approach to breaches of the selective licensing regime may depend on the wording of its policy. In one case, the Upper Tribunal held that a landlord who had acted promptly after being notified of the selective licensing requirement and had used a professional letting agent to manage the letting was not liable for a civil penalty for the period when the property was unlicensed, because the local authority had not followed its own policy of attempting to resolve the matter informally first.[36]

In all cases where there is a right of appeal, the appeal is to the First-tier Tribunal (Property Chamber).[37]

All appeals must be made within 28 days of the notice of the decision.[38]