June 16, 2022
Should my rental home have a property licence?
In the UK, property licencing is a means by which councils can exert a certain level of control over the quality of landlords and rented properties. Also, the UK’s current property license rules can be challenging to wrap your head around.
To start with, each country and region of the UK has its own policies when it comes to property licencing for landlords. Sometimes landlords themselves are required to be licensed and registered with a scheme. Other times, it’s the buy-to-let property that must have a licence or be registered. In some cases, it’s both.
Below, we take a look at the three different types of property licences and their respective fees to get you in line with the laws as a landlord.
1/ Mandatory HMO licencing scheme
Under the Housing Act 2004, local authorities in England have the power to assign their own licencing requirements to particular areas. Since October 2018, any property housing five or more people, forming two or more households, must be licenced. Regardless of the number of storeys.
The only mandatory licencing scheme, however, is for HMO (Houses in Multiple Occupation) rental properties. You will require this in the case of:
- 5 or more people living there
- 2 or more households
- Amenities such as a kitchen, toilet, or bathroom being shared
- It is their only or main residence and rent is payable
- It is not a purpose-built flat in a block where there are three or more purpose-built flats
Planning permission for change of use from dwelling to HMO is also necessary if there are seven or more people living in the HMO. You’ll have to apply for planning permission separately from an HMO licence.
The fee for a mandatory HMO licence depends on the number of bedrooms. In 2022/23, the fee is £1,300 for a five-bedroom HMO plus £160 for each additional bedroom.
2/ Selective licencing
Such schemes are only introduced in areas with problems with low housing demand. Or significant and persistent issues of anti-social behaviour.
This form of licencing aims at improving conditions where the levels of antisocial behaviour, rubbish nuisance and noise issues are above average. It can cover all privately rented properties in a specific area.
In areas where selective licensing applies, landlords must apply for a licence to rent out a property. This enables the council to check if you are a fit and proper person to let out homes. It also allows them to make other stipulations regarding management of the property. And suitable safety measures.
A number of areas in London have selective licensing schemes in place. You can find out more about licensing in general by reading our Landlord Licensing Guide.
3/ Additional licencing
If no selective licencing scheme is in place, then the local authorities can still impose a level of regulation on smaller HMOs in their area. Then they would use their ‘additional’ licencing powers to require all HMOs to have a licence.
An early adopter of the additional licencing scheme was the Oxford council. They required every property rented by three or more people, forming two or more households, to have an HMO licence. The cost for a standard 5-year licence is £560. Yet the amount payable can vary from £197 for a one-year renewal to £1,550 for a higher-rate new application.
As a London landlord, you’ll need to check if any additional licensing schemes are in place in the area/s where you let homes.
4/ Do’s and Don’ts
When disclosing full information, make sure to mention that you are a ‘fit and proper person’. If your application is rejected, your appeal is likely to have a better chance of success if you can show that you did not try to conceal anything.
Also, you should be aware that the amount you pay overall to secure your licence may vary, depending on:
- How long the property has been left,
- The size of the property,
- Additional training requirements,
- Whether it’s a new application or renewal,
- The number of properties you own,
- Whether you are registered with another landlord scheme
It’s also recommended that you keep your details up to date. This is in regards to your personal circumstances or the properties you let.
It’s important to find out exactly what your local council’s policies are. Indeed, councils are now able to impose a civil penalty on landlords of up to £30,000 for non-compliance. They can also issue banning orders for the worst offenders found to be flouting the law. Therefore, the consequences of not meeting the terms of your licence conditions could be severe. As such, it simply isn’t worth the risk.
With so much to factor in with regards to licencing, it’s vital that you work with an experienced letting agent. One that can ensure that you are compliant will all licensing obligations.
If you have any questions about licencing requirements for rental properties in the London area, Atkinson McLeod is here to help.
To find out more about our services and current operations, please get in touch with our expert team today. You can find out how much your home could be worth on the current market by requesting a free and instant online valuation here.