15th December 2021

What is Licensing being introduced to the Private Rented Sector?

What are the different Licence types?

Mandatory HMO Licence - A Mandatory HMO licence is required for any property that is occupied by 5 or more people living together as 2 or more separate households and which meets the standard, self-contained flat or converted building HMO test in Section 254 of the Housing Act 2004.

Additional HMO Licence - An additional HMO is any HMO that does not require a mandatory HMO licence. This includes properties occupied by 3 or 4 people living together as 2 or more households and which meets the standard, self-contained flat or converted building HMO test in Section 254 of the Housing Act 2004.

Furthermore, an additional HMO licence could be required for any building that has been converted into and which consists entirely of self-contained flats, less than two-thirds of which are owner-occupied, and where the building works to convert the property into self-contained flats did not meet and still do not meet appropriate building standards. Such properties are known as Section 257 HMO’s.

Selective Licence - Selective licensing applies to all privately rented properties occupied by single households located in specific areas designated by each Local Authority.

Certain Local Authorities have already introduced selective Licensing to specific areas whilst others are in the consultation process before introducing it.  Some of the areas already introduced are:

LB Islington – Finsbury Park ward

LB Enfield – 14 designated areas

LB Harrow – 4 wards

LB Hackney – 3 wards

LB Ealing  - 5 wards

LB Southwark – 5 wards

LB Tower Hamlets – 3 wards

LB Hammersmith and Fulham – 128 specific streets

What is a household?

A household is either a single person or members of the same family who live together. A family includes people who are:

• married or living together - including people in same-sex relationships
• relatives or half-relatives, for example, grandparents, aunts, uncles, siblings
• step-parents and step-children
• a foster child living with a foster parent (s) is treated as living in the same household

Why do Local Authorities license properties?

Property licensing helps the Local Authorities to regulate the condition and management of private rented properties in their borough. The aim of the license is to:

• improve property standards and management
• help address anti-social behaviour (ASB) issues
• protect local residents from rogue landlords

What are the penalties for unlicensed properties?

The Local Authorities have an enforcement policy how to deal with breaches of the legislation. The service also has a policy which details specifically with how to deal with offences related to property licensing. Operating an unlicensed property that should be licensed can result in a criminal conviction and unlimited fine or a Financial Penalty of up to £30,000.

Any convictions can affect the fit and proper person status and could therefore result in limitation in being able to manage a licensable property in future.

How much does it cost to obtain a Licence?

There is no standard fixed HMO licence cost, the fee differs between Local Authorities. Typically, Mandatory and additional HMO licences start from £750 per property with additional fees depending on number of letting rooms.

Selective Licensing also differs between Local Authorities and ranges between £500 and £900 per property.  In most cases, a licence is valid for 5 years.

Do you need further information?

If you would require further information on the subject, please contact Panicos Loizides on 020 7813 9155 or pl@questpc.co.uk