Is this the end of blanket licensing schemes?

Is this the end of blanket licensing schemes?

The NLA’s Head of Policy Chris Norris on the amendments to local councils’ powers to licence landlords and our role in securing the change.

A triumphant fist pump, but will the news be short-lived?
A triumphant fist pump, but will the news be short-lived?

When the outgoing Labour government granted local councils ‘general approval’ in 2010 to introduce selective licensing schemes without first having to have them rubber stamped by central government, it was difficult not to see it as an attempt to lock in a legacy in the wake of a potential change of administration.

What we do know is that since general approval was granted there’s been a proliferation of blanket borough- or city-wide licensing schemes that, with perhaps the exception of Newham, hasn’t actually led to any significant enforcement or improvements for tenants.

Our lobbying efforts

I’d be lying if I said it hasn’t felt like we’ve been banging our heads against a brick wall since 2010, but in September last year, the current Housing Minster invited our input on this matter. The timing couldn’t have been better: we were on the verge of bringing to fruition a body of research which we’d been compiling over the last four years. We published it recently, you can read it here. The Minister was the first to see it.

In it, we outline the boom in the number of blanket licensing schemes since 2010 and highlight a lack of enforcement action being taken by local councils. We also point out a reasonably strong correlation between the political control of a council and their tendency to license landlords. Yes, you’ve guessed it: in other words, this basically means that Labour-led councils have been the biggest beneficiaries of the general approval powers, choosing to license. Conservative-led councils on the other hand have not, instead preferring to work with local landlord communities through education and incentive-based approaches. Perhaps this isn’t that surprising, but the important thing is it serves as proof nonetheless and it’s something that’s strengthened our case no end.

What the changes mean

Since meeting with the Minister and making our case we’ve been waiting with baited breath to see what the outcome would be and naturally we were delighted that he listened.

The changes announced by the Housing Minister will mean that any council that proposes to licence more than 20 per cent of its geographical area or more than 20 per cent of privately rented homes in the local authority area will need to prove it stands up to independent scrutiny. Councils have been their own judges for the past four years and we’ve long argued that the evidence provided to ‘justify’ blanket licensing schemes have been weak and unclear. This approach should now mean that local authorities will focus their activity on areas with the worst problems and, importantly, not adopt a broadbrush approach that will have an adverse impact on good landlords.

Not penalising good landlords or tenants

And this is an important point. In his letter to announce the changes to local councils, the Housing Minister submits that the blanket licensing approach adopted by some has major drawbacks. Such an approach, he says, is disproportionate and unfairly penalises good landlords.

He also notes that the increased cost of licensing shouldered by the majority of good, compliant landlords invariably ends up with the tenant as higher rents. We’ve long been referring to schemes like these as a ‘tenant tax’ so it’s good news that this is being recognised by the powers that be.

In addition, the Minister has expanded the criteria for selective licensing to cover areas experiencing poor property conditions, large amounts of inward migration, a high level of deprivation or high levels of crime. This now accompanies the existing legal criteria of anti-social behaviour and low demand. Again, this should help ensure that local authorities have the right tools to target enforcement action appropriately.

What does the future hold?

Like a bad whiff, blanket licensing schemes have lingered in the background for long enough and this should signify their end – in the short term at least. It’s uncertain what the future will hold especially if Labour form a majority government or we have Labour/Lib Dem coalition. Although, as Stephen Williams MP (another Minister within DCLG) revealed at our recent hustings event, the Liberal Democrats do not support expansive licensing.

But we’re far from done here. Our report also makes the case for local councils to be able to keep hold of proceeds from the enforcement action they carry out, in order to incentivise and help budget for future enforcement action. Currently such funds go directly to the Treasury, so we need to continue our lobbying efforts on this front. Good landlords should not be made to foot the bill; the polluter should be made to pay.

However, in the meantime it represents good news for landlords and for tenants and it vindicates a lot of hard work behind the scenes from the NLA over the last four years. So I’m off for a cigar.

7 thoughts on “Is this the end of blanket licensing schemes?

  1. I have as usual read this blog with a great deal of interest. Whilst I have found myself completely understanding some of the issues raised by the NLA on landlord licensing, I nevertheless have made it clear that I am entirely in support of it (blanket or otherwise). This is based on my personal experience of having a number of landlords on my 22 flat block that would never have made the grade.

    So, you can imagine my delight when I learned that my own local authority, that of Waltham Forest is also set to introduce landlord licensing in the next few months or so.
    However, when I took a look a the exemptions, my hear sank because on this list are those properties leased to a local authority on a Private Sector Lease (and used as temporary accomodation) and
    nightly let schemes let to a Local Authority (and used as temporary accomodation).

    A number of landlords on my block have used both schemes (maybe more) and they are the landlords that the sector is seeking to clean up. We have had problematic tenants placed with so-called ‘rogue’ landlords’ by a number of authorities and I have been advised in the past that councils don’t have enough resources to make thorough checks on either the landlord or the properties.

    If I am right in my understanding then surely landlords who offer up their properties to local authorities should be placed under the scheme as as a matter of course, because a) combined with the lack of checks b) the pressure to meet homelessness targets in terms of re-housing and c) the continual exclusion of the freeholder and the management means that both ourselves and tenants are put at considerable risk from the lack of fitness of the properties at the outset and physical assault when tenants with drink and drugs issues create problems in our common areas which is our remit.

    I understand that councils cannot license themselves but this does not negate the fact that they are surely liable in other areas if they place tenants into risky environments and expose others like the freeholder and myself to physical danger.

    Do you have any thoughts or suggestions on the issues I have raised as all constructive input would be greatly received.

    Kind Regards

    Miss Sharon Crossland AIRPM

    1. Interesting comment, I think it raises three good discussion points;

      (i) What is licensing for?
      (ii) How effective can it be? and
      (iii) What role do private landlords play when they let through a private-sector leasing scheme/

      In the first point and second points, licensing is intended to deal with ASB or low demand. Disregarding low demand in this case it is expected that by making landlords comply with licensing conditions they will be more able (or prepared) to deal with ASB in their properties. The issue which the NLA frequently has with this assertion is that a landlord (private or social sector) is fairly limited in their options. Generally, they can only seek to end the tenancy and move the problem elsewhere. All too often licensing has a minimal impact on the behaviour of those households causing the problem in the first place.

      Turing to the final point, I think there may be some confusion about what happens when a landlord leases their property to a local authority. The reason that these properties are often exempt from licensing is that the landlord effectively removes themselves from the equation. By signing an extended (often 3 or 5 year) lease with the council they hand over management to the LA and take on a role more akin to freeholder than landlord. In fact they will not be named as landlord in subsequent tenancy agreements, this position will be filled by the LA’s managing department or agent. The local authority is responsible for finding, vetting and placing tenants and handling issues which occur.

      In respect of property condition the authority will generally apply a list of conditions which the units must meet before being accepted into the scheme – these are usually similar to, or exceeding, those introduced by licensing, although I’ve no knowledge of the scheme(s) in question.

      Overall, I think this comment demonstrates a lot of common ground with the NLA’s position. If licensing is truly focused, funded and well executed we support LA action. The problem is that it is often poorly thought through and fails to target the causes of behaviour where it occurs.

  2. I very much appreciate the response to my comments on landlord licensing. I can see exactly where the NLA are coming from and would ask that if the landlord is not mentioned on any subsequent tenancy agreement when giving up his/her property to the local authority, then surely the LA should be looking to engage with the leasehold management sector, i.e the freeholder and the resident management company?

    The Directors of the company which own our freehold have their own legal obligations to adhere to (and it is my job to ensure this happens) but the handing over of a lease (contract) that was entered into by the landlord and the freeholder/resident management company is surely NOT likely to have a clause that allows the lease to be handed over without freeholder/RM consent. Additionally there would also be no clause that requires the tenant to adhere to the terms of the original lease.

    My own lease certainly does not allow this but despite this, the freehold company is always left out of the loop and the ASB that can often occur is ignored because a) our council believe that it is down to the landlord to deal with it and b) if they are no longer named on the new lease, no wonder they put their hands up and say its nothing to do with them!

    I realise I have moved slightly off my original track but do you have any views on this?

    Many Thanks

    1. In the first instance, if the private landlord isn’t named in the tenancy, then the local authority enforcement agency should look at whoever is the responsible party i.e. their housing dept or nominated manager. If they are unable to meet their obligations then the matter should pass up the chain – eventually becoming an issue for the freeholder (if relevant). By this point a number of people/organisations may have breached their respective contracts and the superior landlord may want to enforce terms of their lease.

      The terms of individual leases (i.e. long-leases) will differ significantly between freeholders and some will certainly restrict the type of subsequent lease or tenancy a lease-holder (private-landlord) can enter into. However, this isn’t universally the case as some permit reasonably long leases.

      As with any business contractual liability and obligations become more complex the longer the chain, although ensuring everyone is well informed would go a long way to improving matters. Often freeholders and management companies are too often left out of the loop and not informed of a variety of matters which with which they should be involved but there are times when it would be helpful if freeholders/superior landlords were more proactive about their responsibilities.

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