What is selective licensing and what property certificates do landlords need?

Selective licensing is a rule that some local councils use to keep an eye on rental homes. It aims to make sure these homes are safe and well-managed. If you're a landlord, it's important to understand what selective licensing is and what property certificates you need to have.


Key Takeaways

  • Selective licensing helps improve the quality and safety of rental homes.

  • Landlords need to apply for a license if their property is in a selective licensing area.

  • Key documents like gas safety certificates and tenancy agreements are required for the application.

  • Failing to get a license can result in heavy fines and legal issues.

  • Licenses usually last for five years and are not transferable if the property is sold.


Understanding Selective Licensing


Definition and Purpose

Selective licensing is a scheme where local councils require landlords to get a license for renting out properties in certain areas. The main goal is to improve housing standards and reduce problems like anti-social behavior. This means landlords must follow specific rules to keep their licenses.


History and Legislation

Selective licensing started in 2006 under the Housing Act 2004. It gives local councils the power to introduce these schemes in areas with issues like low housing demand or high crime rates. Each scheme can last up to five years and can be renewed if needed.


Areas Covered by Selective Licensing

Not all areas need selective licensing. Councils choose specific neighborhoods or streets where they see problems. For example, some areas in Brent have selective licensing to tackle local issues. Landlords in these areas must apply for a license and follow the rules set by the council.


Criteria for Selective Licensing


Low Housing Demand

Selective licensing can be introduced in areas with low housing demand or those at risk of becoming low-demand. This helps to improve the quality and management of rental properties in these regions.


Anti-Social Behavior

Areas with persistent anti-social behavior, such as noise, vandalism, or criminal activities, may also be subject to selective licensing. This aims to create a safer and more pleasant environment for residents.


Poor Property Conditions

Selective licensing is often implemented in regions where there are widespread poor property conditions. This ensures that landlords maintain their properties to a standard that is safe and healthy for tenants.


High Levels of Migration

High levels of migration can impact local socioeconomic conditions. Selective licensing in these areas helps to manage the effects of migration and maintain community stability.

Each local authority has its own criteria and process for implementing selective licensing, and the fees can vary. Landlords in areas subject to selective licensing should be aware of these specific requirements.


Application Process for a Selective License


Required Documents

To apply for a selective license, landlords need to gather several important documents. These typically include:

  • Energy Performance Certificate (EPC)

  • Electrical Installation Condition Report (EICR)

  • Gas Safety Certificate (if applicable)


Click the link below to request quote for the EPC, EICR, or Gas Safety Certificate:

https://www.energyperformancesolutions.co.uk/contact-us


Steps to Apply

  1. Complete the application form – Fill out the selective licensing application form available online through your local council's website.

  2. Submit the required documents – Upload or attach the necessary documents as part of your application.

  3. Pay the application fee – Fees vary by council, so check the specific amount required.

  4. Await inspection – Your property may be inspected to ensure it meets the licensing conditions.

  5. Receive your license – If approved, your license will be valid for up to five years.

Once the license is granted, it cannot be transferred. If the landlord changes, the new landlord must apply for a new license.


Common Pitfalls to Avoid

  • Incomplete applications – Ensure all sections of the form are filled out and all documents are provided.

  • Missing deadlines – Submit your application before any deadlines to avoid penalties.

  • Ignoring local requirements – Different councils may have specific conditions, so always check local guidelines.


Responsibilities of Landlords Under Selective Licensing


Property Management Standards

Landlords must maintain their properties to a high standard. This includes regular inspections and prompt repairs. Selective licensing ensures that properties are safe and habitable for tenants.


Tenant Safety Requirements

Landlords are responsible for ensuring the safety of their tenants. This includes installing smoke alarms, carbon monoxide detectors, and ensuring that all electrical and gas installations are safe and regularly checked.


Documentation and Record-Keeping

Proper documentation is crucial. Landlords must keep records of all safety checks, repairs, and tenant communications. This helps in proving compliance with the licensing conditions and can protect landlords in case of disputes.

Failing to meet these responsibilities can lead to severe consequences, including fines and legal action.


Consequences of Non-Compliance


Fines and Penalties

Failing to comply with selective licensing can lead to severe financial consequences. Landlords may face fines up to £30,000 per unlicensed property. Additionally, local councils can issue rent repayment orders, requiring landlords to return up to 12 months' rent to tenants. In some cases, landlords may also be added to a national rogue landlord database, which can damage their reputation.


Legal Repercussions

Renting out a property without the necessary license is considered a criminal offense. This can result in prosecution, unlimited fines, and even jail time. The severity of the punishment often depends on the nature of the violations, such as failing to meet fire safety regulations.


Impact on Future Renting

Non-compliance can have long-term effects on a landlord's ability to rent out properties. Landlords may receive banning orders, preventing them from letting properties in the future. Additionally, failing to comply with licensing requirements can invalidate buy-to-let mortgage conditions and landlord insurance policies, making it difficult to secure financing and protection for rental properties.


Fees and Funding for Selective Licensing


Cost Breakdown

Selective licensing fees can vary greatly depending on the local council. On average, landlords in England face rising costs of around £700 for these licenses. However, this amount can differ significantly from one area to another.

Council

Average Fee

Council A

£650

Council B

£750

Council C

£700


Use of Fees

The money collected from selective licensing fees is used for specific purposes. These fees are ring-fenced, meaning they are allocated solely for enforcement and inspections of rented properties. This ensures that councils do not profit from the fees but instead use them to improve property standards in the area.


Financial Impact on Landlords

The cost of selective licensing can be a significant burden for landlords, especially those with multiple properties. It's important to budget for these fees to avoid any financial strain. Additionally, landlords should be aware that non-compliance can lead to hefty fines and other legal repercussions.


Exemptions and Special Cases


Properties Not Requiring a License

Certain properties are exempt from needing a selective license. The main exceptions include properties that require a different type of license, such as:

  • Mandatory HMO License: Needed if the property houses 5 or more persons who are not all part of one household.

  • Additional HMO License: Required in many council areas for HMOs with 3 persons who are not all related.


Temporary Exemptions

There are also temporary exemptions available under specific conditions. For instance, if a property is being sold or if major renovations are taking place, a temporary exemption might be granted. These exemptions are usually short-term and must be applied for through the local council.


Appealing a Licensing Decision

If a landlord believes their property has been wrongly included in a selective licensing scheme, they have the right to appeal. The appeal process typically involves submitting a formal request to the local council, outlining the reasons for the appeal. It's crucial to provide all necessary documentation to support the case.

Landlords should be aware that failing to comply with licensing requirements can result in significant penalties, including fines and legal action.



Conclusion

In summary, selective licensing is a crucial tool for improving rental housing standards and reducing anti-social behaviour in designated areas. Landlords must be aware of the specific requirements and ensure they comply with local council regulations to avoid hefty fines and penalties. By obtaining the necessary property certificates and adhering to the licensing conditions, landlords can provide safer and better-managed homes for their tenants. Staying informed and proactive about selective licensing can help landlords navigate the complexities of property management and contribute to the overall well-being of the community.


Frequently Asked Questions

What is selective licensing?

Selective licensing is a scheme where landlords must get a license to rent out properties in certain areas. This helps local councils ensure that landlords meet specific standards for property management and tenant safety.

How do I know if my property needs a selective license?

You need to check with your local council to see if your property is in an area that requires a selective license. Some councils have online tools or websites where you can enter your address to find out.

What documents do I need to apply for a selective license?

To apply for a selective license, you typically need an Energy Performance Certificate (EPC), a gas safety certificate, and an Electrical Installation Condition Report. Check with your local council for a complete list of required documents.

What are the consequences of not having a selective license?

If you rent out a property without the required selective license, you could face fines up to $30,000. You might also have to repay up to 12 months of rent to your tenants and could be banned from renting out properties in the future.

Are there any exemptions to selective licensing?

Yes, some properties are exempt from selective licensing. These can include holiday lets, business premises, and student housing managed by a university. Check with your local council for specific exemptions.

How long does a selective license last?

A selective license usually lasts for five years. If the property owner changes, the new owner must apply for a new license.


Energy Performance Solutions have been helping many landlords with the inspections required for the selective licensing (EPC, EICR and gas safety). For more information or to book any of these inspections, please find our contact details below:


Kind Regards


Daniel Pina
Director & Energy Assessor | Energy Performance Solutions LTD
Address: 128 City Road, London, EC1V 2NX
Web: www.energyperformancesolutions.co.uk
Phone: 02071013460