Licensing has been brought in over the last decade in an effort to improve standards of both rental properties and those letting and managing them. Like so much property legislation, it has both national and local regulations, meaning one council area can take an entirely different approach to its neighbour. And with 393 local council areas within the United Kingdom – 326 in England alone - it can be very hard to keep up with what applies to you, particularly if you are a portfolio investor with properties in several different locations.
There is only one national licensing law, which relates to Houses in Multiple Occupation (HMOs) and stipulates that an HMO must be licensed if it is three or more storeys AND is occupied by five or more people, forming two or more households. However, local councils then have the power to impose additional licensing for HMOs and selective licensing for other properties, such as single lets.
Some councils further complicate matters by having different licensing schemes for different parts of their ward. In Burnley (Lancashire), for example, there are three designation areas where additional licensing schemes apply for certain streets, with schemes coming into force for a further three areas from 15th November 2016. A total of 13 schemes have been introduced to date this year in council areas across England and Wales, six selective and seven additional, with a further seven still to be introduced in the last three months of 2016.
Licenses usually last for five years and can cost anything from around £550 (additional licensing in Cardiff) up to around £1400 (Kensington & Chelsea) for an ‘average-sized’ property.
In addition to property licensing, local councils also have the power to introduce landlord licensing. This is already in place across Scotland and N.Ireland (although is sometimes referred to as ‘registration) and will be required by the end of November 2016 for any landlords owning property in Wales who want to self-manage their properties. There are currently around 40 areas in England operating these schemes, including Liverpool, which has the largest in the country and has just entered into a co-regulation scheme with the Residential Landlord Association.
Even if you’re in an area where you’re not currently required to license either your property or yourself, it’s still worth checking whether there are any plans for licensing to be introduced in the future, so you can plan ahead. You can either speak to your local council housing department or come and speak to us in your local branch. Our lettings experts are always kept up to date with all upcoming changes in legislation and can advise you both before and after purchase on the steps you need to take, and the costs involved.