One of the more complex sides to life as a landlord is the subject of Licensing. There is little consistency in the rules across different locations and there are many different schemes to navigate. Meanwhile if landlords fail to comply with complex and ever changing legislation, then they could be fined up to £30,000.
We’ve taken a look at the key facts around the two different types of license requirements:
Mandatory licenses for HMOs (Houses of Multiple Occupation)
Where a property is classed as an HMO it needs to be licensed by the Local Authority. Properties must be inspected to ensure there are no health and safety risks before the license is granted. Landlords must provide copies of annual gas safety certificates, conduct electrical safety tests and install smoke alarms on each floor. Additionally, if any rooms have a coal fire or wood burning stove they must have a carbon monoxide alarm.
However, from 1st October the definition of an HMO is changing. Until this date, a property is classed HMO if it was let by five or more tenants that form two or more households; who share a kitchen, bathroom or toilet; in a building that is more than two storeys high. But from 1st October the definition is changing and landlords who rent a property to five or more tenants from two or more households - regardless of how many floors the property has - will become subject to mandatory licensing. The Government has estimated some 160,000 properties could be impacted.
Selective Licensing was introduced in 2006 to grant Local Authorities greater powers to address the impact of poor quality private landlords, and anti-social tenants. The scheme was intended to raise standards in the private rented sector, and the rationale for not having a nationwide licensing scheme was that only councils in areas badly impacted by persistently low housing standards had the power to take enforcement action, without adding unnecessary burden on the majority of landlords.
It was always expected that the number of Local Authorities with a selective licensing scheme would be limited, but the number has grown substantially and there are now 146 different schemes in operation. The penalties could be costly, therefore it is vital landlords find out whether they are in an area that currently has - or is considering launching - a licensing scheme. However, this information isn’t easy to find out as there is no publicly available central database.
Darlows is now able to provide a proactive and highly cost effective solution for landlords which tracks schemes and consultations, checks registered properties against the current legislation and registers the property with the relevant Local Authority. The service is provided nationally, which is particularly useful as many investment landlords have properties across several geographic locations, and with the rapid increase in new licensing schemes there is a real risk that landlords may not be aware of a looming change in regulations.
If you would like to discuss any of our licensing solutions we can provide, please contact our at InvestorServicesTeam@spicerhaart.co.uk on 07960 120267.