Local housing authorities (LHAs) in England and Wales have the power to designate the whole or any part or parts of their area as subject to “selective licensing” under Part 3 of the Housing Act 2004 (2004 Act). This means that privately rented properties must be licensed if those properties fall within such an area. Although LHAs have been slow to exercise this power, selective licensing is increasingly becoming an issue that Managing Trustees need to bear in mind when they consider letting residential property.
What are the reasons behind selective licensing?
Advocates of selective licensing claim that it will help LHAs to address specific social and housing problems arising in particular areas. LHAs can designate areas for selective licensing that suffer low housing demand, significant or persistent anti-social behaviour, high levels of crime, migration or deprivation, or poor property standards. Licensing is intended to help raise standards in the management of privately rented properties as well as having a positive effect on the local community and housing stock in general.
How does selective licensing effect Managing Trustees?
The key thing for Managing Trustees to bear in mind is that if they are letting out residential property in an area that their LHA has designated for “selective licensing”, they must apply for a licence before entering into a tenancy. It is therefore important to ascertain whether the proposed rental property lies in such an area. As there is no central register Managing Trustees will need to ask their LHA or letting agent, or look on their LHA’s website. Please note that the areas can be very specific and while the next street may be subject to selective licensing, the street in which the property is located may not. The LHA’s website should include maps showing any designated area or areas.
Managing Trustees need to be aware that failure to obtain a licence is a criminal offence and fines of up to £20,000 can be imposed. Managing Trustees without a licence would also be unable to regain possession of a property using the quick and relatively easy procedure under s.21 of the Housing Act 1998.
Managing Trustees with property in a designated area are not only required to obtain a licence but need to comply with the conditions imposed under that licence. These go beyond the general statutory obligations placed on landlords. There are mandatory conditions set out in s.90 of the 2004 Act including to supply a gas safe certificate annually and produce a copy to the LHA, to keep any electrical appliances and furniture which the landlord supplies in a safe condition, to install smoke alarms and ensure these are maintained in good working order, and to obtain references. In addition, LHAs can elect to impose further appropriate conditions to regulate management of the property. These can change between licences. Such conditions may include providing a 24 hour contact number to deal swiftly with problems, ensure there is no overcrowding or deal with anti-social behaviour. Managing Trustees will be anxious to ensure any conditions are met to avoid loss of the licence and from incurring a fine up to £5,000. Details of standard conditions imposed in different areas can be found on LHA websites.
How do we obtain a licence for Methodist property?
Each area is slightly different but the general rule is that the licence is obtained by the person who has control over the property, which in the case of Methodist property would usually be the Managing Trustees. We have found that it is often Circuit Stewards or the Superintendent who apply. Please note that licences are non-transferable meaning that if somebody leaves the Circuit, a new licence will be required. Unlike the position with Rent Smart Wales, it is the Managing Trustees who need to apply for a selective licence and not TMCP. However, please notify TMCP so that TMCP Legal can provide guidance and keep a record of selective licensing and its impact across the Connexion.
Usually an application is submitted with supporting documents confirming compliance with statutory requirements and good practice such as the EPC, gas safe certificate, fire risk assessment and electrical check. Applications must also be accompanied by any fee payable. It is highly recommended that you visit your LHA’s website which should set out full details of how to apply in your area.
Managing Trustees applying for a selective licence would need to satisfy a “fit and proper” person test. The LHA must be satisfied that the Managing Trustees are fit and proper having regard to any previous convictions including for fraud, dishonesty, violence or drugs. Unlawful discrimination or contravention of housing or landlord and tenant law is also taken into account (s.89 of the 2004 Act).
How much does a selective licence cost?
Fees vary considerably with a licence costing £490 per rented property in Oldham and £750 in Croydon. Note that the fee is per property although some LHAs do offer a reduction for bulk applications. It is recommended that Managing Trustees try to ensure they are not left out of pocket and that any fees are factored into the rent payable.
Do any of the exemptions apply to Methodist property?
Exemptions to selective licensing are very limited and mainly apply to properties that are let by social landlords, business tenancies or to properties already licensed under other parts of the 2004 Act such as Homes of Multiple Occupation (HMOs). The main exemption applicable to Methodist property is likely to be where the Managing Trustees have already had to obtain a HMO licence.
The Conference Office has confirmed that Manses occupied by presbyters and deacons will not be affected. However, it is recommended that Managing Trustees speak to their LHA to check whether it is necessary to seek a specific exemption for manses that lie in affected areas. Managing Trustees have been told to apply for an exemption in some areas such as Croydon.
For properties in Wales, please note that if an area has been designated for selective licensing, some parts of Neath Port-Talbot for example, such a licence would be required in addition to the Rent Smart Wales landlord’s licence already held by TMCP.
Please check whether selective licensing applies in your area. If so, take all necessary steps to comply with your area specific licensing requirements before entering into any new tenancies. If you have manses occupied by presbyters or deacons in a selective licensing area, please check whether your LHA requires you to apply for a specific exemption.
Guidance on selective licensing requirements and procedures for particular designated areas should be available on the LHA’s website. The websites below provide good examples of LHA specific guidance and also provide links to general information on selective licensing:
For guidance on residential tenancies, please refer to the Residential Tenancies page on TMCP’s website.
The Residential Tenancy (Landlord) Guidance and Residential Tenancy (Landlord) Checklist are available setting out the charity law and Methodist law, policy and best practice requirements to be fulfilled before granting a residential tenancy of Methodist property. There are also focus notes on Statutory Requirements, managing (Residential Tenancy (During) Focus Note) and ending (Residential Tenancy (Ending) Focus Note) tenancies as well as the Rent Smart Wales Scheme in Wales.
From an article produced by TMCP Legal for Property Matters issue 17 - March 2017