Nottingham City Council to consult on Selective Licensing of ALL rental properties
Letting agents in Nottingham, Slater & Brandley, have created a series of ‘Investor Spotlight’ articles specifically aimed to provide professional landlords with ‘off-market’ information on rental yields, capital growth, tenant demographics and property investment best practice. These articles are based on 20+ years of first hand Nottingham property experience.
In this months Investor Spotlight article we are taking a slightly different tact and coming to you with some important news for landlords owning houses within the Nottingham City Council area. In a bid to tidy up the private rental sector (PRS) in Nottingham, the council are currently proposing a scheme whereby all rental properties – around 30,000 in total – will require licences in order to be let to tenants. Should the scheme be approved, this could start as early as Spring 2018.
What is Selective Licensing?
Selective Licensing has been introduced in a bid to address the impact of poor quality private landlords and tackle anti social behaviour among tenants. Originally outlined within the Housing Act 2004 (alongside HMO licensing regulations) but deemed an optional approach for Local Councils, there has been increasing pressure from Government officials to bring forward Selective Licensing as a means of trying to clean up the UK rental property market. The idea is that by introducing Mandatory Licensing landlords will be forced to ensure their properties reach a certain quality standard before being able to rent them out.
Who will this affect?
The consultation is proposing that all privately rented homes within the Nottingham City Council area be licensed on an individual basis and at a cost of around £600 per license (per property), with discounts of around £150 being made available for landlords that are accredited by the council backed DASH or UNIPOL schemes. Once granted, each license will remain in place for 5 years and will require landlords to meet a number of safety and occupation standards. An important point to note is that landlords who currently hold valid HMO or Additional Licenses will not be required to obtain a further Selective License as part of the process.
According to the official consultation paper Nottingham City Council received over 4,500 complaints relating to private sector homes between April 2013 and December 2016. It is believed that by introducing new reforms this number can be reduced and make Nottingham both a safer and better place to live. That being said, the idea behind this type of licensing is not entirely new to us – in January 2014 an Additional Licensing scheme was brought into place for any property housing three or more unrelated people and falling within a certain boundary of the City Centre – and guess what, complaints have actually risen since that happened! This is causing many to now ask if a citywide Selective Licensing scheme is really likely to work.
Why will it cost £600?
It is being proposed that around forty new people are to be employed in order to administer the scheme and the fee is intended to cover the costs involved in this. Portfolio landlords are likely to be hit the hardest, with each individual property requiring a licence and no possibility of being able to obtain one licence which would cover all properties owned by an individual or company (a much fairer option in our opinion).
How can I prepare?
If the scheme does get the go ahead then you can rest assured that things will start moving rather quickly. Requirements in obtaining the licence are likely to include the provision of all relevant safety documentation including gas, electricity, fire safety and legionella testing, and inspections will be carried out on most properties to ensure that general living standards are being upheld. We are recommending that landlords start preparing now in order to avoid a barrage of costs should the scheme be approved by the Secretary of State. One way you can also get ahead is by obtaining either UNIPOL (student properties) or DASH accreditation – both of which are free – in order to benefit from a discount of around £150.00 on the licensing fee.
What do we think of it?
Having compiled some of our own research based upon property appraisals throughout 2016 it is quite clear that the standards in some rental properties need to improve (and in some cases dramatically). We turned down around 10% of the properties we were offered for management alone last year and can clearly see a requirement for improvement in areas. What we are opposing is that those who will be hit the hardest by the scheme are likely to in-fact be good, honest landlords who already provide high quality accommodation and do things properly. We are of the opinion that ‘rogue landlords’ will remain just that and simply avoid the scheme altogether. The question therefore has to be asked – who really benefits from this?
Whilst Nottingham City Council are drawing on complaint figures as part of their argument, we are yet to see further evidence of what the complaints entail and how many have been valid and ultimately upheld. Many people we have spoken to are asking questions on whether or not the scheme is really likely to improve the overall problem or if it is simply another revenue generator for a Council that has struggled to administer the concept on a scale of less than one tenth of the one being proposed.