United Kingdom

Will the Renters (Reform) Bill end selective licensing schemes?

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Local councils are preparing to fight for selective licensing after the Renters (Reform) Bill comes into force – and a group of rental industry organisations, including PayProp, is helping the government find a fair way forward for local rental regulation.

As part of the Renters (Reform) Bill, the government has committed to a review of selective licensing schemes to prevent duplication with the new national Property Portal. When questioned in Parliament, Under-Secretary of State for Levelling Up Jacob Young said that there were no plans to totally scrap selective or HMO licensing (as was called for by a group of backbench Conservative MPs), but they could be scaled back to solely target local issues.

Housing sector organisations weigh in

Removing or restricting selective licensing schemes could take away a significant source of funding for councils. Fees usually range from £500 to £1,000 per property for a five-year licence, the maximum length of a selective licensing scheme.

The Local Government Association (LGA) has warned that the additional funding included in the Renters (Reform) Bill (from being allowed to keep the money from new landlord fines introduced in the Bill) won’t be enough to cover councils’ new enforcement duties, even if selective licensing stays.

To close the gap, they recommend allowing councils to set up large selective licensing schemes without needing central government permission, and increasing the maximum fines that local housing authorities can impose from £5,000 to £30,000.

But individual landlords and organisations like the National Residential Landlords Association (NRLA) say that all selective licensing schemes do is push up rents. According to NRLA research, there is little to no correlation between licensing schemes and improved housing outcomes (although other studies have found that well-run schemes can improve housing quality). Critics add that keeping schemes in place while requiring landlords to abide by national standards could also increase the regulatory burden on the PRS.

A better way forward?

Licensing PropTech firm Yuno arranged an industry roundtable event on 25 April after the government announced a review of licensing schemes and how they could operate with the new PRS database. The event was attended by legal experts, letting agents, and industry suppliers, and PayProp and Reapit were invited to take part as recognised thought leaders in the field.

Following an intense first session, the group plans to put forward its list of recommendations to the government. These will not only cover how the PRS can uphold transparency and high standards once the national rental database comes into effect, but also how monitoring and enforcement can be sustainably funded.

Other regulation stories

Landlords and estate agents seek further changes to Renters’ Reform Bill as it returns to the Lords – Housing Today

Estate agents are ‘manipulating property sales’ by failing to pass on offers to buyers – Property Industry Eye

Landlords warned over evictions paperwork ahead of landmark judgement – LandlordZONE

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