This Commons Library paper explains the history and operation of selective licensing schemes for private rented properties since local authorities in England and Wales acquired the power to introduce them in April 2006.Jump to full report >>
Sections 79, 80 and 81 of the Housing Act 2004 provided for the introduction of a scheme of selective licensing of private landlords in a local housing authority’s area. The provisions came into force in April 2006 and apply in England and Wales.
Selective licensing is intended to address the impact of poor quality private landlords and anti-social tenants. It was primarily developed with the need to tackle problems in areas of low housing demand in mind – although the Act also allows for selective licensing in some other circumstances.
In an area subject to selective licensing, all private landlords must obtain a licence and, if they fail to do so, or fail to achieve acceptable management standards, the authority can take enforcement action. The London Borough of Newham introduced a selective licensing scheme covering all private rented properties in the borough in January 2013 and a number of authorities followed suit. Increased interest in licensing appears to be directly linked to the growth of the private rented sector - it is now the second largest tenure in England.
Following the issue of a General Consent in March 2010 by the Secretary of State, local authorities in England did not have to seek approval for the introduction of a selective licensing scheme provided all necessary conditions were complied with. However, in March 2015 the Coalition Government introduced amendments. Since 1 April 2015 local authorities have had to seek confirmation from the Secretary of State for any selective licensing scheme covering more than 20% of their geographical area, or affecting more than 20% of privately rented homes in the local authority area. These requirements do not apply in Wales.
The Communities and Local Government Committee’s inquiry into the private rented sector (2012-13) considered the operation of selective licensing and recommended that the Government should bring forward proposals for a reformed approach. Following a consultation exercise in 2014, the Coalition Government issued a response which was particularly critical of borough-wide licensing schemes and expressed a preference for voluntary accreditation. This was quickly followed with a letter from Brandon Lewis, then Housing Minister, to authorities on 11 March 2015 advising of the change to the General Consent regime from 1 April 2015.
There was a mixed reaction to the announcement. Generation Rent and some authorities criticised the decision in the absence of specific consultation and some questioned the decision to interfere with councils’ autonomy. Landlord bodies welcomed the move. Councils operating borough-wide schemes may face difficulties in renewing them once the intial five-year term has ended.
The London Mayor is reportedly seeking a transfer of powers from the Secretary of State to approve selective licensing schemes in the capital.
Commons Briefing papers SN04634
Author: Wendy Wilson