This briefing 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. The Government is currently conducting an independent review of selective licensing with a report due in spring 2019.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 before changes introduced in April 2015. 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. Local authorities argue that the requirement for approval is contrary to the spirit of localism. In contrast, landlord bodies welcomed the change.
Two Select Committee inquiries into the private rented sector over 2012-13 and 2017-18 recommended a reformed approach to selective licensing. Julia Rugg and David Rhodes of the Centre for Housing Policy at the University of York published a follow-up to their 2008 review of the private rented sector in 2018, The Evolving Private Rented Sector: Its Contribution and Potential, in which they note that evidencing the impact of selective licensing remains “problematic”. On 20 June 2018, the Government announced an independent review of selective licensing to see how it is being used and to assess how well it is working. The final report is due in Spring 2019.
Commons Briefing papers SN04634
Author: Wendy Wilson