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Private residential landlords: do you need a licence?

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You are a private residential landlord renting out a property in a “selective licensing” area – did you know that you could face a fine of £20,000 and be ordered to pay back rent to your tenants if you don’t have a licence?

Under the Housing Act 2004, local authorities have powers to introduce “selective licensing” of privately rented homes to address problems in their area, or any part of them, caused by low housing demand and/or significant anti-social behaviour.

Local authorities are now designating certain districts as selective licensing areas, thereby requiring private residential landlords to obtain a licence (for a fee) permitting them to rent out their properties in the designated area.

Many private landlords will not be aware of this legislation (which has been around for some time, but is rarely used) and may be unaware that their property is in a selective licensing area.

Examples of local authorities which have introduced the selective licensing scheme include Newham and, more recently, Barking and Dagenham.  Croydon has also recently announced that it will introduce selective licensing in October of this year.

A property may be exempt from licensing if:

  • it is let by a local authority or a registered social landlord;
  • it is a house in multiple occupation that requires a licence; or
  • it is subject to a management order or empty dwelling management order.

The consequences for non-compliance are serious:

  • A landlord who fails to obtain a licence may be liable to a fine not exceeding £20,000.
  • A landlord who fails to comply with his licence conditions could be prosecuted and fined up to £5,000.
  • The Residential Property Tribunal may order a landlord to pay back rent received during the unlicensed period.
  • A section 21 notice pursuant to the Housing Act 1988 cannot be served during any unlicensed period.

It is therefore extremely important, as more and more local authorities are starting to bring selective licensing to their areas, that private landlords and their advisors check the relevant local authority position and are informed of their obligations.

This article was written by Craig Walker, Partner, Dispute Resolution with assistance from Sona Voreux, trainee solicitor.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 0207 404 0606 and ask to speak to your usual Goodman Derrick contact. Information correct as at 15 May 2015.