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The monthly magazine providing news analysis and professional research for the discerning private investor/landlord

The Impact of Selective Licensing

Mark Hempshell reports

While selective licensing has been around for over a decade its use seems to be spreading apace at the moment. Specifically, some locations are making use of selective licensing in a very unselective way, by introducing it city or borough-wide. So now might be a good time to review the impact of selective licensing by speaking to those who are already subject to it, as well as looking at the implications for those areas where it is yet to be introduced.

Perhaps the primary concern of most landlords facing selective licensing is that it makes it more difficult to enter, and stay in, the letting market. The initial application procedure and any work that might be part of the licence conditions are often demanding, and invariably expensive.

Opinions, by the way, are divided on the implications of these extra costs. Some will say that they can be passed on to tenants by way of increased rents. However, curiously perhaps, local authorities often argue that their licensing schemes should not impact rent levels. In any case, raising the rent may not be possible in a selective licensing area as the market may not support it.
Then there is the issue of compliance with the conditions of a selective licence on an ongoing basis. As well as the standard of the property itself, this might include landlord responsibility for issues that others have tried – and failed – to address, such
as anti-social behaviour. And all this is before even considering the risks of – and penalties for – being caught in breach of them, even inadvertently.

Of course most good landlords will argue that, as they are already meeting or exceeding good standards anyway, it is difficult to see what selective licensing brings to the table.

Many landlords, and letting agents, express concerns about the way selective licensing schemes are introduced in the first place. These vary from authority to authority and, while demanding a sizable fee, rarely seem to provide much benefit to landlords or tenants for that matter. In many cases, the grounds stated by councils for introducing them – such as demand levels and control of anti-social behaviour – do not seem to hold up to close scrutiny.

Others express concerns about the way schemes are enforced, including the paradox that those who comply are treated in an inflexible, heavy handed way yet landlords who fail to licence appear to go unchecked. Indeed, perhaps due to the state of local authority finances, schemes may be inadequately resourced or policed despite the income they generate.

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