Introduction to selective licensing

Selective licensing is a regulatory scheme introduced by local authorities to improve the management and condition of privately rented properties within specific neighbourhoods. By implementing a selective licensing scheme, councils aim to tackle issues such as poor housing conditions, anti-social behaviour, and low housing demand that can negatively impact communities. The scheme requires private landlords to meet certain standards, ensuring that privately rented homes are safe, well-maintained and responsibly managed. Selective licensing works alongside other housing regulations, providing local authorities with an effective tool to raise standards in the private rented sector and protect tenants from substandard living conditions.

Landlords operating in a selective licensing area must submit a licence application and comply with conditions set by the local housing authority. The licence application process typically involves providing details about the property, paying the relevant fees and meeting eligibility criteria. Failure to do so may result in enforcement action, including financial penalties and restrictions on regaining possession of the property. Selective licensing generally applies to properties let under assured tenancies, which are a common legal classification in the private rented sector.

Designation of areas

Local housing authorities identify neighbourhoods with a high proportion of privately rented properties that are experiencing challenges such as poor housing conditions, persistent anti-social behaviour or low housing demand. Before introducing selective licensing, authorities must consult with interested parties - including residents, landlords, and tenants - to gather feedback and assess the need for intervention. Once an area is designated, the selective licensing scheme typically runs for a five-year period, during which landlords must obtain a licence for each property they let. The decision to designate an area is based on evidence of local problems and aims to ensure that privately rented homes contribute positively to the community.

Selective licensing scheme criteria

Prior to the implementation of a licensing system, local residents, landlords and tenants (as well as anybody else who may be affected by the selective licencing designation) must have been consulted. Landlords who rent out properties in a selective licencing region must obtain a licence from the local authorities for each of their properties. Each individual property within the designated area must be licensed. If a landlord owns more than one property in the area, each must be licensed separately under the scheme. Selective licencing is granted if an area meets one or more of the following criteria:

• There is a low demand for housing (or is likely to become such an area).
• There are substantial and ongoing issues created by anti-social behaviour.
• The property is deteriorating.
• The area has high migration rates.
• The area is subject to a high level of deprivation.
• The area has high crime levels.

The designated period for a selective licence is five years. During this time, the proposed licence holder, who should be the most appropriate person such as the property owner or managing agent, is expected to take the necessary steps to make sure the property is safe, meets minimum housing standards and is managed to a level the council considers satisfactory. To obtain a licence, the landlord or their managing agent must pay a fee determined by the local authority. The exact cost and payment structure can vary between councils.

Certain properties are exempt from Selective Licensing. For example, an HMO that already requires an HMO licence will not need a selective licence. A property requires a licence under the scheme if it is located within the designated area and does not fall under an exemption.

Licensing scheme administration

The local housing authority is responsible for administering the selective licensing scheme, overseeing the application process and overseeing compliance throughout the designation period. This includes processing licence applications, conducting property inspections to verify standards and enforcing licence conditions. Licence fees obtained from landlords are used to cover the costs of running the scheme, including administration and enforcement activities. The authority also has existing enforcement powers to issue civil penalties or take legal action against landlords who fail to comply with the scheme. By maintaining regular oversight and providing guidance to both landlords and tenants, the local housing authority helps to uphold the standards set by the selective licensing scheme and address any issues that arise.

The managing agent's role

Managing agents act as the proposed licence holder for privately rented properties. It is their responsibility to ensure that all licence conditions are met, including maintaining accurate records, responding promptly to tenant concerns and keeping properties in good repair. Managing agents must also cooperate with the local authority, providing information and access for property inspections as required. If a managing agent is found to be in breach of licence conditions, such as failing to address anti-social behaviour or neglecting property maintenance, they may face a civil penalty or a possible unlimited fine. As key partners in the private rented sector, managing agents must demonstrate professionalism and diligence to help landlords comply with the selective licensing scheme and maintain high standards for tenants.

The benefits of selective licences

In areas where selective licensing is introduced, the wider community can see improvements that extend beyond the quality of individual properties. Although the scheme is primarily designed to address poor housing conditions and anti-social behaviour, it may also deliver the following benefits:

• Increased housing demand: as living conditions improve, more people may choose to move into the area, supporting population growth and economic stability.
• Longer tenancies: improved property standards and community conditions can make tenants more likely to remain in the area long term.
• Reduced void periods: better property management can lead to quicker re-letting, helping landlords maintain consistent rental income.
• Rising property values: as the area becomes more desirable, property values may increase in response to demand and improved perception.
• Lower levels of crime and anti-social behaviour: increased oversight and higher property standards can help deter unlawful or disruptive activity.
• Improved property management standards: licensing conditions require landlords to maintain their properties to a reasonable standard, helping to professionalise the local rental sector. Monitoring persons occupying the property is also an important part of maintaining standards and ensuring community safety.
• Better long-term sustainability: improvements to housing quality and neighbourhood stability can contribute to the long-term viability of the area as a place to live and invest.

The selective licensing scheme is not designed for financial gain or for councils to receive financial gain. Licence fees are used solely to cover costs associated with the administration and enforcement of the scheme.

Can a selective licence be revoked?

A local authority has the power to revoke an existing licence if certain conditions are met. This action is not taken lightly and will generally follow an investigation or enforcement process. Circumstances in which a licence may be withdrawn include:

• Serious or ongoing breaches of licence conditions: this covers situations where the licence holder has failed to meet the obligations set out in the licence. Examples might include failing to carry out required safety checks, not addressing hazards identified by the local authority or persistently ignoring management responsibilities.
• The licence holder is no longer considered a fit and proper person: to hold a selective licence, the responsible person must meet statutory standards of suitability. This means having no unspent convictions for offences such as fraud, violence or drug-related crimes, as well as no offences listed under Schedule 3 of the Sexual Offences Act 2003. A change in circumstances, such as a new conviction, can lead to the authority reassessing suitability. In particular, a criminal conviction for certain offences can result in the loss of eligibility to hold a licence.
• The property develops structural defects: if the property’s condition deteriorates to the point where it poses safety risks or fails to meet required housing standards, the local authority may decide that continued licensing is inappropriate until issues are addressed.

Where a licence is revoked, the landlord will need to take steps to address the reasons for withdrawal before reapplying. Continuing to operate a property without a valid licence in a selective licensing area can result in prosecution or financial penalties.

What is the result of non-compliance?

Operating a property without the required property licence, or breaching the terms of an existing licence, can lead to enforcement action from the local authority. The consequences can be severe, affecting both the landlord’s finances and their ability to manage the property. Although penalties vary between councils, they typically include:

• Fines following a successful prosecution: in serious cases, the local authority may pursue criminal proceedings, which can result in unlimited fines if the court finds the landlord guilty.
• A civil penalty of up to £30,000: as an alternative to prosecution, the council can impose a financial penalty. The amount will depend on the severity and duration of the breach, as well as the landlord’s history of compliance.
• A rent repayment order (RRO): the First-tier Tribunal can order a landlord to repay rent received during any period when the property should have been licensed but was not. This can include rent paid by tenants or housing benefit paid by the local authority.
• A banning order: for the most serious or repeated breaches, a landlord can be prohibited from letting or managing property in England for a set period. This is likely to have long-term implications for their ability to operate in the private rental sector.
• Restriction on serving a Section 21 notice: during any period when privately rented properties are unlicensed, the landlord loses the right to serve a valid Section 21 notice to regain possession. This can make it more difficult to deal with tenancy issues or regain control of the property.

If issues are not resolved after an interim management order, the local authority may impose a final management order as a more permanent solution. A final management order can last up to five years and may be renewed if necessary.

Receiving multiple civil penalties can result in your details being added to the national rogue landlord database. This register is accessible to local authorities across England and can affect your ability to let or manage properties in the future.

Can you get temporary exemption?

A temporary exemption notice can be requested in specific circumstances, such as when the landlord intends to move into the property themselves or the property is being sold to a buyer who will live there. If the property is sold, the new owner must apply for a new license before renting it out, as licenses are not transferable. If granted, the notice exempts the property from the selective licensing scheme for a limited period, giving time for the change in occupation or ownership to take place. Once the exemption period ends, the property must either be licensed or fall under another valid exemption.

How AST Assistance can help with selective licensing

As a landlord in a selective licensing area, you must understand your responsibilities, or risk facing serious consequences. AST Assistance can help landlords understand their obligations under a new scheme introduced by local authorities, including guidance on compliance with recently launched licensing schemes and the high volume of applications being processed. If you are a resident landlord, we can advise you on whether you need a licence or if you qualify for an exemption based on your circumstances. To prepare your property for inspection related to the licensing process or to seek expert advice on any difficulties or worries you may have related to selective licensing, get in touch with AST Assistance. Having helped many landlords to understand their duties and comply with selective licensing regulations, we can take the stress away from you.

Get in touch with our friendly and knowledgeable team by calling 01706 619 954, emailing info@ast-assistance.com or filling out our contact form here.