Landlord Licensing consultation – your questions answered
Liverpool City Council is conducting a public consultation over its proposals to introduce a new landlord licensing scheme – known under legislation as ‘Selective Licensing’.
Different proposals are being consulted on covering up to 16 (out of 30) council wards. If approved by the Government, the preferred scheme is expected to start in June 2021 for five years as specified by legislation.
Who is being consulted?
A 12 week independent consultation, carried out by Opinion Research Services (ORS) on behalf of Liverpool City Council, is seeking the views of ALL stakeholders. This includes landlords, agents, industry associations, residents and resident’s groups, private tenants, third sector organisations, advice agencies, registered housing providers and councillors and businesses.
The consultation aims to fully engage with allorganisations and individuals affected by these proposals, to give everyone the chance to have their say and ensure all views are properly considered and recorded.
The consultation will run from 3rd August to 26th October 2020. Feedback will be considered by the City Council before it makes its final decision and makes an application to Government in December 2020. This final decision on a designation (if approved) will be made public through a press release and any appropriate statutory notices.
What does this mean for people who rent properties?
It means that landlords/agents who privately rent properties in the designated areas of the city would need to licence each rented property making them a “licence holder”.
They must comply with the conditions of their licence. As part of the application process, checks are made to ensure that potential licence holders are “fit and proper” under the requirements of the Housing Act 2004 (Part 3) to manage properties.
There are exemptions set out by Government but if owners do not or refuse to licence properties, they will liable for enforcement action including prosecution or civil penalties which the City Council have used extensively.
This is a discretionary scheme by the City Council and is separate from the licensing of Mandatory HMO (Houses in Multiple Occupation) which applies to HMOs with 5 or more people forming 2 or more households meeting the mandatory criteria wherever they are located across the City.
What are the proposals?
The City Council has three options which meet the legal tests based upon one of three criteria. However, there is overlap between different wards.
Poor property condition using data from complaints and predicted hazards that exist in private sector properties (16 wards)
Low demand – characterised by low property prices / rents and high numbers of vacant properties blighting communities (13 wards)
Deprivation – characterised by acute social, economic disadvantage and poor physical well-being including access to amenities and decent housing (14 wards)
Feedback is welcome from stakeholders on proposals – such as the level of support for any particular option, the draft licence conditions and ideas for intended fees.
Further detail is available on the consultation website including maps of the proposed designations.
Did the City Council have a city wide scheme?
Between 1st April 2015 and 31st March 2020, Liverpool City Council operated a city wide scheme based upon low housing demand.
This was successful in terms of the number of properties licensed, the improved standards and identification of hazards. It also meant getting across the threshold of more private sector properties than ever before which led to improvements being made in the Sector.
The Government would not approve a second city wide scheme citing insufficient evidence of low demand to justify another citywide scheme.
These proposals are more specific and targeted at areas of Liverpool where there are acute housing problems and a high volume of private rented sector (PRS) properties. In broad measure, over ¾ of PRS properties will be covered.
In the meantime, the City Council will concentrate using its existing powers to licence and enforce on HMO properties (of which there are currently 2,000) and respond to complaints which are most likely to be about properties already earmarked in proposed licensing designations.
What are the benefits of selective licensing?
Although there will be different views about licensing, there are a number of benefits which have already been shown in other licensing schemes in Liverpool
Through complying with same licence conditions, there is a level playing field – with licence holders treated the same and tenants having clear expectations about the property they are renting
Landlords are now more aware of their legal obligations. This is turn empowers tenants to make informed choices about the property they and their families want to live in. It gives reassurance to neighbours and communities who may have suffered from properties being let out to unsuitable tenants by landlords who fail to adequately manage them
Landlord licensing gives the City Council the ability to identify and take the strongest action against criminal and non-compliant landlords whose unprofessional or poor property management causes misery to tenants, putting them at unacceptable risk and de-stabilising neighbourhoods.
This joined up approach with other housing enforcement powers has a greater impact on tackling bad properties and developing positive working with landlords to make private renting a more attractive option creating homes that people want to live in.
Using regulation alongside other initiatives creates greater confidence in the rental market and helps to increase investment and demand.
Why these options?
Liverpool’s private rented sector has continued to grow quickly and accounting for 32% of housing across Liverpool. In a third of council wards this is over 40%.
There has been significant growth in higher yield properties and purpose built city rentals but the housing market is still vulnerable with a number of council wards showing evidence of high vacancy rates, lower rents, supressed property values and significantly low numbers of occupiers moving into properties.
Significantly the age and condition of properties with over 50% of housing stock built before the Second World War, means that properties are harder to maintain and not desirable to families.
The previous city wide scheme (2015-20) showed that property management standards were variable and in a number of cases poor quality, reflected on the condition of the properties.
The City Council acknowledges that many landlords/agents in Liverpool operate professionally. However, there are a significant number who fail to manage their tenants properly, deploy suitable property management standards and deliberately fail to licence their properties putting tenants at risk and gaining commercial benefit by operating under the radar.
Through a robust approach to enforcement, the City Council was able to licence 52,000 properties which in turn meant visiting more properties than ever before. With over 35,000 compliance checks, it was found that 65% of licence holders were not fully complaint at first visit. Over 12,000 licence breaches were exposed with a significant number related to basic health and safety issues. 3,375 hazards were identified on inspection.
Liverpool received 36,633 complaints related to 20,583 different private rented properties over a 5-year period.
There were 311 successful prosecution offences for unlicensed properties and noncompliance.
In addition, a specialist team dealt with over 2,800 anti-social behaviour complaints which had a real impact on neighbourhoods.
The ability to undertake all this work could only be done through resources available by a licensing scheme. While the City Council has other housing enforcement powers, it would not have enough officers to deal with extensive problems found in the PRS or be proactive as before.
The proposals are based on up to date data,and comparisons with similar local authorities to arrive at each option or designation. As shown in the proposals, there is an overlap between council wards showing evidence of poor condition, low demand and deprivation but for clarity they have been presented as separate options.
The City Council has a preferred option which focuses on poor property conditions but it is in the formative stage and it wants to show
stakeholders the reasons why other designations are possible. Also the rationale why other designations were not considered and certain Council wards excluded from proposals will be explained.
What the City Council has been able to do is draw upon extensive research and its experiences of previously operating a large scale licensing programme. The proposals are realistic and deliverable and have the support of the Mayor and Cabinet who have approved them for consultation.
How do the plans support the city’s wider aims?
Within the City Inclusive Growth Plan, there is a specific aim to empower residents, promote strong thriving neighbourhoods and improve housing conditions. All of this is vital for the City to grow and develop. It is about making the most effective use of regulatory powers alongside other initiatives to make Liverpool an attractive place to work, travel and live in and having a wider impact on neighbourhoods.
A targeted selective licensing designation as proposed will provide an opportunity to identify poor management, disrepair and conditions that are hazardous to health in council wards where it is most needed. There will be a direct impact seen where there are poor housing conditions. As shown in the proposal document, it is estimated that there are over 16,700 category 1 and 2 health hazards in the city’s private sector properties.
Poor housing equals lower life chances. Selective Licensing tackles the impact of poor housing conditions on health outcomes such as excess cold, tripping hazards, faulty gas and electrical appliances. This is a key objective for the city and its residents.
Landlord licensing has been shown to be effective in supporting the City Council’s wider intervention in neighbourhoods that are adversely affected by low demand depressed house values, high vacancy rates, vandalism and fly-tipping. Previously, these areas have benefited from a co-ordinated approach targeting unlicensed properties and landlords who are not complying with their licence conditions and other targeted enforcement working alongside other services / partners.
Finally, the wider impact on factors that have created embedded deprivation in council wards. The growth of the PRS has potential for levering in investment and contributing positively to the city’s economic growth. Selective Licensing supports this by its promotion of professionally managed tenancies and good property conditions.
How much will a licence cost?
More information about fees can be found in the consultation documents including how these have been derived and are to be paid. It is intended to offer incentives (in the form of discounts) for early bird applications plus further discounts for properties with good energy performance and managing multiple blocks of flats.
The table shows a simple breakdown and are per property.
Early Bird £400
New Rental £400
Early Bird / New Rental / EPC at C + £350
Early Bird / New Rental / EPC at C + / Multi £300
All the money received has to be used to cover the cost of employing staff who carry out inspections and the administation of the scheme – it cannot be used to subsidise other council services.