Oct

safeagent claims thousands of HMO properties are going unlicensed

admin

Licensing:

Research carried out
for safeagent (formerly NALS) by London Property Licensing finds that
over 130,000 properties in London remain unlicensed. Landlords whose
properties should be licensed under selective, additional or
mandatory HMO licensing schemes are breaking the law in large
numbers, it says.

safeagent reckons
there could be a non-compliance rate of as much as 75% in unlicensed
HMOs in London and is calling for a rethink by Government of
licensing in the private rented sector (PRS).

The research, which
was carried out using Freedom of Information (FOI) requests, found
that there are over 310,000 private rented properties in London that
require licensing under one or other other of the mandatory HMO,
additional and selective licensing schemes implemented under the
Housing Act 2004.

Mandatory HMO
licensing applies to all HMOs right across England, whereas
additional and selective licensing schemes apply selectively when
introduced by local authorities on a Borough by Borough basis. The
aim is improve standards in the Private Rented Sector (PRS), where
greater control is deemed necessary.

Non-compliance in
the capital is rife claims safeagent. Its says that licence
applications have been submitted for only 25% of the 138,500 private
rented properties that require licensing under mandatory HMO or
additional licensing schemes. That, if correct would imply a
non-compliance rate of 75%. Without a mandatory licence approval in
place, these lettings are being operated illegally, potentially
putting lives at risk.

Landlords and or agents caught operating unlicensed properties face heavy penalties with a criminal prosecution, hefty fines, or a civil penalty of up to £30,000 and rent reclaims of up to ordered to repay up to 12 months rent. safeagent thinks that some landlords many be falling foul of the law through ignorance of the complex regulatory framework.

Since October last
the mandatory HMO licensing scheme applied to most HMOs shared by
five or more people, whereas it was previously restricted to
properties three or more storeys in height.

In some boroughs,
additional licensing schemes have extended licensing to properties
rented to just three or four unrelated people. This complicated
picture also makes it hard for council enforcement teams to assess
which properties should have a licence says safeagent.

The picture for
selective licensing is markedly different says safeagent. These
schemes extend licensing to all private rented properties including
single family lets within a certain geographical area. Licence
applications have been submitted for 85% of the 173,000 private
rented properties that require licensing under selective licensing
schemes in London- a non-compliance rate of just 15%.

Added to the
confusion over licensable properties, many London Boroughs are
struggling to process over 24,000 licence applications – a huge
administrative burden that can lead to long delays in issuing licence
approvals. Currently, about 40% of boroughs still rely on paper
applications.

Consequently,
safeagent is calling for a simple, streamlined licensing process
which would make it more cost effective for the public purse, easier
for councils to enforce, and clearer for landlords and agents to
understand whether a property should be licensed.

Isobel Thomson,
safeagent CEO, says:

“The results of
the survey are concerning. Consumers are not being well served and
indeed many are being placed at risk through this mish mash of
licensing schemes. Right now, the system isn’t fit for purpose and
Councils are drowning in paperwork. Landlords needing property
licences are either deliberately evading the schemes or are in the
dark concerning their legal responsibilities and tenants are being
placed at risk.

“If the compliance
rate for HMO licensing schemes is only 25%, how can these schemes be
effective? Ultimately this is about proper use of public money and
consumer protection. Where are the assessment procedures for Councils
who have schemes in place? Isn’t it time we went back to the
drawing board to come up with a simple, streamlined system that works
for all?“

Types of
licensing

HMO Licensing Mandatory HMO licensing applies throughout England under Part II of the Housing Act 2004. The licensing scheme applies to most Houses in Multiple Occupation (HMOs) occupied by five or more people – an estimated 220,000+ properties across England. http://www.londonpropertylicensing.co.uk/mandatory-hmo-licensing

Additional
Licensing Each council has the power to introduce additional
licensing under Part II of the Housing Act 2004. Additional licensing
schemes apply to certain Houses in Multiple Occupation (HMOs) that
fall outside the scope of the mandatory HMO licensing scheme. For
example, HMOs with only three or four occupants. Each scheme has
different terms and conditions.

http://www.londonpropertylicensing.co.uk/additional-licensing

Selective
Licensing Councils have the power to implement a selective licensing
scheme under Part III of the Housing Act 2004. These schemes apply to
all private rented properties within a defined geographical area.
Larger schemes required approval from the Secretary of State.

http://www.londonpropertylicensing.co.uk/selective-licensing

Research
methodology – safeagent commissioned London Property Licensing to
carry out research on mandatory HMO, additional and selective
licensing schemes implemented by the 32 London Boroughs plus the City
of London.

Freedom of
Information requests were submitted to all 33 London local
authorities seeking information about their property licensing
activity as of 1 May 2019. Responses have been received from every
council.

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