Selective Licensing in the Private Rented Sector, A Guide For Local Authorities – A Look at the 2023 Update
The government has recently published an update to its guidance on how local authorities should introduce selective licensing schemes. In this report we will look at what has changed in the new version.
Firstly, how does selective licensing work?
Under the Housing Act 2004 local authorities are able to introduce selective licensing schemes, spanning a five year period, in areas of their district. All PRS properties must then have a licence. A statutory procedure must be followed before this can be done. Specific criteria must be met and local authorities must be able to justify a need for the scheme as part of a package of measures.
Where a scheme covers more than 20% of properties, or of a geographical area, individual consent (confirmation) is required from the Secretary of State.
The criteria that apply for a selective licensing scheme to be introduced are that the area is one that is experiencing: Low housing demand – or it is likely to become such an area. A significant and persistent problem caused by anti-social behaviour (ASB). Poor property conditions. High levels of migration. High level of deprivation or high levels of crime.
Issues surrounding selective licensing
It is probably true to say that landlords rarely welcome selective licensing schemes. Some believe they are a cynical revenue-raising measure.
While the number of areas with selective licensing schemes is relatively limited, local authorities generally are very enthusiastic about them. They tend to welcome the ability selective licensing gives them to intervene more in the PRS.
However, the housing market, national and local politics have changed considerably since this legislation was planned and introduced in the early 2000s under a Labour administration. So there is perhaps sometimes an element of misunderstanding and/or conflict between national and local governments, politicians and bureaucrats, about how selective licensing should work.
Government guidance – a timeline
Selective licensing was first introduced in spring 2006. For the first nine years there was no official guidance as such. Local authorities had to interpret the legislation directly.
The first non-statutory guidance, titled Selective Licensing in the Private Rented Sector: A Guide For Local Authorities was published by the then Department for Communities and Local Government (now Department for Levelling Up, Housing and Communities) in March 2015. This provided, for the first time, extensive guidance on the criteria for introducing selective licensing. It also detailed the procedure local authorities should follow in order to gain consent for their scheme from the Secretary of State – the requirement to obtain this consent for schemes over 20% was introduced the same year.
The latest, updated version of Selective Licensing in the Private Rented Sector: A Guide For Local Authorities was published on 20 June 2023. The guide only applies in England.
What the latest guidance on selective licensing says
The latest guidance does not change any laws on selective licensing. It simply clarifies selective licensing legislation and the requirements for applications for consent which are submitted to the DLUHC.
Here are some of the key differences between the 2023 and 2015 guidance:
The new guidance clarifies that as well as low housing demand and/or significant anti-social behaviour other reasons for introducing a selective licensing scheme include poor housing conditions, high levels of migration, high levels of deprivation and high levels of crime.
It confirms that selective licensing may only be introduced where the PRS represents more than 19% of the housing stock in the area. Additionally the 2023 guidance adds that this must be PRS property occupied under an AST or a licence which was not the case in the previous guidance.
It suggests that when assessing the need for a scheme local authorities may use a wider range of data than previously. It mentions the most recent census, the English Housing Survey or ‘any other appropriate up-to-date data.’ It also adds that the local authority ‘may also wish to commission their own independent review of the proposed designation to ensure that the figures are correct.’
The new guidance underlines that a scheme cannot be proposed unless other measures of eliminating problems in the housing market are to be introduced.
In the 2015 guidance local authorities wishing to introduce a scheme due to low housing demand were advised to consider the general appearance of the locality, eg. ‘boarded up shops’. This criterion has been removed from the 2023 version.
In the 2015 guidance local authorities wishing to introduce a scheme on the grounds of migration to the area (both international and national) could only do so if the population had increased by 15% or more over 12 months. This has been changed to 10% or more over five years in the 2023 version.
The new guidance says that if considering a scheme on the grounds of high levels of crime the authority must now consider the nature of the criminal activity, eg. theft, burglary, arson, criminal damage, graffiti.
The new guidance adds that prior to licensing an area due regard should be given to objectives set out in the Equality Act 2010, in line with the Public Sector Equality Duty.
Applications to the Secretary of State for confirmation of a scheme are now likely to take 14 weeks rather than eight weeks previously. It says that the designation will be made by the Secretary of State or delegated Minister rather than a ‘senior official’ as previously.
The new guidance says that demonstration of robust enforcement will help to evidence the grounds for introducing a new scheme.
The earliest a scheme can be introduced is three months after it is agreed. However the new guidance says that this can now be extended by a further three months if necessary.
When a local authority is looking to renew a selective licensing scheme the new guidance says that a summary of outcomes should be provided where possible. This should explain whether the desired outcomes in the previous scheme were delivered or not.
Summary
In publishing this new guidance the DLUHC say that their aim is to clarify the process local authorities should follow when looking to introduce a selective licensing scheme. However it is debatable whether this new guidance makes things any clearer than the previous version. Rather, it gives local authorities a few more things to consider when creating a scheme.
It will be interesting to see how the selective licensing regime might interact with other upcoming proposed legislation. Some might argue that the Private Rented Sector Database and Property Portal being proposed by the Renters (Reform) Bill, and the proposed introduction of the Decent Homes Standard in the PRS, might ultimately render selective licensing obsolete.
