The Next Wave of Licensing Enforcement: A New Report

There is relatively little information out there about how licensing schemes are applied and how (or if) they work. However, a recent report titled ‘Red Tape Revolution: The Next Wave of Licensing Enforcement’ by proptech company Kamma has provided some valuable insight into this subject, as well as considering what the future might hold for licensing. We will consider some of their findings here.

Some key findings from the report

Most of us will be aware that licensing schemes, in their various guises, have been expanding fast in recent years and more are planned in areas across the country. The report says that the number of licensing schemes actually decreased slightly between 2018 and 2020. But then increased dramatically during 2021 to 2022. It is still showing an upward trend, if slightly shallower, now.

As regards selective licensing alone a recent, separate report from Direct Line says that around 20% of English councils have these schemes – a 10% increase on 2022.

On costs, the report found that the London borough of Lambeth’s mandatory licensing scheme is the most expensive in the country. It costs £2,530 per property. It says that, overall, licensing fees increased by just over 10% on average between 2023 and 2024. (The Direct Line report says that the average fee is now £700.)

The report presents some interesting findings, based on a poll the authors undertook, of how knowledgeable landlords and letting agents are about these schemes and how easy (or otherwise) they are finding them to comply with. They found that:

• 69% of letting agents and landlords have had trouble simply understanding if their properties fall within a licensing scheme.

• 92% think councils do a bad job of publicising upcoming schemes and regulation changes.

• 75% have struggled to use a council’s application system.

Although the report does not present any figures on this, it also suggests that there is a feeling amongst these parties that enforcement and improved housing quality isn’t being delivered on.

The best councils for enforcement – and the worst

The report says that what it calls the top councils inspect over 8,000 properties while others barely reach 50 (Although local authority areas vary in size this appears to be something of a shocking statistic.)

Looking specifically at selective licensing schemes, the report says that three of the eight councils they ranked (see below) had numbers of property inspections that matched or exceeded the volume of complaints about PRS properties. It says that of the 10 local authorities with the highest number of complaints during 2021-2023 eight had selective licensing. This might suggest that there is a particular issue with selective licensing and also that these schemes are very unequal in their application and operation.

The report considered a number of metrics, and presented some statistics to identify what it considered to be the best and worst local authorities for enforcement.

In this regard, the report exposes what many will consider to be a key issue with the current system of enforcement: Good quality data is hard to come by. The report says data is inconsistent from authority to authority. It suggests that local authorities could potentially use this as a way of covering up poor enforcement should they wish to.

Interestingly, the best data appears to come from local authorities who are renewing a licensing scheme rather than setting up a new one for the first time. The report explains that this is because they are legally required to produce the data to support its renewal.

The report provides information on what it says are the three best and two worst local authorities as follows. This ranking was based on data from previous schemes:

Best council – Waltham Forest (London borough)

Waltham Forest council conducted 8,011 property inspections, 43% above their target.

They ranked tenth on the list for the number of HHSRS (Housing Health & Safety Rating System) complaints. HHSRS inspections as a proportion of complaints was 167%.

They issued 233 civil penalties and undertook 195 prosecutions.

1,680 properties were improved as a result of their schemes.

Best council – Bristol

Bristol council conducted 6,087 property inspections.

They ranked second on the list for the number of HHSRS complaints. HHSRS inspections as a proportion of complaints was 129%.

They issued 1,417 improvement notices relating to serious hazards.

On improvements, 33% of properties in the Stapleton Road scheme had hazards resolved, 52% of properties in their Central licensing scheme were improved, while 88% of properties in their Eastville and St. George licensing scheme were improved.

Best council – Barking and Dagenham (London borough)

Barking and Dagenham council ranked third on the list for the number of HHSRS complaints. HHSRS inspections as a proportion of complaints was 127%.

They conducted 8,032 property inspections, inspecting around 160 a month. Additionally after completing an application properties were inspected with 2-4 weeks.

They served 509 notices and undertook 64 prosecutions.

Worst council – Greenwich (London borough)

Greenwich ranked first on the list for the number of HHSRS complaints. They conducted HHSRS inspections relating to just 5% of complaints.

They had 982 licensed HMOs out of an estimated total of 5,000 HMOs.

They had no data on enforcement or improvements.

The report says that: ‘Greenwich council had no sufficient data on enforcement

efforts in their consultation report, while also having a huge disparity between the number of HHSRS complaints and the number of inspections carried out.’

Worst council – Salford

Salford ranked eighth on the list for the number of HHSRS complaints. They conducted HHSRS inspections on 38% of complaints.

They had 727 licensed HMOs.

They carried out 40 inspections under their selective licensing scheme.

The report says that: ‘Salford council had success in licensing a high proportion of properties in its Eccles and Barton scheme, but the number of inspections against complaints suggest that enforcement was not properly carried out.’

Our thoughts: It could be argued that these rankings were somewhat unfair to the ‘worst’ councils and over-complimentary to the ‘best’ ones due to the great variation in the type and quantity of data available. However the report suggests that it did seem to be the case that the best councils undertook a lot more inspections than complaints, ie. they were proactive. It also seemed to be the case that the best councils had the best data and were best at providing it (and vice versa).

The future of enforcement – some other issues raised by the report

The report formed the opinion, as perhaps many will agree with, that enforcement activity is on the increase and is getting tougher. It is likely, however, that inconsistencies in the data make it hard to come to any firm conclusions here.

The report pointed out, also as many might agree with, that staff training and resources are an issue within the enforcement sector.

The report  mentioned alternative ways in which enforcement might be done, which might be more effective and be better value for money. It referred to a scheme where Wolverhampton council have appointed a private contractor to handle their enforcement (at a cost of £2.5m).

It also mentioned that some councils are encouraging tenants to, in part at least, do some of their enforcement work for them. It gave an example of where Oxford council ran a campaign encouraging tenants to check if their landlord had a licence. It said that, as a result, 44 tenants received £85,000 from rent repayment orders because their student accommodation was unlicensed.

The report pointed out that the arrival of the Renters’ Rights Bill will create more regulations which landlords could be found in breach of, and introduce higher penalties.

Some thoughts on the report

First of all, in an environment where relatively little information exists about housing enforcement, any report like this ought to be welcomed as helping to inform our understanding.

It won’t come as much of a surprise that the use of licensing schemes is mushrooming, along with the costs of them. It might come as something of a surprise, however, to find just how poor landlords’ and agents’ understanding of licensing (or even that a scheme exists at all) is. This ought to be a concern for everyone, including local authorities.

However, the availability of data, and data quality, is perhaps the big story here. The main reason that is usually put forward in favour of licensing schemes, and for the costs that they involve, is that they raise property standards. Licensing schemes may achieve this, or they may not. But this report suggests that there is relatively little data to support either side of the argument. This definitely ought to concern those involved with operating them.

Identifying which local authorities are ‘good’ or bad’ at enforcement as this report does is interesting but perhaps something of distraction. Because there is only limited usefulness in naming and shaming. The real value in this sort of exercise should perhaps be in identifying best practice, and sharing it amongst local authorities. Something which, currently, is difficult to do.

The report confirms what many already know: Enforcement is not all it could be. But if it is lacking now it could face even more problems with the increasing red tape that the report alludes to in the form of the upcoming Renters’ Rights Bill.

See our article about the Renters’ Rights Bill here: The Renters’ Rights Bill: What’s In It And What Does It Mean For Landlords?

The Renters’ Rights Bill, if it becomes law, will indeed bring in more obligations for landlords. There will be more complex rules for local authorities to enforce. There will be legal requirements for local authorities to report on their enforcement duties. On the other hand there will be a landlord database and property portal which they will (or should) be able to use to inform their enforcement activities, and greater penalties to help finance them.

No matter which side of the fence you stand on it is certainly to be hoped that the Renters’ Rights Bill will help to improve and streamline licensing and enforcement processes. Hopefully, there will be clearer guidance on how licensing works (or is supposed to) for landlords and agents and better data to help improve the system. Because without that it could make things worse, not better.

In summary – and this is perhaps something the authors would agree with – these rankings were not produced in an entirely scientific way. But therein lies the problem: Good quality data to permit that and to allow analysis of local authority performance accurately does not always exist. But in an industry which is facing increasing red tape that is going to be absolutely essential going forward.

Further information

If you are interested in reading the full report you can request a copy from Kamma here.