Selective licensing

Selective licensing gives local authorities the power to introduce licensing for all privately rented properties in a given area. In an area subject to a Selective Licensing Scheme (SLS), all private landlords must obtain a licence and if they fail to do so, or fail to achieve acceptable management standards, the authority can take enforcement action, eg impose a fine.

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When may a council introduce an SLS?

An SLS can only be introduced if the council is satisfied that there is a problem with low housing demand or where there are significant and persistent problems of anti-social behaviour. Any decision to implement an SLS must be consistent with the council's housing strategy and part of a coordinated approach for dealing with homelessness, empty homes and anti-social behaviour. The council must be satisfied that there are no other courses of action that might provide an effective remedy, and that the introduction of an SLS will assist in dealing with the problem.

Councils can implement an SLS, provided they meet all of the requirements in the Housing Act 2004:

  • The area must have low housing demand; and
  • The SLS must contribute to the improvement of the social or economic conditions of the area.

Or:

  • The area is experiencing a significant and persistent problem of anti-social behaviour;
  • Private sector landlords in the area are failing to take appropriate action to combat the problem; and
  • Making an SLS designation will lead to a reduction in, or the elimination of the problem.

The council must have also consulted everyone affected for a minimum of 10 weeks.

Low housing demand

When deciding if an area is suffering from low demand, a local authority must take into account:

  • the value of the properties in the area in comparison with similar properties in comparable areas;
  • the turnover of occupiers in the area; and
  • the number of properties available and the length of time they are unoccupied.

Fit and proper persons

When operating an SLS, local authorities must also assess landlords for:

  • management competence;
  • being 'fit and proper'; and
  • the suitability of their management structures and funding arrangements.

When determining whether a landlord is 'fit and proper', local authorities can consider factors such as whether the landlord has been involved in any fraud, practised unlawful discrimination, broken any housing laws or breached any relevant code of practice.

What are the exceptions?

Selective licensing only applies in designated areas. Where it applies, all privately rented accommodation in that area has to be licensed by the Local Authority. Such accommodation need not be licensed if the:

  • property is an HMO that already requires a licence under a mandatory HMO or additional licensing scheme;
  • tenancy or licence has been granted by a registered social landlord;
  • property is subject to an Interim or Financial Management Order (i.e. the council have taken over the management of the property);
  • property is covered by a temporary exemption notice; or
  • property is occupied under an exempt tenancy or licence (eg holiday homes).
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