Selective Licensing Becomes A Reality Just Up The Road From Leicester

Property Budgeting

Two houses in front of several stacks of coinsHarry Albert Lettings & Estates has been campaigning rigorously for Nottingham City Council to discontinue their plans for selective licensing in Nottingham which will see landlords forking out an extra £675 every five years for a licence. The Nottingham City Council claim this will cost as little as £3 or less per week not taking into consideration void periods, in which case this £3 or less per week will sky-rocket. Leicester City Council is taking a similar stance as well, with plans to introduce planned licensing in April 2019. Harry Albert Lettings & Estates have produced this article for our East Midlands based landlords and for our landlords in Birmingham and Peterborough. We expect Nottingham, Leicester, Derby and Northampton to be particularly affected by these changes with some landlords exiting the market in favour of less costly, lower-maintenance investments. Harry Albert Lettings & Estates have provided a list of Frequently Asked Questions and Answers below:

What is Selective Licensing?

The Housing Act 2004 says any Local Authority has the right to introduce selective licensing conditions and Nottingham City Council has ratified the scheme in April 2018 after public consultations and the approval of the Secretary of State. Most rented properties in the Nottingham City boundaries will require a license which will last for a period of five years but can be revoked at any time or provided for less than five years. The licensing scheme will last for a period of five years and it is likely it will be extended beyond this date.

Why is it being introduced?

The licensing scheme is being introduced in an effort to apply a minimum standard to all private rented properties (remember, Social Housing providers are exempt from providing these minimum standards, apparently, as social landlords are not required to have this license) and make all private rented properties in Nottingham comply with the Housing Health and Safety Rating System (HHSRS). The conditions set out in the license will require landlords to adhere to certain standards of management and maintenance in an effort to bring about better quality housing within the sector. There are discounts available to accredited landlords.

Is my rented property affected?

It is likely your property will be affected if the property is within the boundary where the administrative authority is Nottingham City Council; you can check if your property is within the boundaries by clicking here. However, don’t panic too much; remember this only applies to properties within the Nottingham City Council boundary, so properties under different administrative councils (such as Rushcliffe, etc) are unlikely to be affected.

How much will it cost?

The costs for the license are steep. Non-accredited landlords will need to pay £780 per property, payable in a maximum of two instalments, one instalment at the time of application, the second instalment when the proposed license if granted (if at all). Accredited landlords, who have spent extra on courses provided by partners of Nottingham City Council (who we expect are paying Nottingham City Council a fee for the monopolisation), will be offered a discount of £480.

Is the fee an annual cost?

No, the fee will be for the full 5 year period of the scheme but can be revoked or issued for a shorter amount of time. The fee is payable per license application, so if your license is revoked or granted for just one year, you’ll have to repay the same fees upon your next application.

Why are we telling you this?

We have a duty of care to protect our Landlord clients, as all responsible Managing Agents should.

How do I get accredited?

House on stack of pound coinsNottingham City Council recognises two accreditation bodies, DASH Services and UNIPOL, both working in partnership with Nottingham City Council. Unipol is mostly associated with student accommodation providers. It is likely the cost saving on your initial license applications will be eroded by accreditation application fees, especially when we factor in other requirements including any Electrical Condition Reports, Electrical Installation Certificates or extra works required as a condition of gaining the accreditation. DASH Services have confirmed they cannot guarantee that accreditation will be awarded in time for the start of the scheme which may mean you have to pay the full licensing fee for your first license regardless of accreditation. The evidence suggests there will be no refunds granted if you apply for accreditation before selective licensing and accreditation is given before the selective license is granted.

When does the scheme start?

The scheme starts on 1st August 2018. Applications can be uploaded through the Nottingham City Council website from 1st July 2018. We recommend being the “early bird” and “getting the worm” as we expect the council to experience a backlog of applications as August draws nearer.

I’m an overseas landlord, can I still get a license

No, not even if you have a right to reside in the UK. Nottingham City Council states “the Council does not allow those based abroad to be Licence Holders. This is not dependent on your right to reside in the UK but it is because the documents are legal documents and cannot be enforced by the courts if served abroad. Therefore, you would need to nominate a person/company in this country to be the Licence Holder.” We are prepared to be the Licence Holder for you, however, there will be additional terms and conditions associated with this due to the increased responsibility we would be required to shoulder on your behalf.

Would I be better off selling?

Selective Licensing Becomes A Reality Just Up The Road From Leicester 1Well, that’s a matter for you to consider and we can value your property with a view to marketing it. We can also sell your property with no seller fees. However, you will still probably need to apply for a Licence as time is quickly running out before the scheme starts, so it may be worth holding on to your investment, biting the bullet and paying the extra cost. If you are in a position where a sale is agreed but not yet completed then you may be able to apply for a Temporary Exemption Notice (TEN) if the building is to be occupied or used in such a manner that it will no longer fall within the definition of a licensable house. However, the exemption is purely at the discretion of the local authority on a case by case basis.

What are the conditions of the licence?

The conditions are extensive and more onerous than the requirements of normal day to day property management. Details of the conditions can be found on the Nottingham City Council website.

Can I be fined for not having a Licence?

Yes, up to £20,000 if found guilty. The Council can now issue financial penalties of up to £30,000 for offences under the Housing Act 2004. If you are found guilty of an offence under the scheme then the tenant could apply for all of the rent he/she has paid to you, for the period the property was unlicensed which will be enforced by a Rent Repayment Order.  You also run the risk of prosecution and a possible unlimited fine if prosecuted, this will affect your “fit and proper person” status and your license will likely be revoked and not reissued forcing you to use a licensed agent.

I want help but am on a ‘let only’ service

You will have to be the Licence Holder if you wish to remain on that service or instruct us on a fully managed basis where we can be the Licence Holder. The Nottingham City Council states that the Licence Holder “should
be the person who has control of the property. This is usually the person who receives the rent (usually the owner or manager). They will be bound by the licence conditions and should be competent.”

What should I do now?

You need to decide whether you want to be the Licence Holder and take the full risk and responsibility for both the application and complying with the conditions over the 5 year period. If you decide to instruct Harry Albert Lettings & Estates to be the Licence Holder then you need to instruct us formally by signing a new agreement with us. You can refer to our website for more information on fees and what’s involved.

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