Obtaining a license to be a landlord can be a tricky business; the aim is to improve renter's accommodation and deal with crimes and anti-social behaviour associated with low-quality property maintenance. You can pay anything between £55 to £1150 depending on the property type and location. Not having the right license could result in a fine.
Do you need a landlord license?
These rules can be different in each country. Landlords in England only need to register for a license if they have an HMO (house in multiple occupations) that has over five or more people living in it. Otherwise, it's mainly down to your local authority. They have the power to assign selective licensing schemes – around 70 in the UK do so. It's worthwhile checking with your local authority to see if you do indeed need a Landlord License. In Scotland, you must enlist on the local Landlord register and with your local council. Landlords in Wales are required to register with Smart Rent Wales and use a licensed letting agent. In Northern Ireland, you need to register yourself and your properties with the Landlord Registration Scheme.
To use selective licensing Local Authorities must carry out a public consultation. Once complete schemes may be rejected, approved or passed on to the secretary of state for approval. Holiday lets and properties with live-in Landlords don't need to be licensed in any way.
How much does a landlord license cost?
In Wales, Scotland and Northern Ireland, Licenses are a set fee ranging from £55 to £186 for a 3 to 5-year scheme. In England, the authorities set their own fees for a 5-year period. Costs can vary significantly as this can be in a tiered system where the number of rooms or occupants in a property can result in different fees being charged. A leading insurance provider found that a license can cost anything up to £1150 depending on the type of property and location.
The average 5-year cost across the UK is around £591. Licenses in London can also cost considerably more due to new compliance and regulatory operations of the local authorities with additional permits being required for multiple properties.
What happens if you breach the local licensing rules?
In England, if you fail to adhere to the regulations, then you can face an unlimited fine. Councils can also impose civil penalties of up to £30,000 per offence, subject to rent repayment orders, banned from letting again and placed on a "rogue landlord" database. In Scotland, you can expect a fine of up to £50,000 and prohibited from registering again for up to 5 years.
So, what are the pros and cons of Landlord Licensing?
Rogue landlords are an issue that faces the sector; Generation Rent claims that this is circumvented by introducing a scheme that actively attempts to provide oversight and understanding into the industry. It also provides a level of consistency and fairness where it has been previously ignored, or there has been limited regulation. Local authorities agree with this, citing that issues arising from poor accommodation and insufficient property management have dropped as a result of increased regulations.
There is, however, a disagreement from members of the RLA – they claim that only good landlords come forward to be regulated and that the system fails to punish poor landlords and result in higher costs to the good landlords, meaning they can push this cost to tenants. They claim that it would be a much better idea to set up a dedicated housing court to deal with these issues instead.
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