Selective Licensing and the Buy to Let Market: What Landlords need to know

The introduction of selective licensing in the mid-2000s has caused plenty of trouble for law-abiding landlords, despite its intention to protect tenants from landlords who flout the law and their legal responsibilities.

The penalties for not having a licence when required are so severe that it is crucial for every single buy-to-let investor to check and double check whether or not the area they are intending to let out a property in is covered by a selective licensing scheme.

Selective Licensing Explained

Selective licensing is a ‘fit and proper person’ test by another name. It was brought into existence thanks to the Housing Act 2004 with the intention of forcing rogue landlords to meet their legal responsibilities with regards to their tenants and the properties they let.

The licence application enables the local government to investigate whether or not the landlord meets the criteria of a ‘fit and proper person’. This means the potential landlord should have no history of fraudulent or anti-social activity or any other indication that they might not be a legally responsible landlord.

The licensing process also allows the government to impose other stipulations which may concern the management of an individual property; for example, any particular safety measures that should be undertaken before allowing a tenant to move in.

Problems for Law-Abiding Landlords

The main problem for law-abiding landlords is simply a lack of awareness of the issue. The fact that technically the vast majority of towns and cities around the UK are not covered by a selective licensing scheme means many landlords need not worry about it, but those who are letting in a selective licensing area may not even know they are breaking the law.

It is possible that thousands of landlords remain unaware of the fact they are letting out a property in a selective licensing area, especially as new areas are added to the list of those covered by such a scheme. For example, the London borough of Hackney has recently been added to the list, with landlords there given until December 2nd to apply for their licenses.

The punishment for being found guilty of letting a property in a selective licensing area without a license is a civil penalty of £30,000. For many landlords, this is a ruinous amount of money to have to pay for what might have been a simple oversight.

Is Your Buy-to-Let Property in a Selective Licensing Area?

It is the landlord’s responsibility to determine if their property is in an area covered by a selective licensing scheme. Some areas may have specialist local websites such as London Property Licensing where a list can be viewed, but there is no single big list of every place with a scheme, so speaking directly to the local council is the safest option.

It is also worth noting that some types of buy-to-let properties do not require licenses. These include:

* Properties let to family members

* Properties let as holiday homes

* Commercial or business premises

* University-owned student premises

Selective Licensing Application Process

Every council will have an application form which landlords must fill out, providing certain information as required. The information required will usually include items such as safety certificates and details of carbon monoxide and smoke detector locations. It is also likely that the tenancy agreements will require the council’s perusal and approval as well.

The licensing fees vary, but can be around £400 for a standard property housing a single family. Each licence applied for and approved lasts for five years and thus will require renewal upon expiration.

If you need more information about selective licensing and other buy-to-let legislation, then contact North Yorkshire Law Solicitors who can help you find out everything you need to know.

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