Letting agents have a responsibility to support their landlords in their licensing obligations, as Anita Nel, Vouch, explains.
There has recently been a spate of new selective licensing schemes cropping up across England in a series of announcements, with Liverpool one of the latest to start accepting applications, while HMO licensing has been mandatory since back in 2006. Letting agents can help explain to their landlords what these schemes mean, where they're in place, and what they need to know to stay compliant.
The three types of landlord licensing schemes in England
Unlike in Scotland and Wales which have landlord registers already in place, in England, we rely solely on licensing.
Mandatory HMO licences have been in place for quite a while. These cover HMO properties, which are properties shared by five or more people in two or more different households. So it is in place mostly to make sure that landlords comply and adhere to all the legal requirements and compliance bits to make sure the property covers health and safety.
Additional licensing can then supplement this. These licences are brought in by individual councils where a mandatory HMO licence isn't really good enough to cover what needs to be covered.
Then, you've got selective licensing. This covers all private rented properties in a specific council area or local authority. It can be any property, however many tenants live there. It's just for the council to be able to target a specific area if need be.
Reasons why a selective licensing scheme may be introduced
Agents should understand their local area well enough to recognise if it ticks the boxes for councils to apply to set up a licensing scheme, so they can have it on their radar as a possibility. Selective licensing schemes look at, for instance, poor property conditions, high levels of migration, high levels of crime.
It has to cover one or more from the list of issues, and whether or not the area has a high proportion of rented properties. Around 20% of properties in an area need to be rented for them to be able to even consider a licensing scheme.
The licensing scheme has to be coordinated alongside an area's overall housing strategy as well. Homelessness, empty properties as a society, social behaviour, market renewal activities - these all must be considered.
Councils also need to look at whether or not licensing will actually make a difference or if they can implement something else. For example, instead of putting a licensing place if there's antisocial behaviour, is there anything else we can do instead of trying to monitor it by adding a licence?
A letting agent's role in landlord licensing
Anthony Gold Solicitors says that, even if you state in your terms of business that it's the landlord's responsibility to obtain a relevant licence, the Housing Act 2004 places responsibility for licensing a property on the "person having control" or "person managing".
If you receive rent on behalf of your landlords, Anthony Gold emphasises that you would be considered the "person managing" the property. This means that even agents operating a rent collection service may need to ensure a relevant licence is in place.
It's even a grey area for let-only services. As the agent would tend to collect the first month's rent on behalf of their landlord, they are technically still receiving rent for their landlord, despite this not extending into the remainder of the tenancy - a distinction that tripped up an agency in a recent court case for HMO licensing.
Suffice to say that your agency should always check that the landlords you're instructing have a licence in place, where applicable.
How agents can help their landlords
Agents need to keep on top of where these licences are surfacing to help your landlords - and your agency - stay compliant.
It takes time to set one up, so you should keep your ear to the ground to recognise if your council is likely to apply for a scheme in your local area.
There's not normally a dedicated list of the areas under a licensing scheme, so you may need to contact your local authority to ask the question.
If a new scheme is being introduced in your area, make sure you understand fully all of the conditions, and then double-check that your landlords' certificates and other safety measures are up to date.
Next, you should check to see if there are any financial incentives involved in the new scheme. Some, such as the new one in Liverpool, may offer an "early-bird discount" on the scheme. Others may offer a discount based on an EPC rating of a property or if the licence holder is a member of a relevant professional body.
Licensing costs money and your landlords will be charged for it, but advising them on any savings they can make will help keep them happy with your agency's services.