Selective licensing

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.

Any SLS that covers more than 20% of the area or 20% of private rented homes, can only be introduced with central government approval.

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.

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 (ie the council have taken over the management of the property)
• property is covered by a temporary exemption notice
• property is occupied under an exempt tenancy or licence (eg holiday homes)

Where a property should be but has not been licensed, or a license has been obtained but its conditions have been breached, a range of sanctions may be available. While these may vary from local authority to local authority, they generally include:

• a fine on conviction

• a civil penalty of up to £30,000 imposed by the local authority instead of prosecution

• a Rent Repayment Order (RRO) being obtained in respect of the period the property was rented out and unlicenced

• the landlord being subject to a banning order

• the landlord being prevented from serving a Section 21 Notice during the unlicensed period

Check your local council for more information.