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Selective licensing

This information only applies in England. 

Selective licensing gives local authorities the power to introduce licensing for all privately rented properties in a given area. In an area subject to a Selective Licensing Scheme (SLS), all private landlords must obtain a licence and if they fail to do so, or fail to achieve acceptable management standards, the authority can take enforcement action, such as imposing a fine.

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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.  You should check with your local council for updates and more information on SLSs. 

Councils can implement an SLS, provided the local authority area meets at least one of the following requirements:

  • the area must have low housing demand

  • the area is experiencing a significant and persistent problem of anti-social behaviour 

  • the area is experiencing a high level of migration (ie movement within the country or from overseas)

  • the area has a significant number of privately-rented properties in a poor condition 

  • the area suffers from a high level of crime

  • the area has high levels of deprivation

Selective licensing for privately rented housing is available if local authorities believe it would reduce or eliminate the above housing problems.

Local authorities can designate an area for selective licensing without the Secretary of State's approval if they 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 the Secretary of State's 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

  • the number of properties available and the length of time they are unoccupied 

  • the appearance of the locality and the number of boarded-up shops and properties

Fit and proper persons

When operating an SLS, local authorities must also assess landlords for:

  • sufficient level of management competence

  • being 'fit and proper'

  • 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)

Licences may be revoked if:

  • there has been a serious breach or repeated breaches of a condition of the licence

  • the license holder is no longer a fit and proper person

  • the property becomes structurally defective

Where a property should be licensed but isn’t, or where a license has been obtained but its conditions have been breached, a range of sanctions may be available. While these may vary amongst local authorities, 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

Note that tenancies granted by landlords who have committed offences regarding the licensing of a property are lawful tenancies. This means that the tenant will be required to pay the rent as agreed in any Tenancy agreement and the landlord must follow the correct eviction procedure to bring the tenancy to an end.

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