Landlord Licensing. PREVENTING INFLUENCING AND LEGISLATION FINANCE AND TAXATION. arrears

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1 Landlord Licensing Interim Report Overview of the incidence and cost of HMO & discretionary licensing schemes in England February INFLUENCING AND LEGISLATION FINANCE AND TAXATION PREVENTING ACCESS FINANCE TO AND JUSTICE TAXATION arrears

2 Contents Introduction 3 Executive Summary 4 Background 6 Concerns about Licensing 7 Resources & Costs 8 Evidence, Justification & Enforcement 9 Incidence of Licensing 10 Licensing Fees 13 Interim Findings & Recommendations 15 2 Licensing Report

3 Introduction Private renting has a long and varied history in the UK s housing mix. At the start of the twentieth century, nine in ten households rented their home from a private landlord, but standards were variable and security tenuous with few legal protections. The level of regulation present in the private-rented sector (PRS) rose and fell as the century progressed until intervention reached its peak in the 1970s. This period was characterised by very strong security of tenure and strict control of private rents. It was also marked by the exit of large portfolio investors and financial returns too weak to encourage new market entrants. By 1973 the prospects for private investment in residential property were so poor that a campaign group, the Small Landlords Association, was formed to call for the repeal of the Rent Act and improve the plight of private landlords in the UK. That group went on to become instrumental in shaping the housing policy of the 1980s latterly reforming as the National Landlords Association (NLA). Following the partial de-regulation of the PRS in the late 1980s and the introduction of the first mortgage products specifically designed for individual property investors in the mid-1990s, letting privately started to become a viable investment opportunity once again; halting the tenure s decline at eight per cent of all households. Today more than 18 per cent of households rent privately from a population of around 1.5 million private landlords. Private renting has overtaken social housing as the second most populous tenure in the UK and the sector has begun to embrace a whole new generation of renters from all walks of life a far cry from the traditional stereotypes of student digs and dingy bedsits. However, not all progress made in the last two decades has had a positive effect on private renters and their landlords. Despite the common misconception that renting is unregulated, there is a significant amount of statute and precedent governing the way landlords provide accommodation. Much of this regulation is positive in spirit and reality, but occasionally good intentions do not translate into good practice. The Housing Act 2004 introduced licensing of privately rented property, in three forms: Mandatory Licensing of HMOs Additional HMO Licensing Selective Licensing The first tackles the inevitably higher risks of letting and living in larger properties with complex occupancy by means of mandatory licensing, which was applied nationally, and addresses genuine risks. The latter two are described as discretionary, as they are applied at the discretion of local authorities. The NLA, as an association with members throughout England and Wales where these schemes apply is concerned about the quality of decision making behind many local schemes and lack of central oversight. The following report details findings of research undertaken by the NLA into the spread of discretionary schemes, trends in their application and the cost to landlords, tenants and the local authorities themselves. Licensing Report 3

4 Executive Summary The NLA works with over 51,000 individual landlords from around the United Kingdom, 24,800 of which are paying members, and over 100 local authority associate members. We provide a comprehensive range of benefits and services to our members and strive to raise standards in the private rented sector. The NLA aims to provide a bridge between landlords offering private accommodation around the UK, local government and national policy makers. Its national network of local and regional representatives provides comprehensive intelligence about factors influencing market behaviour and the experience of landlords impacted by public policy. Above all, it seeks a fair legislative and regulatory environment for the private rented sector while aiming to ensure that landlords are aware of their statutory rights and responsibilities to ensure that the private rented sector is a place where people choose to work and live for years to come. In response to member concerns about the impact and effectiveness of landlord licensing schemes throughout England, the Association undertook to obtain information about the incidence and cost of HMO, Selective and Additional Licensing throughout the country. Overview of Findings I. Fees. The level of fee charged for a five-year licence varies significantly between areas and schemes. This is particularly apparent in respect of mandatory HMO licensing. II. Discretionary licensing. The incidence of discretionary (Additional and Selective), schemes has increased considerably since the General Approval order was signed into law in III. Borough-wide licensing. Proposals for borough-wide schemes have become more common, following the introduction of the first in London. IV. Enforcement. Insufficient enforcement is taking place by local authorities in parallel with licensing activity. V. Politics. There is a definite correlation between the political control of a local authority, its propensity to introduce discretionary licensing and the fee charged to landlords. Summary of Recommendations I. Exploit economies of scale. The administration and processing procedures employed by a number of local authorities are inconsistent and appear inefficient. According to the cost breakdowns provided in response to the NLA s FOI requests, it can take anywhere from fifteen minutes to more than one hour to process and validate an application. Given this variation in efficiency the NLA would like to see centralisation of these back office functions, adopting a shared services model to minimise the cost to independent licensing authorities. This could take advantage of the systems and efficiencies developed in well-run authorities or outsourced entirely to a central processing centre within central government or the private sector. II. Reverse general approval. The incidence of discretionary licensing has increased dramatically since housing minister John Healey approved The Housing Act 2004: Licensing of Houses of Multiple Occupation and Selective Licensing of Other Residential Accommodation (England) General Approval Unfortunately, this increase in volume has been accompanied by the 4 Licensing Report

5 removal of objective oversight in the form of a central regulator. Without this oversight function there exists no mechanism to hold licensing authorities to account or question their justification short of the pursuit of judicial review, which is out of the financial reach of most landlords and their representatives. The NLA believes that a central, impartial, authority should have oversight of proposed schemes and the ability to withhold approval of inappropriate licensing schemes. This could be achieved by rescinding the above order. III. Incentivise local enforcement. Local authority budgets are increasingly limited leaving little available funds to undertake enforcement activity. Furthermore, licensing fee revenue may not be used to fund enforcement activity, and enforcement agencies are unable to recover sufficient costs to make regular enforcement against criminal landlords cost effective. The NLA believes that the polluter pays philosophy should be applied to regulation of the PRS, insofar as those found guilty of transgressions should be held financially responsible for enforcement. It is already the case that many authorities charge recipients of enforcement notices. The NLA would like to see a mechanism developed whereby local authorities which successfully pursue comprehensive enforcement strategies are able to share in the proceeds of fines currently the preserve of the Exchequer. IV. Promote best practice & co-operation. The DCLG consultation on proposals to remove the requirement for central government approval of new discretionary licensing schemes cited the important role played by the Local Authority Coordinator of Regulatory Services (LACORS) in sharing best practice. The subsequent reorganisation of Local Government Regulation (LGR) and dissolution of the Private Housing Group, which facilitated this collaboration, has further reduced the transparency and accountability of licensing scheme development. The NLA believes that if licensing is to continue, a facility for sharing best practice and consulting with impacted parties is essential. Licensing Report 5

6 Background The NLA worked closely with authorities and LACORS in relation to the implementation of HMO licensing and has monitored the development of Additional and Selective Licensing closely since the introduction of the first schemes in Salford. The ability to introduce discretionary licensing is a powerful tool. If used correctly by a local authority it can resolve specific issues. The NLA has supported many local authorities when the introduction of a licensing scheme has been proposed, as it has been demonstrated that the policy will benefit landlords and tenants in the area. Until 2010, DCLG had responsibility for approving proposed schemes before they could be lawfully implemented. This resulted in a number of proposals being adapted to better meet the obligations imposed by statute and the rejection of a small number of applications. Crucially, this oversight ensured that a local authority s duty to consult adequately was met and that sufficient, appropriate evidence was produced to justify implementation of licensing. Unfortunately, since the advent of general consent, this has not been the case. Furthermore with the demise of the Local Authority Coordinator of Regulatory Services (LACORS), which had previously provided a simple means of sharing experience and best practice on issues such as PRS enforcement and licensing, a significant resource was lost to local authorities interested in pursuing local licensing. 6 Licensing Report

7 Concerns About Licensing The legislation in relation to licensing clearly states that its introduction has to be evidence based. The importance of this element is often overlooked by local authorities; the evidence that is presented does not adequately support the argument made or is not produced. { } The use of licensing, which focuses on the status of the landlords and properties in an area, will not resolve many of the issues identified by local authorities, as they are issues resulting from the activities of tenants who live in Local the locality, not connected with the way in which their authorities only accommodation is provided. prosecuted The cost of the licensing schemes adds to landlords 487 landlords overheads, and is often passed through by landlords to in 2012 tenants, thus increasing cost for those who rent in an area. This can price people out of an area and increase local authorities costs in the long-term. The introduction of discretionary licensing is not a solution in itself; resources need to be allocated by the local authority as well in order to address the underlying issues, which create the perceived need for intervention. This too often fails to happen, and the problems that have been identified by the local authority remain unresolved. It is essential that, if problems exist which are sufficiently directly related to private rented housing to justify the introduction of licensing, targeted enforcement is used as a comprehensive sanction against those who are found to be acting criminally. Despite the apparent rise in interest in intervening in the PRS, local authorities only prosecuted landlords in This conflicts with the often-anecdotal evidence relied upon by local authorities suggesting that a significant proportion of landlords are criminal. Given that there are 1.5 million landlords in England, the low number of prosecutions would appear to indicate either low levels of criminality or an inherent ineffectiveness in the prosecution process. The NLA believes that any regulation of the private rented sector needs to be both balanced and effective. Additional regulatory burdens must focus on genuine detriment and aim to combat it by increasing the professionalism of landlords, the quality of private rented stock and driving out the criminal landlords who blight the sector. It should be the shared objectives of all parties involved to facilitate the best possible outcomes for landlords and tenants and as such good practice should be recognised and encouraged in addition to the required focus on enforcement activity. This approach does not require discretionary licensing, and is not strengthened by its adoption as a potential solution. 1 Licensing Report 7

8 Resources & Costs A key concern over the creation of licensing schemes is the question of local authority resources. It is well known that in this time of austerity, local authorities are being asked to do more by central government with fewer resources. The administration of a licensing scheme is costly in terms of both officer time and a financial commitment. This is especially true around the additional resources that the council will have to deploy in relation to issues such as anti-social behaviour. The implementation of licensing by local authorities too often does not have the support that is required to resolve the issues. At a time when local authorities are reducing department budgets, we believe that the remaining resources should be allocated to targeted enforcement against the worst, criminal landlords. This is diverting limited resources away from the essential business of tackling poor accommodation. For example, in 2009 Swansea City and Borough Council spent approximately 272,000 on its mandatory and discretionary licensing schemes (of which approximately 243,000 came from landlords paying the application fee) 2. This caused a shortfall of 29,000 for the local authority and we would argue that this money could have been better spent employing additional Environmental Health Officers to target sub-standard and poorly managed properties. The NLA believes many local authorities are incurring costs processing the licence than investigating and enforcing poor housing standards. Leeds City Council, through the process of introducing Selective Licensing, incurred a cost of around 100k, ultimately passed on to the taxpayers of Leeds 3. The charges for the introduction of Selective Licensing schemes vary between local authorities, from 150 for five years (Newham, during its initial discounted period) to 750 for the application and an additional 150 per year (Blackburn and Darwen Council). Despite the accounting and transparency requirements of the associated legislation, it remains unclear how many authorities establish appropriate costs and whether they possess sufficient information about their respective sectors to appropriately set fee levels. Many local authorities are not aware of the size of their local private rented sector. Liverpool City Council has in excess of 50,000 private rented houses but are only aware of 1744 landlords 4. Based on industry averages, a typical town or city will contain a much higher proportion of landlords with only a single property than these figures would suggest. Thus when they start engaging the private rented sector via licensing it is highly likely that they will not have allocated sufficient resources for licensing to have the stated impact i.e. tenant information officers, landlord liaison officers, anti-social behaviour staff, community workers and enforcement officers. This creates added cost to local authorities, which cannot be met through licensing; the local authority thus fails to address the underlying issues, as they don t have the ability to allocate sufficient budgets. 2 Response from Swansea City and Borough Council on 31 March 2010 to an NLA request under the Freedom of Information Act Private%20Rented%20Property.pdf 8 Licensing Report

9 Evidence, Justification and Enforcement A failure to address issues and develop appropriate solutions means that problems are maintained in communities. Licensing can play a role, but licensing in isolation will not resolve matters; the use of appropriate enforcement where the law is being broken is required. Councils have many existing powers. Section 57 (4) of the Housing Act 2004 states that a local authority must not make a particular designation...unless (a) they have considered whether there are any other courses of action available to them that might provide an effective method of dealing with the problem or problems in question. The use of these powers as listed below give a local authority the power to tackle many of the issues that they wish to overcome: - Use of Criminal Behaviour Orders; - Crime Prevention Injunctions; - Issuing improvement notices to homes that don t meet the decent homes standard - Directions regarding the disposal of waste (for example under section 46 of the Environmental Protection Act 1990); - Litter abatement notices under section 92 of the Environmental Protection Act 1990; - Powers under the Noise Act 1996 to serve fixed penalty notices or confiscate equipment (sections 8 and 10); - The power to require rubbish to be removed from land under section 2 4 of the Prevention of Damage by Pests Act The lack of prosecutions of landlords by local authorities in recent years 5 suggests that these enforcement powers are not comprehensively used. This contradicts the justification used by many authorities considering licensing based on the number of poor or sub-standard properties and criminality within the landlords population. For example Liverpool City Council, in the cabinet papers documenting the proposals for citywide licensing, states that over 18,000 6 homes do not meet with their standards, this is proffered as evidence for the need to license. However, as such poor standards can only ultimately be resolved through enforcement activity permitted by existing regulation and not aided by the implementation of discretionary licensing schemes. This is clear evidence that there is no de jure need or justification. A common example of poor practice in relation to providing sufficient justification is the citing of other illegal activity. Many proposals for the introduction of licensing include references to significant drug dealing in a locality; as this is already an illegal activity and a criminal offence, which must by virtue of its inclusion be known about by the relevant authority, it is the NLA s contention that the most appropriate response would be to work with law enforcement agencies to use criminal sanctions to apprehend the alleged criminals. Licensing of properties and landlords appears a poor substitute for enforcement of the law. Furthermore, when specific activity is referenced as a reason for proposing licensing, it is often not made clear how the behaviour is linked to private property. For example, in one local authority s proposal (Bournemouth Council) for the introduction of Selective Licensing the example of anti-social behaviour was used as justification. In the same document the local authority points out that the people that are causing the anti-social behaviour did not come from the proposed area Private%20Rented%20Property.pdf Licensing Report 9

10 Incidence of Licensing While the number of local authorities actively administering discretionary licensing schemes within their boundaries remains relatively small, the incidence of their seeking new designations has accelerated considerably since the advent of general approval. The removal of the need to seek central government approval for designations in 2010 has seen the growth in scheme introductions (per annum) and the total number of active schemes as demonstrated by chart 1 below. Number of Schemes Schemes Introduced Total Schemes Year Chart 1 7 In the first four years ( ) of licensing only 15 areas implemented discretionary licensing schemes (NB. A number of areas implemented numerous areas of designation). In the four years since powers of oversight were removed from DCLG, a minimum of 34 localities have implemented schemes. Furthermore, 17 have recently consulted on proposals and are likely to proceed. We are aware that at least 30 more local authorities have proposals under development. Additional Licensing Selective Licensing Approved with Department for Communities and Local Government Consent (Before 1 April 2010) London Borough of Hounslow (5 wards; 2 storey 4+ people) London Borough of Hillingdon (13 wards; 2 storey 5+ people) London Borough of Ealing (designated area; 2 storey 4+ people) Blackburn Bolton Burnley Durham Gateshead Hartlepool Leeds Middlesbrough London Borough of Newham Salford Sunderland Manchester ended October 2012 and not renewed 7 Indicative figures, based on data collected from local authorities in response to a nationwide FOI request. Nb. NLA is not responsible for data provided by third parties. Data set contains gaps resulting from incomplete responses. 10 Licensing Report

11 Additional Licensing Selective Licensing Approved under general consent (After 1 April 2010) Oxford (All district; all HMOs) LB Croydon (21 wards; all HMOs excl. s257) East Riding of Yorkshire (Designated area; 2 storey 4+ people) Peterborough (3 wards; 2 storey 3+ people) Cardiff (1 ward; all HMOs) Hastings (4 wards; 3+ storey) Slough (designated area; all HMOs) Newport (All district; all HMOs) Wrexham (All district; all HMOs) London Borough of Newham (All district; All HMOs) Brighton and Hove (5 wards; all HMOs) London Borough of Kingston (All borough; 5+ tenants or 3+ storey) Breckland (Norfolk) (All district; All HMOs) London Borough of Hillingdon (considering extending current area) Newcastle Thanet Blackpool Wolverhampton Stoke on Trent Gateshead have extended their scheme Salford have extended their scheme Southampton Coventry Bristol Portsmouth London Borough of Newham (all districts) Hull Blackburn Oldham Hyndburn Reading Northampton Sheffield Newport Liverpool (all district) Recent Consultations: Luton Doncaster Rotherham Peterborough Brent Enfield Waltham Forest Hackney Greenwich Norwich Plymouth Burnley Islington Cornwall Doncaster Derby Gravesham Oldham Consulted (did not proceed): Southend-on-Sea Bournemouth Gravesend Boston Worcester Manchester (withdrawn) Sandwell Licensing Report 11

12 The following local authorities have announced, or intimated that proposals for discretionary licensing are under development. Barnsley Consultation expected Birmingham Brighton Planning to introduce city-wide licensing Cornwall Awaiting consultation Derby Awaiting consultation Doncaster Consultation issued Exeter Awaiting consultation Gravesham Awaiting consultation Hull Luton Awaiting consultation Newport Northampton Council approved proposal Preston Local residents pressing Council for selective licensing and Article 4 Direction Rotherham Decision expected at Council meeting on 24 September (delayed) Solihull Awaiting consultation West Lindsey Consultation closed; expected to be approved York London Boroughs: - Barking and Dagenham Approved - Brent Approved - Camden Apparently considering licensing - Croydon Working on consultation proposals - Ealing Additional Licensing in place; awaiting consultation on Selective Licensing - Enfield Additional and Selective Licensing schemes in place; application for judicial review partly rejected - Greenwich Awaiting consultation - Hackney Council accepted Scrutiny Committee recommendation in favour; awaiting consultation - Hammersmith & Fulham Awaiting announcement. - Islington Council accepted Scrutiny Committee recommendation in favour; awaiting consultation - Kingston Approved, but not implemented - Redbridge Pre-consultation exercise complete. Implementation expected January Southwark Awaiting consultation The NLA is concerned that local authorities are implementing discretionary licensing schemes, which would not have received the approval of central government pre-general consent. This is evident in the manner and design of discretionary licensing schemes currently in place and under development. The NLA does not believe that the Housing Act 2004 was intended to provide local authorities with the opportunity to introduce district wide Selective Licensing schemes such as those active in London Borough of Newham and about to be introduced city-wide in Liverpool. The evidential burden imposed on a proposing authority is low. In relation to anti-social behaviour (ASB), legal advice obtained by the NLA indicated that a single incident of ASB in a designated area would be sufficient to meet the threshold. Likewise, limited areas of low demand are being used to justify the application of Selective Licensing to entire cities, such as Liverpool. 12 Licensing Report

13 Licensing Fees All regulatory intervention represents a cost to the implementing and policing authority. In this respect licensing is no different from any other element of public policy intended to offer public protection or impose minimum standards on business. However, it is vital that the financial impact of such regulation is comprehensively assessed and monitored, particularly where safeguards against misuse of legal power is relatively limited. Local authorities ability to charge-back the cost of running licensing schemes is defined in law. A licensing authority may charge fees set at a level to cover the cost of implementation and administration, but not conducting enforcement activity. The cost of enforcement should be budgeted for by means of appropriate allocation of budgets and where possible recovery of costs following successful prosecution i.e. polluter pays. Given the variation in housing market size, proportion of stock let privately and demographics, it is understandable that the allowable costs will vary to a certain extent between areas. However, there is at present very little transparency about fee levels between areas or efficiency within individual licensing authorities. In order to combat this lack of accurate information, the NLA contacted every authority in England and Wales with a Freedom of Information Act request concerning: The licensing present in their district, Scope of schemes Administration costs Fee levels charged The resulting information illustrated a startling lack of consistency between authorities in relation to openness, quality of budgeting and fees levied on private landlords. The lack of consistent fee setting was particularly apparent when Mandatory Licensing costs are taken into account. The following charts illustrate the level of absolute or average fees charged by each local authority according to the information each respective authority provided. The fees demanded in respect of discretionary licensing are illustrated separately by charts 2 and 3. Due to the volume of local authorities in England with mandatory licensing schemes, each region is represented separately in Appendix 1. Licensing Report 13

14 Selective Licensing Fee Wolverhampton City Council Thanet District Council Sunderland City Council Stoke-on-Trent City Council Southampton City Council Salford City Council Redcar and Cleveland Borough Council Portsmouth City Council Newham Borough Council Middlesbrough Council Leeds City Council Hyndburn Borough Council Gateshead Borough Council Enfield Borough Council Durham County Council Charnwood Borough Council Burnley Borough Council Bristol City Council Blackburn with Darwen Council Barking and Dagenham Borough Council Cost of Licensing ( ) Additional Licensing Fee Southwark Borough Council Slough Borough Council Scarborough Borough Council Peterborough City Council Oxford City Council North Somerset Council Newham Borough Council Kingston upon Thames Borough Council Hounslow Borough Council Hillingdon Borough Council Hastings Borough Council Enfield Borough Council Ealing Borough Council Croydon Borough Council Bristol City Council Brighton and Hove City Council Brent Borough Council Breckland District Council Bedford Borough Council Bath and North East Somerset Council Barking and Dagenham Borough Council Aylesbury Vale District Council Cost of Licensing ( ) 14 Licensing Report

15 Interim Findings and Recommendations Discretionary licensing is a powerful, and potentially effective, tool at the disposal of local authorities with definable difficulties related to the PRS. However, it is not a one-stop solution to housing problems and can be an incredibly poor, blunt instrument when used inappropriately or with unrealistic objectives. Through researching the incidence and administration of such licensing, both mandatory and discretionary, it has become clear to the NLA that too little data exists to comprehensively assess the efficacy of licensing as a universal tool. Blanket designations are unlikely to be beneficial and are, arguably, difficult to justify against the spirit of the Housing Act Furthermore, to promote its continued proliferation would be imprudent without first exploring its potential effectiveness, value for money and the ways in which it can be used most effectively where appropriate. The NLA believes that if licensing is to remain an instrument of local authority policy, its use and overall effectiveness since inception should be evaluated by an objective third party with a view to ensuring it is fit for purpose. Assuming that a review, and ultimately an amendment to the powers given to local authorities, is a long-term objective we propose four low intervention means of improving the practical use of licensing in the future. I. Exploit economies of scale. The administration and processing procedures employed by a number of local authorities are inconsistent and appear inefficient. According to the cost breakdowns provided in response to the NLA s FOI requests, it can take anywhere from fifteen minutes to more than one hour to process and validate an application. Given this variation in efficiency the NLA would like to see centralisation of these back office functions, adopting a shared services model to minimise the cost to independent licensing authorities. This could take advantage of the systems and efficiencies developed in well-run authorities or outsourced entirely to a central processing centre within central government or the private sector. The benefits of sharing services between multiple licensing authorities could be extensive. For example, the following are considered examples of common financial and non-financial cost savings resulting from amalgamating services 8. Financial Benefits - Staff rationalisation - Adoption of best practice in working practices across the partnering organisations. This should lead to reduced duplication and realisation of associated savings - Accommodation savings - Enhanced purchasing power and reductions in supply costs given enhanced economies of scale and cheaper procurement through aggregated demand - Fewer management overheads and more streamlined reporting procedures 8 Shared Services Benchmarking Analysis Paper, Business Services Transformation Project, September 2010 Licensing Report 15

16 Non-financial Benefits - Improved processes will ensure things are done right first time, prevent duplication and allow for easier automation where appropriate - Better management information should improve decision-making and help identify where problems occur within business processes - Better procurement information such as whether goods and services are bought off-contract will help to rationalise the supplier base - Corporate and employee information will be consolidated in a single place, ensuring that it is clean and consistent, as well as improving database interoperability - Underperforming organisations can benefit from learning from their higher-performing counterparts - The cost of providing support services becomes much more transparent and enables a better focus on performance management - Job satisfaction and staff retention should improve once the shared service is established, since employees will have a clearer career path, more colleagues to learn from and greater chances for promotion within a bigger team - The increased size of the team will allow employees to focus on specialist areas. As traditional back-office functions take on customer-facing responsibilities and increased importance, the new facility can become a centre of excellence and ensure business users receive a consistently high level of service - Senior management and business users are freed-up to focus on more value added activity such as developing strategy, improving front-line services, responding to the changing environment and delivering key objectives within their own departments and organisations - There may also be ecological and environmental benefits by having more efficient processes e.g. less printing, reduced energy costs associated with fewer functional offices, reduced carbon emissions by fewer commuters, etc. This model works effectively in the delivery of NLA landlord accreditation nationally and is proposed by the Welsh Assembly Government in relation to their programme of registration of private landlords and letting agents. II. Reverse general approval. The incidence of discretionary licensing has increased dramatically since housing minister John Healey approved The Housing Act 2004: Licensing of Houses of Multiple Occupation and Selective Licensing of Other Residential Accommodation (England) General Approval Unfortunately, this increase in volume has been accompanied by the removal of objective oversight in the form of a central regulator. Without this oversight function there exists no mechanism to hold licensing authorities to account or question their justification short of the pursuit of judicial review, which is out of the financial reach of most landlords and their representatives. Where pursued, a small number of judicial reviews have forced local authorities to reconsider their plans, resulting in further consultation for example landlords in Hyndburn and Enfield have successfully challenged poor quality consultation exercises. Although these legal challenges are useful as a means of holding an authority to account they are not efficient or cost-effective and rarely benefit either party substantially in the long-term. The NLA believes that a central, impartial, authority should have oversight of proposed schemes and the ability to withhold approval of inappropriate licensing schemes. This would not act as a barrier 16 Licensing Report

17 to authorities wishing to exercise their powers to license private property, but it will serve as a brake on those bodies failing to undertake sufficient consultation and with unrealistic expectations falling outside of the scope of the original legislation. This could be achieved by rescinding the above order. III. Incentivise local enforcement. Local authority budgets are increasingly limited leaving little available funds to undertake enforcement activity. Furthermore, licence fee revenue may not be used to fund enforcement activity, and enforcement agencies are unable to recover sufficient costs to make regular enforcement against criminal landlords cost effective. The NLA believes that the polluter pays philosophy should be applied to regulation of the PRS, insofar as those found guilty of transgressions should be held financially responsible for enforcement. It is already the case that many authorities charge recipients of enforcement notices The NLA would like to see a mechanism developed whereby local authorities, which successfully pursue comprehensive enforcement strategies, are able to share in the proceeds of fines that are currently the preserve of the Exchequer. In 2014 the Local Government Association undertook research, focussing on a number of local authorities approaches to prosecuting landlords for poor property conditions. In conclusion they found: The process of prosecuting landlords for renting properties in poor condition is long and complex. Most of the steps involved are laid down by law or are essential to the legal process of proving the case beyond reasonable doubt. In the eight cases studied in-depth, it took between six and sixteen months from discovering the poor housing conditions until the court case, the average time for the whole process was 11 months 9. During such an extended period it can be challenging for authorities to allocate sufficient funds to undertake enforcement action resulting in under-use of existing powers and a desire to pursue interventions such as discretionary licensing. IV. Promote best practice & co-operation. The DCLG consultation on proposals to remove the requirement for central government approval of new discretionary licensing schemes cited the important role played by the Local Authority Coordinator of Regulatory Services (LACORS) in sharing best practice. The subsequent reorganisation of Local Government Regulation (LGR) and dissolution of the Private Housing Group, which facilitated this collaboration, has further reduced the transparency and accountability of licensing scheme development. There is significant variation in the way in which local authorities approach the administration of licensing schemes, enforcement and sector engagement. There is disparity in effectiveness and quality of output leaving significant scope for stakeholders to assess common objectives, formulate solutions and learn from each other s experience. Currently there is limited evidence that this takes place, highlighted by the fact that authorities frequently make the same basic errors in local engagement and consultation when considering their applications. The NLA believes that if licensing is to continue, a facility for sharing best practice and consulting with impacted parties is essential. 8 Private sector housing research: Prosecuting landlords for poor property conditions, LGA, 2014, June 2014 Licensing Report 17

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20 Encouraging Renting Follow us: National Landlords Association 200 Union Street London SE1 0LX Tel: Web: NLALR v1 0215_5101