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Under parts 2 and 3 of the Housing Act 2004 (the Act) Local Authorities have the power to introduce a discretionary licensing scheme.
There are two types of scheme that can be considered; Additional Licensing and Selective licensing.
Additional licensing under section 56 of the Act allows the local authority to extend the Mandatory HMO licensing scheme to include other types of HMO. Section 56 (2) states that;
‘The authority must consider that a significant proportion of the HMOs of that description in the area are being managed sufficiently ineffectively as to give rise, or to be likely to give rise, to one or more particular problems either for those occupying the HMOs or for members of the public.’
Work was undertaken in 2007 to look at the viability of introducing an Additional HMO licensing scheme. Some basic consultation and research was undertaken at this time; however, although there are significant numbers of buildings within the area which are converted into flats, data on the area suggests that many of these do not fall within the definition of an HMO under the Act (s254 and s257). All those properties that fall within the mandatory licensing scheme already have a licence and the remaining buildings are generally flat conversions carried out since 1991. This means that they are not HMO under section 257 of the Act and therefore, this type of discretionary licensing would only be applicable to a small number of problems and be unlikely to have a significant impact on the issues in the area or the quality of the rented accommodation.
Selective licensing is a regulatory tool provided by Section 80 of the Act. This section states that a selective licensing scheme can be declared if one of two general conditions is met. The first relates to low housing demand:
Section 80 (3.)
‘ the area is, or is likely to become, an area of low housing demand and that making a designation will, when combined with other measures taken in the area by the local housing authority, or by other persons together with the local housing authority, contribute to the improvement of the social or economic conditions in the area.
Section 80 (4) In deciding whether an area is, or is likely to become, an area of low housing demand a local housing authority must take into account (among other matters)
(a) the value of residential premises in the area, in comparison to the value of similar premises in other areas which the authority consider to be comparable (whether in terms of types of housing, local amenities, availability of transport or otherwise);
(b) the turnover of occupiers of residential premises;
(c) the number of residential premises which are available to buy or rent and the length of time for which they remain unoccupied.’
The second relates to anti social behaviour:
Section 80 (6)
(a) that the area is experiencing a significant and persistent problem caused by anti-social behaviour;
(b) that some or all of the private sector landlords who have let premises in the area (whether under leases or licences) are failing to take action to combat the problem that it would be appropriate for them to take; and
(c) that making a designation will, when combined with other measures taken in the area by the local housing authority, or by other persons together with the local housing authority, lead to a reduction in, or the elimination of, the problem.
“Private sector landlord” does not include a registered social landlord within the meaning of Part 1 of the Housing Act 1996 (c. 52).’
A document issued by Communities and Local Government in 2007 ‘Approval steps for additional and selective licensing designations in England’ provides guidance on how to apply for a discretionary licensing designation. Up until April 2010 all designations had to be agreed by the Secretary of State, however the Housing Act 2004: Licensing of Houses in Multiple Occupation and Selective Licensing of Other Residential Acousing Housing Accommodation (England) General Approval 2010 provides the local authority with the power to designate a selective licensing scheme.
The guidance states that a designation may be made if the area to which it relates satisfies one or both of the conditions.
In order to meet these conditions sufficient evidence must be presented. The guidance provides an outline of the information that should be evidenced.
The guidance says:
‘Low Housing Demand
When deciding if an area is suffering from, or likely to become, an area of low housing demand, section 80 (4) of the Act requires LHAs to consider the following factors:
The second set of factors above are examples of the types of characteristics which an area suffering from low demand, or is likely to become such an area, could demonstrate. These examples are clearly not exhaustive characteristics of an area in low demand, neither are the factors mutually exclusive.
Anti-Social Behaviour
Section 80 (6) (a) of the Act gives LHAs the power to make a Selective Licensing designation if “the area is experiencing a significant and persistent problem caused by anti-social behaviour.”
An area can be deemed to be suffering from significant and persistent anti-social behaviour if it suffers from:
Section 80 (6) (b) of the Act requires LHAs to consider that:
A landlord has responsibility to ensure persons he has permitted to reside at a property do not cause an annoyance or nuisance to other persons residing in it, or other persons living, working or visiting the immediate neighbourhood. If anti-social behaviour is being carried out within the immediate vicinity of the property and is being caused by the occupiers of it, then it would be reasonable to expect a landlord to ensure that those persons are not conducting themselves in a way that is adversely impacting on the local community. This applies equally to visitors to the property.' (Approval steps for additional and selective licensing designations in England, CLG)
The Guidance is clear on the information the local authority is required to provide. Section 4 details the proposal for a selective licensing scheme in Thanet and the evidence that this type of scheme is needed.
By making the designation, all privately rented accommodation in the designated area will require a licence. Owners of rented properties will be required to make an application to the Council for a licence and will need to nominate either the manager or the owner to be the licence holder.
Section 79(2) details those houses that are covered and this is defined as a whole house that is occupied either under
a) a single tenancy or licence
b) under two or more tenancies or licences in respect of different dwellings contained in it.
This definition has been interpreted to mean the following:
a) A house let under a single tenancy only requires one licence.
b) Where the freeholder of a building containing a number of flats, owns all the flats and lets those flats on tenancies or licences (not including long leasehold), then the freeholder will be required to apply for one licence to cover the whole building containing the flats.
c) A building containing flats where each flat is owned by a long leaseholder and the flats are individually rented out, the leaseholder will be required to apply for a licence for their individual flat.
d) A building containing flats where there is a mixture of different long leaseholders and accommodation owned by the freeholder, each of the leaseholders would require an individual licence for their flat or flats and the remaining accommodation would require a licence applied for by the freeholder.
e) Landlords who own more than one ‘house’ under the above definitions within the designated area will need to apply for a licence for each of those houses.
f) Houses being used as houses in multiple occupation and are not covered by the Mandatory licensing scheme, will need a licence and the owner or manager will be required to apply.
Exemptions
There are exemptions from the scheme and these can be found in appendix three.
Section 87 of the Act details the application process for a licence. In particular this section states that an application must be made in accordance with such requirement as specified by the authority. It also states that the authority may require the application to be accompanied by a fee fixed by the authority. When fixing fees under this section of the Act the local housing authority may take into account all costs incurred by the authority in carrying out their functions under this part of the legislation and all costs incurred in carrying out their functions under Part 4 of the Act chapter 1 which relates to management orders.
Details on the application process and how Thanet propose to calculate the fee are detailed in section 4.
The application process is detailed within the Act and there are subsequent regulations detailing the contents of an application form. This includes providing information on the property layout, certificates for gas, furniture and fire safety. The Licensing and management of Houses in Multiple Occupation and Other Houses (Miscellaneous Provisions) (England) Regulations 2006 schedule 2 provides full details on what must be included within in an application this includes determining if the manager or proposed licence holder is a fit and proper person. This requires the declaration of any unspent convictions, unlawful discrimination and prosecutions under housing, public health, environmental health or landlord and tenant law.
Once an application has been made the local authority must consider whether to grant or refuse the licence. If the licence is granted it will have conditions attached to it. Section 90 and Schedule 4 of the Act details the mandatory licence conditions that must be included, however there is provision for the local authority to add additional conditions that are either specific to the licence in question or that are locally agreed to address specific issues.
‘A licence under Part 2 or 3 must include the following conditions.
1. Conditions requiring the licence holder, if gas is supplied to the house, to produce to the local housing authority annually for their inspection a gas safety certificate obtained in respect of the house within the last 12 months.
2. Conditions requiring the licence holder—
a) to keep electrical appliances and furniture made available by him in the house in a safe condition;
b) to supply the authority, on demand, with a declaration by him as to the safety of such appliances and furniture.
3. Conditions requiring the licence holder—
a) to ensure that smoke alarms are installed in the house and to keep them in proper working order;
b) to supply the authority, on demand, with a declaration by him as to the condition and positioning of such alarms.
4. Conditions requiring the licence holder to supply to the occupiers of the house a written statement of the terms on which they occupy it.
Additional conditions to be included in licences under Part 3
5. A licence under Part 3 must include conditions requiring the licence holder
to demand references from persons who wish to occupy the house.’
Section 4 will provide details of those additional conditions that are likely to be included by Thanet council under this scheme.
A licence would be valid for 5 years; however, the local authority has the discretion to grant the licence for a shorter period of time where there are problems with the application such as evidence of insufficient management.
Once the licence has been issued the licence holder must comply with the conditions attached to the licence. Where there is a breach of those conditions the licence holder may be prosecuted with a fine of up to £5,000 per breach.
If the licence application is refused the local authority must instigate an interim management order. This is where the local authority takes over the management of the property for up to one year or until such time as the owner is able to rectify the reasons for the licence being refused. If the owner is unable to rectify the problems then the local authority can apply for a Final management order where they take on the management for up to 5 years.
In some circumstances rather than refuse the licence it may be possible for the owner to apply for a temporary exemption notice under section 86 of the Act. This allows 3 months for the owner to take such steps as are necessary so the property no longer requires a licence.
Where a property requires a licence but the owner has not applied for one the owner can be prosecuted. Failing to apply for a licence could lead to prosecution and a fine of up to £20,000.
In addition to the fine there is a provision under section 96 of the Act for a Rent Repayment Order. This allows amounts paid in respect of a house or other periodical payment payable in connection with a tenancy or licence to be recovered for the period that the property should have been licensed.
Under section 98 of the Act there is also a restriction on terminating tenancies where a property is not licensed. This section states that ‘No section 21 notice may be given in relation to a short hold tenancy of the whole or part of an unlicensed house so long as it remains a house’.
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Housing Regeneration Team
E-mail:
housing.conditions @thanet.gov.uk
Tel: 01843 577437
Further information for private landlords here