By D
30/09/2011

Back in the Consulting Room

The London Borough of Newham is holding a consultation on the introduction of selective licensing accross the whole borough. Selective licensing is a byproduct of the HMO licensing provisions in the Housing Act 2004. It permits a local authority to licence all landlords in a specific area where that area is one of low housing demand or anti-social behaviour, the local housing authority can show that there are problems which are in part due to poor housing management, and they can show that a licensing scheme will alleviate the problem. There is also an obligation to hold a consultation with stakeholders and affected parties.

However, it is not as simple as merely asking a few questions. There is guidance from the government on the nature of the consultation and the courts have been clear (in R(Peat & Others) v Hyndburn BC) that a licensing consultation must follow that guidance. One of the key parts of the guidance states:

During consultation, LHAs must give a detailed explanation of the proposed designation, explaining the reasons for the designation, how it will tackle specific problems, the potential benefits etc. For example, in the case of selective licensing, LHAs must be able to demonstrate what the local factors are that mean an area is suffering from low demand and/or anti-social behaviour, how those factors are currently being tackled and how the selective licensing designation will improve matters. Affected persons should be given adequate time to give their views and these should all be considered and responded to.

This is where Newham has started to go wrong. Their consultation contains loaded questions with no explanation of the meaning. For example there is a question about whether poor property management is a problem. However, this cannot be asked without specifying that the question is confined to landlords in the private sector and giving some idea of what is meant by poor property management. Another question asks if landlords should be obligated to take steps within their powers to deal with anti-social behaviour by their tenants but without outlining what the scope of those powers are.

It gets worse. The consultation goes on to give outlines of the licensing scheme Newham proposes. It will come as no surprise to most readers that local authorities do not have a completely free hand to impose any licensing scheme they please and there are specific restrictions imposed by the Act. So Newham state that they intend to charge one fee for landlords who licence early and a “penalty” fee of nearly ten times that sum for those landlords who have been prosecuted for failure to have a licence. Quite apart from the concern over Newham creating it’s own penalty scheme outside the proper jurisdiction of the magistrates courts, the law requires that Newham can only levy charges that reflect the costs of running the scheme. Newham will state that they are loading the cost onto those who cause then the most problems but they will have to show that the balance is fair and is a genuine reflection of the different costs of licensing the two groups. This might be hard for them to do.

In addition, Newham have set out a list of standard conditions they propose to attach to licences under the scheme. Firstly, the RPT has ruled that standard conditions which are automatically applied to all properties are inappropriate and conditions must be applied on a case by case basis even though there will often be a strong similarity in conditions among properties in the same area. There are also legal restrictions on conditions which can be imposed. For example one of the conditions Newham intends to impose is one:

Requiring the licence holder to provide each occupier with a written statement of the terms of his occupation which must contain anti-social behaviour clauses.

But HA 2004, s90(7) states that no condition can be applied to a licence which requires or intends to secure a change in the terms of the terms of the tenancy or licence that the property is occupied under.

Newham has every right to impose selective licensing but if it is serious about doing so it must do so within the law. There is an urgent need to rethink the terms of the scheme and to amend the consultation to bring it into line with guidance.

D is a solicitor specialising in landlord and tenant matters with a London firm.

1 Comment

  1. Shelini tanna

    Hi David

    great informative article from a legal perspective, is this selective process legal if the local authority are pushing it out to all private landlords in the borough? this now seems like a blanket policy. i was under the impression that selective licensing is to be used to deal with targeted problems, in a specific targeted area (like an estate)? then surely if that’s the case not all areas where private rented properties are in the borough are not falling foul of the so called rules so to raise fees in this fashion could be illegal?

    is there a legal argument against this proposal other than what is discussed in your atrticle?

    the local authority surely already have powers to deal with all aspects of challenges that they claim are from the private rented sector? and if so, should the council be publishing them with the consultation?

    Mrs Tanna

    Reply

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