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MARCH 20, 2019 | BY A & S Property

The most expensive landlord licence costs 21 times more than the cheapest

Landlord licensing schemes are being introduced across England, while they are mandatory in Scotland and Wales, as local authorities attempt to clampdown on rogue operators.

But while councils argue that selective licensing schemes are a key weapon in the battle to improve standards in the private rented sector, many landlords believe these schemes are simply a money-making exercise designed to boost council coffers, with new research showing that the most expensive landlord licence costs 21 times more than the cheapest.

Fresh analysis of licensing charges between local authorities show a large variance, with the cost of a new licence ranging from just £55 to £1,150.

The research from Direct Line for Business found that in Liverpool, the cost of a licence for a first property is £412, whereas in Salford just 30 miles away it is 51% higher at £625. The average landlord licence across the UK costs £591.

While in Scotland and Wales landlord licence schemes are mandatory, in England just one in six – 16% - of local authorities have a scheme in place.

It is estimated that 460,000 rental properties in England are now covered by a landlord licensing scheme.

Licencing schemes allow councils to establish if landlords are a ‘fit and proper’ person to be a landlord and can include regulations concerning the management, upkeep and safety measures of a property.

Those renting out a house for multiple occupation (HMO) need a mandatory licence. However, councils are increasingly introducing their own additional and selective schemes to raise revenue. 

In the London Borough of Newham, for example, the cost of an additional licensing scheme increased by 150% in just three years, from £500 in 2014/15 to £1,250 in 2017/18.

Local authorities are raising huge sums from additional landlord licensing schemes, with Liverpool City Council receiving over £4 million in a year covering over 42,000 properties. 

On average, each council with a scheme in place raised £144,629 from landlord licensing schemes in 2017.

Some argue that the worst criminal landlords will simply carry on staying under the radar. But local authorities across the UK recorded an average 5,069 licensing offences in 2017, an increase of 46% since 2016 (3,476 offences).

The average fine for a licensing offence in 2017 was £926.

Matt Boatwright, head of Direct Line for Business, said: “Our analysis shows landlord licensing is truly a postcode lottery, with a phenomenal range of costs for those that do have to sign up for a scheme. 

“Anyone planning on becoming a landlord, or who already has a property portfolio, should contact their local authority to see if they have a scheme in place.”

All landlords in Wales are required to register with Rent Smart Wales and since the start of 2017 there have been a total of 11,392 successful landlord licence registrations in Wales. 

Rent Smart Wales has generated over £1.54m in revenue from successful applications since the start of 2017.  If a landlord does not register, is unlicensed or uses an unlicensed agent, they can be issued with a fixed penalty.

Since the start of 2017, there have also been 1,625 licences granted to agents, those who let or manage a rental property in Wales. These registrations generated £211,321 in revenue. 

It is a criminal offence to rent out a property without registering with a local council in Scotland, with fines of up to £50,000. 

Landlords renting out properties in Scotland are also required to sign onto the Landlord Registration central online system. Since the start of 2017, there have been over 22,000 new landlords registered and over 46,000 successful renewals. Everyone carrying out letting agency work also must apply to join the Scottish Letting Agent Register.

Boatwright added: “It is vital that landlords comply with all appropriate legislation and take steps to protect themselves and their investment, including appropriate landlord insurance.”

Whatever the cost of licensing, it fails to provide any assurance about the quality of accommodation, according to David Smith, policy director for the Residential Landlords Association (RLA).

He said: “The RLA’s own analysis shows that there is no clear link between a council having a licensing scheme in place and levels of enforcement against criminal landlords.

“The fundamental problem with all schemes is that it is only the good landlords who come forward to be licensed. They completely fail to identify the crooks. They just mean landlords, and therefore tenants, having to pay more. Instead, councils need to be more creative in how they identify landlords by better using the powers they have to collect data using council tax returns and accessing information from deposit schemes.”

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