What does Brighton & Hove’s licensing scheme proposal mean to Landlords & Tenants?

 

As you may know licenses are required for HMOs (Houses of Multiple Occupation) both locally and nationally, depending on the property use, size and often location. Back in NOV-16 I attended a National Landlord Association meeting in response to the Brighton & Hove County Council (BHCC) Housing & New Homes meeting putting forward proposals for a new licensing scheme. I have been following it ever since.

To set the scene what are the HMO requirements?

Although this post relates to a proposed new licensing scheme I thought it would be beneficial to go over what we already know:

The Housing Act 2004 requires landlords of larger HMO to apply for licences. Citywide National Licensing HMOs that need to be licensed are those which:

  • have three or more storeys, and which are
  • occupied by five or more people forming two or more households (ie people not related or living together as a couple), and
  • have an element of shared facilities, (eg kitchen, bathroom, etc)

As of OCT-2012 the council added (initially) 7 Wards under a locally adopted scheme Additional Licensing for smaller HMOs in twelve wardswhich applies to:

  • smaller houses in multiple occupation consisting of two or more storeys
  • with three or more occupiers from two or more households sharing facilities
  • as far as licensing is concerned, attics and basements are included as storeys if they are used as part of the living accommodation

From JUL-2015 5 more Wards were added making a total of 12. For these smaller HMOs many Landlords chose to let to a single Tenant, two occupiers or two households thereby falling outside the requirements and fee. This often reduces the achievable rent and also the already stretched market loses another bedroom, subsequently increasing rents for Tenants.

What are they proposing?

Following the notes of their NOV-16 meeting BHCC are proposing ‘Selective Licensing’ for all non-HMO Private Rental Sector (PRS) property throughout the city based on “sufficient evidence to demonstrate a significant proportion of HMOs are being managed sufficiently ineffectively to support the introduction of citywide Additional HMO Licensing to smaller houses in multiple occupation, and of poor property conditions and significant and persistent anti-social behaviour”. Frankly I cannot agree with this as they do not have the man-power to prove the first part and during my 9 years in this city I have not yet heard of a common anti-social behaviour issue in any form via on or off-line media.

The report also states very clearly that their findings are entirely based on theory rather than fact. Their heat map of ‘Geographical density analysis: Private Rented Sector & Requests for Assistance’ also happens to be the most densely populated areas of Brighton and Hove. The ‘Wards table comparing the size of the PRS with housing conditions and Anti-Social Behaviour (ASB)’ shows that Rottingdean is just as bad as Preston Park. I don’t want to bore you, the report is an endless list of data based on theory, and do the Police Force actually ask if a report of ASB relates to a PRS property, social housing or privately owned?

You can see the full report by clicking here.

The report was based on a 3rd party summary seen by clicking here.

BHCC are highly likely to roll Additional Licensing out across the city and the new Selective Licensing is likely to be applied to 12 Wards – St Peter’s & North Laine, Regency, Moulescoomb & Bevendean, Hollingdean & Stanmer, Queens Park, Hanover & Elm Grove, Brunswick & Adelaide, East Brighton, South Portslade, Central Hove, Westbourne & Preston Park.

What does an HMO cost?

Planning is often required to get to the stage where you can then apply for an HMO, more often for National Licensing type HMOs. Pre-planning advice is now chargeable if required and the planning application will cost £172.

Licensed HMOs are generally expected to meet the council’s HMO Licensing Standards. Any work necessary for compliance is required by way of conditions attached to the licence. Fees start at £654 and go upwards from there depending on size and type of HMO.

Why do they want to do this?

As you may have read over recent years local authorities are having budgets cut across the UK and need to make up deficits, often to ensure staff can remain in their positions. It could be said that the pressure they are being put under by these cuts is unfair and puts them in a very difficult position. Licensing seems to be quite a good vehicle for creating revenue, covering current salaries and even creating new jobs. Could that have anything to do with the proposed licensing scheme? Hmmmm.

There is precious little data on the number of Additional HMO type property in Brighton so just looking at the Selective Licensing numbers for the suggested 12 Wards it would result in 27,000 new licenses and going on the lowest fee of £460 that equates to £2.5 million per year over the five year period, or 83 x £30,000 PA salaries. Remember this is just Selective Licensing figures. They have stated they are not permitted to use the funds outside of the scheme and to be fair they may well need that many new employees to administer and regulate all of these properties properly. Something tells me it may not work out that way.

The one positive I can see is that if this works it may help reduce the impact of the so called ‘Rogue Landlords’ who generally ignore health & safety, Landlord obligations and Tenant deposit legislation. BHCC state that if these new schemes are put in place a Landlord will not be able to let their property without passing this ‘fit and proper’ check. The local authority do have powers to inflict large fines where relevant and also rectify major health and safety breaches which, if it works, can only be a good thing for the industry. I hasten to add that from my experience Rogue Landlords are in a huge minority and as with many areas of life unfortunately it is these rule flouting minorities who tend to end up in the papers rather than the rule following majority.

Otherwise this seems like yet another tax on Landlords to add to the list, will likely push more out of the market, further reducing stock, increasing rents and making life harder for Tenants not better. But what do I know, I’m just a letting agent.

If you are a Landlord with a property in this area the increased Additional Licensing is proposed to begin in SPRING and Selective Licensing in SUMMER. You can keep an eye on things on BHCC website here. We will be offering a service to assist in the licensing process if required and always happy to just have a chat if you prefer. 

 

If you need any assistance letting your property in Brighton, Hove, Kemptown and surrounding areas or if you just have some general queries please feel free to contact us on +44 (0)1273 646426 or lettings@bishopsullivan.co.uk

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Best Regards,

julian-sig

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