Licensing: What is it, and how do landlords comply?

Landlords have so many things to consider and it comes as no surprise that licensing is something which could get overlooked. Yet, it’s one of the most complex sides to life as a landlord and one that needs to be clearly understood. What makes it so tricky is that there’s no consistency in the rules across the UK, and there are different schemes to navigate.

If landlords fail to comply with the complex and ever-changing legislation, they could face a hefty fine of in excess of £30,000. Repaying this sum of money would be crippling for many landlords.

We want you to be as fully informed as possible, so we’ll shed some light on the two different types of license requirements:

1. Mandatory licenses for HMOs (Houses of Multiple Occupation)

HMO definition - landlords who rent a property to three or more tenants from two or more households are subject to mandatory licensing.  

GOV.UK states that:

A home is a House of Multiple Occupation (HMO) if both of the following apply:

• at least three tenants live there, forming more than one household
• tenants all share toilet, bathroom or kitchen facilities.

Your home is classed as a large HMO if both of the following apply:

• at least five tenants live there, forming more than one household
• tenants all share toilet, bathroom or kitchen facilities.

A household is defined as a single person or members of the same family who live together. A family includes people who are:

• married or living together
• relatives or half-relatives, for example, grandparents, aunts, uncles, siblings
• step-parents and step-children.

To avoid a fine, you must:

• Get your HMO licensed by the Local Authority 
• Have the property inspected to ensure there are no health and safety risks
• Provide copies of annual gas safety certificates
• Conduct electrical safety tests and install smoke alarms on each floor 
• If any rooms have a coal fire or wood-burning stove, they must have a carbon monoxide alarm.   

As well as mandatory licenses for HMO’s, some local authorities have additional license schemes. The criteria to comply can vary from area to area – but your local branch can help you navigate the rules.

2. Selective Licensing

Selective Licensing definition: Selective Licensing is a scheme that requires most private rented properties to be licensed. It means that houses need to be licensed to have one or two tenants or a family living there.

The licensing scheme was introduced in 2006 so that certain Local Authorities have greater powers to address the impact of poor-quality private landlords and anti-social tenants and was intended to raise standards in the private rented sector.

If landlords aren’t compliant in locations subject to selective licensing, then penalties could be costly. You must find out whether your properties are in an area that has, or is launching, a licensing scheme.

To avoid a fine, you must:

• Contact your local council to check whether the property is within an area that requires a Selective License
• If it is in an area that requires a license, you will need to submit an application.

Each scheme has its own set of conditions to be granted a license, which the landlord must meet. Yet, there are mandatory conditions that you need to address, including:

• A valid gas safety certificate
• Electrical appliances and furniture (supplied under the tenancy) must be in a safe condition
• Smoke alarms must be in proper working order
• Landlords must provide the tenant with a written statement of the terms of occupation
• Landlords must demand references from persons wishing to occupy the house.

If you need help navigating the treacherous licensing terrain, speak to your local branch. We operate a license application service, helping you to navigate the ever-changing rules of mandatory and selective licensing.