Is compulsory landlord licensing the answer to poor standards in the private rented sector?

Interest in compulsory landlord licensing in the Private Rented Sector (PRS) has been growing in the wake of Newham’s well-publicised move to become the first borough in England and Wales to introduce the scheme last January. LGiU’s own research with the Electrical Safety Council (ESC) has found that a third of local authorities are considering a similar scheme, and the Labour Party recently announced that it’s considering a national scheme. National compulsory landlord licensing is not on the cards under the coalition, with Housing Minister Mark Prisk MP arguing that the problem is with enforcement of existing legislation. However, it’s worth taking a look at why some councils are considering their own schemes, and what outcomes they hope compulsory landlord licensing will deliver.

The Mayor of Newham, Sir Robin Wales, said that “the huge rise of the private rented sector has led to a situation where standards are slipping and poor management practices are becoming more common… The scheme will enforce the management standards everyone wants to see.” The Mayor cited pest infestation, gardens overflowing with rubbish and overcrowded properties as major issues he hopes compulsory licensing will address.

Newham is not the only borough which faces quality problems in the PRS. LGiU’s research with the ESC found that the top concerns for councils considering compulsory licensing are gas and electrical safety, fire safety and unscrupulous landlords. According to recent government figures, 35% of privately-rented homes do not meet decent standards, compared with 22% of owner-occupied homes and 17% of social housing.

Compulsory landlord licensing is seen by some as a way to improve living conditions and outcomes for residents. The impact of low quality, badly maintained and badly managed housing on a community can be devastating, leading to health risks, anti-social behaviour and a lower quality of life. Last month Newham council hit a landlord with a £12,000  bill for letting out properties in poor and dangerous condition without a license, one of which was deemed unfit for human habitation. Newham have pursued thirty prosecutions since the scheme started.

Critics argue that the scheme is a heavy-handed approach to the problem, which burdens the majority of law-abiding landlords with bureaucracy. Westminster, a leading Conservative council, acknowledges serious problems in the sector, but argues that existing legislation is sufficient to tackle the problem.

Some have also seen the scheme as a cynical income-generating exercise on the part of the council, which could even be counter-productive to overall aims. The scheme in Newham costs each landlord £500 for up to a five year licence, and critics say this could drive rogue landlords further underground. Moreover, the resources needed to enforce the scheme, including through inspections of properties, are likely to be considerable in terms of staffing and administration.

Six months into Newham’s scheme it’s success remains to be seen – we don’t yet know whether this is the answer to poor standards in the PRS. But we can be sure that the idea of compulsory licensing will continue to interest local authorities as long as they perceive problems with quality in the PRS – and with demand for housing increasing in many parts of the country, this concern is unlikely to go away.

What do you think of the scheme? Is your council thinking of introducing something similar? Let us know your thoughts below.

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