What Landlords Must Know About Selective Licensing

Chancellor Rachel Reeves has found out to her cost that licensing a buy-to-let home is complicated and expensive.

Rachel from accounts, as she is endearingly known, has apologised for failing to obtain a selective licence while renting out her home in Dulwich, South London, after moving into her grace and favour home at 11 Downing Street.

What she overlooked was that the four-bedroomed detached home is in a Southwark Council selective licensing neighbourhood.

The council helpfully publishes an online map showing the selective licensing zones so landlords can avoid confusion.

Reeves explained she had overlooked the need to apply for the licence before letting her home as the letting agent had agreed to take on the task.

Absolute offence

Well, that's all right then, said Prime Minister Keir Starmer, that's an acceptable reason for not having a licence.

But as many landlords without friends in high places know, it's not.

Southwark Council says any privately rented properties in a selective licensing neighbourhood not covered by other mandatory or additional licensing must have a selective licence.

The offence is absolute - a landlord either has a licence or they don't.

Palming the blame off on someone else is mitigation, but does not change the facts. The property owner has the ultimate responsibility for complying with the law, although an agent can be held liable too if they have contractually agreed to apply for a license on your behalf.

Penalties for not having a licence

"You can be prosecuted or fined if you're a landlord or managing agent for a property that needs a licence and do not get one," the Southwark Council website points out in bold type highlighted in red.

The same page has a handy invite to search the register of licensed homes under the warning.

The penalty for not having a licence varies from case to case.

"If a landlord cooperates with the council,an informal approach will be adopted so long as a valid application with the appropriate fee is subsequently made within a reasonable time scale. The time scale may vary depending on circumstance but will not be less than 10 working days," says Southwark Council.

"Consideration will be given to any representations regarding exceptional circumstances that may have resulted in the application not having been made. In other circumstances, the Council will investigate and if appropriate consider taking formal action, such as prosecution, applying for a Rent Repayment Order, or issuing a civil penalty."

A civil penalty under the new Renters Rights Act can cost from £7,000 to £40,000, an unlimited fine or a rent repayment order, which allows tenants to reclaim up to two years' rent.

How to find out if you need a licence

Councils publish details of which streets are covered by licences and a register of licensed properties online.

All houses in multiple occupation (HMOs) should have a mandatory licence, but not all councils have additional or selective licensing areas.

Most councils list this information in the housing section of their websites.

Don't expect a letting agent to know about licensing - unless they contractually state about licensing, and the buck stops with the landlord.