Research reveals PRS mandatory licensing is rife with non-compliance in London

There are over 310,000 private rented properties in London that require licensing under mandatory HMO, additional and selective licensing schemes implemented under the Housing Act 2004, new research has found.

Whilst the mandatory HMO licensing applies across England, additional and selective licensing schemes are introduced on a borough by borough basis, with the aim of improving standards in the Private Rented Sector (PRS).

However, non-compliance in the capital is rife, says a report from safeagent conducted by London Property Licensing using Freedom of Information (FOI) requests, and licence applications have been submitted for only 25% of the 138,500 private rented properties that require licensing, a non-compliance rate of 75%.

It points out that without a licence application submitted, these properties are being operated illegally, potentially putting tenants at risk.

If they are caught operating an unlicensed property, landlords and their letting or managing agent, can face prosecution and a hefty fine, or a civil penalty of up to £30,000. The landlord can also be ordered to repay up to 12 months’ rent. However, many could be falling foul of the law through ignorance of the complex regulatory framework.

Since October 2018, the mandatory HMO licensing scheme has applied to most HMOs shared by five or more people whereas it was previously restricted to properties three or more storeys in height.

In some boroughs, additional licensing schemes have extended licensing to properties rented to just three or four unrelated people. This complicated picture also makes it hard for council enforcement teams to assess which properties should have a licence.

The picture for selective licensing is markedly different. These schemes extend licensing to all private rented properties including single family lets within a certain geographical area. Licence applications have been submitted for 85% of the 173,000 private rented properties that require licensing under selective licensing schemes in London- a non-compliance rate of 15%.

Added to the confusion over licensable properties, many London boroughs are struggling to process over 24,000 licence applications – a huge administrative burden that can lead to long delays in issuing licence approvals. Currently, about 40% of boroughs still rely on paper applications.

Safeagent is calling for a simple, streamlined licensing process which would make it more cost effective for the public purse, easier for councils to enforce, and clearer for landlords and agents to understand whether a property should be licensed.

‘The results of the survey are concerning. Consumers are not being well served and indeed many are being placed at risk through this mishmash of licensing schemes. Right now, the system isn’t fit for purpose and councils are drowning in paperwork,’ said Isobel Thomson, safeagent chief executive officer.

‘Landlords needing property licences are either deliberately evading the schemes or are in the dark concerning their legal responsibilities and tenants are being placed at risk. If the compliance rate for HMO licensing schemes is only 25%, how can these schemes be effective?’ she explained.

‘Ultimately this is about proper use of public money and consumer protection. Where are the assessment procedures for Councils who have schemes in place? Isn’t it time we went back to the drawing board to come up with a simple, streamlined system that works for all,’ she added.