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Determining whether you need a license for your UK rental property isn’t always straightforward, as different areas of the country have different rules.
However, given the strict penalties for non-compliance, landlords must do their research and ensure they thoroughly understand their obligations when it comes to licensing.
In this article, we’ll explore the rules surrounding landlord licensing schemes in the UK and the process for obtaining a licence to help landlords to comply.
What are the Laws Surrounding Landlord Licences in the UK?
Landlord licensing rules throughout the UK are eclectic, to say the least. If you manage a rental property in Wales or Scotland, things are somewhat simpler, but it gets more complex if your rental property is in England. Let’s take a look at how the rules vary.
Landlord Licensing in Wales
In Wales, all landlords and agents need a license to manage privately rented property legally.
Licensing rules in Wales were introduced under the Housing (Wales) Act 2014. Licenses can be obtained from Rent Smart Wales, providing landlords can show evidence that they have been suitably trained for the role, declare that they are a ‘fit and proper person’, and pay the licence fee.
All landlords must complete an approved Rent Smart Wales training course before they submit their licence application.
Landlord Licensing in Scotland
Landlords in Scotland do not require a licence but must pay to register themselves and their properties with the Scottish Landlord Register.
One of the conditions of becoming a registered private landlord is that you must be a ‘fit and proper person’. This is also a condition of obtaining a licence in other parts of the UK.
Registrations are valid for three years, after which they must be renewed.
Landlord Licensing in England
In England, there are three different types of landlord licences, each introduced under the Housing Act 2004. These are selective licensing, additional licensing, and mandatory HMO licensing.
Selective licensing can apply to any rented property within a set area, whereas mandatory licensing and additional licensing only apply to houses in multiple occupation (HMOs).
Let’s learn more about each licence type and when landlords are required to apply for them.
Landlord Selective Licensing in England
Selective licensing was introduced in England in April 2006 under the Housing Act 2004 to improve standards in the private rented sector.
The legislation allows local authorities to apply for selective licensing of all properties that are either let or occupied under a licence within an area. Some councils may operate the scheme within their whole authority, but many only operate it in certain areas. Once they have applied, a consultation will take place to decide whether to grant the designation. Selective licensing may be granted if the area meets one or more of the following conditions:
- Low housing demand.
- A significant and persistent problem caused by anti-social behaviour.
- Poor housing conditions.
- High levels of migration.
- High levels of deprivation.
- High levels of crime.
However, selective licensing should only be granted when it is deemed that there is no practical or beneficial alternative.
Landlord Mandatory HMO Licensing in England
Regardless of what area of the country you’re in, all landlords in England managing a large house in multiple occupation (HMO) are required to have a licence. This includes student HMOs.
The government defines an HMO as “a property rented out by at least three people who are not from 1 ‘household’ (for example, a family) but share facilities like the bathroom and kitchen.”
An HMO is defined as a large HMO when it meets the following criteria:
- It is rented to 5 or more people who form more than one household.
- Some or all tenants share toilet, bathroom or kitchen facilities.
- At least one tenant pays rent (or their employer pays it for them).
HMOs often house a large number of tenants, all sharing basic amenities. Over the last 10-20 years, the number of HMOs has grown significantly, in line with the demand for this type of shared living.
Before the introduction of mandatory licensing, there was a growing number of rogue landlords letting substandard, overcrowded, and potentially dangerous HMOs. Mandatory HMO licensing was introduced to improve the safety and well-being of tenants living in shared housing.
While licensing is only mandatory for large HMOs, some small HMOs will also need to be licensed if they are in an area where a selective or additional licensing scheme is in place, so HMO landlords should always check with their local authority.
Landlord Additional Licensing in England
If a local authority believes that a significant proportion of HMOs in the area are being managed ineffectively, they can extend licensing to bring more HMOs within the scope.
The terms of additional licensing schemes vary depending on the scheme’s requirements as decided by the local authority and the licensing consultation.
Some additional licensing schemes apply to the whole borough, whilst others only apply to a small area within a borough. Equally, some additional schemes will apply to all HMOs, regardless of size, whilst others will only apply to those with four or more people sharing a property.
Landlords should contact their local authority to find out if an additional licensing scheme is in place and, if so, the unique terms of the scheme.
How to Find Out if you Need a Licence
If you manage an HMO rented by five or more people who form more than one household, you definitely require a licence.
Otherwise, you should check with your local authority if you need one. You can find your local council on the government’s website by entering your rental property’s postcode.
Most local authority websites have a section dedicated to different types of licences. You can find out here which licensing schemes are active in the area.
How to Get a Licence
Licences are issued per property, not per landlord, so you will need a separate licence for each property you manage within a licensed area.
Landlords in England should apply for a licence with their local authority. Applications are usually made online through the local authority’s website, although you may be able to get a paper application upon request.
In most cases, you create an online account with your local authority and then access, complete, and submit an application form for a licence online. If you apply online, you can usually track the progress of your application, pay the fee, and raise any queries online too.
Tenants can also visit the local authority’s website and search its licensed properties register to ensure that the property they are renting is licensed if it should be.
Requirements for Getting a Licence
The requirements for obtaining a licence vary from one licence type to another and one local authority to the next.
However, there are a few standard requirements that remain the same for all licences; these include:
The person managing the property must be ‘fit and proper’ to do so
The property manager means you, the landlord, or your agent. For a person to be considered ‘fit and proper’ to manage a property, they should not have a criminal record and should not have previously breached landlord laws or codes of practice.
Health and safety requirements
You must also be able to meet the licence’s minimum health and safety requirements. This will usually include providing the following:
- A valid gas safety certificate
- An electrical installation condition report
Relevant documentation
Some of the documentation that you may require to apply for a licence include:
- Proof of address
- Property details
- A property floorplan
- A copy of the tenancy agreement
- Proof of landlord insurance
Further HMO requirements
As well as satisfying the standard requirements listed above, HMO licences will only be issued if a property is deemed suitable for the number of occupants (this depends on its size and facilities).
To meet the licensing conditions, some landlords may need to carry out significant work on their property to align it with the required standards.
The type of work that may be required includes:
- Upgrading the fire alarm system and installing fire doors.
- Installing basins in all bedrooms.
- Providing additional toilet facilities.
- Improving kitchen facilities.
Landlords should also familiarise themselves with the rules surrounding minimum bedroom sizes. Renting out a room that breaches the minimum bedroom sizes would mean breaching the terms of the licence and could result in a serious financial penalty.
How Much do Licences Cost?
Landlords are required to apply for one licence per property, and the cost of obtaining a licence varies from one council to the next.
The cost of a licence ranges from about £400 to over £1000. Licences last a maximum of five years before they need to be renewed. It’s important to remember to renew your licence before it runs out.
What are the Consequences of Non-compliance with Licensing?
Compliance with licensing regulations is not optional; it’s the law.
Landlords that fail to comply with licensing rules could face a hefty fine of up to £30,000 for each offence.
On top of fines, landlords flouting the rules could also be charged a rent repayment order.
The most serious offenders could also face a property rental ban.
Whilst complex, landlord licensing schemes have been implemented to improve standards in the private rental sector and are viewed as a positive step towards better quality private rental housing and greater accountability for landlords.
However, the lack of uniformity in licensing rules across different local authorities can make it difficult for landlords to understand what is required of them, especially if they manage multiple properties in multiple areas. This can lead to landlords unintentionally breaching licensing laws. Remember, it is your responsibility to stay informed about licensing rules within your local area to make sure that you don’t get caught out.
