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How can property licensing reach its full potential in London?

More resources, better data, and increased powers were what council staff told us they needed to better help renters.

Renting in London is getting harder. Soaring prices and a shortage of properties means many Londoners are ending up in poor-quality accommodation, unable to afford anything else.

One way in which councils in London are trying to improve conditions for renters is property licensing: requiring landlords and letting agents to get a license to rent out residential property.

17 of the 32 London Boroughs currently have ‘selective licensing’ schemes. We wanted to see what we could learn from their experiences about how property licensing might be able to help more renters.

In October 2022, we brought together representatives from London councils to discuss the successes and challenges of property licensing in the capital.

The discussion also reflected on how the government’s proposed ‘Property Portal’ (effectively a national landlord register) could interact with property licensing, and what features it would need to be effective.

Here’s what we found out.

The benefits of property licensing in London

Our attendees stressed that licensing is an effective tool for improving conditions for renters in London.

Property licensing has allowed many councils to be proactive in addressing hazards and issues that would otherwise go unreported by tenants.

Though many tenants are living in poor conditions across the city, they are often too afraid to report problems for fear of eviction.

Under section 21 of the Housing Act, landlords are able to evict tenants without reason, often called ‘no fault evictions’. (The government has promised to abolish section 21 evictions, as outlined in the White Paper on renting ‘A Fairer Private Rented Sector’.)

With the information and revenue licensing brings, councils are able to conduct a greater number of proactive property inspections. This enables more formal interventions, resulting in more improvements in property conditions.

Limited capabilities are holding councils back

However, the effectiveness of property licensing in London can be limited by a lack of resources.

The lack of qualified, trained staff to undertake inspections and assist councils with their applications for schemes was highlighted by many of our attendees. As a result, local authorities can end up competing with each other for talent.

Licensing also requires robust and competent IT systems to manage all the data collected on landlords and properties. However, these systems are not already in place in many local authorities, meaning they must invest in expensive, tailored IT packages.

Difficulties with the application process

One of the most resource-intensive elements of licensing is the application process.

If a proposed licensing system will cover over 20% of private rented properties in the borough, councils have to apply to the Secretary of State for permission to implement it. Councils can spend over a year gathering the information needed to present their case for licensing to the Secretary of State.

Often schemes are rejected by central government, but the feedback provided is vague. Local authorities often don’t know why their application was unsuccessful, and what the benchmark is for meeting certain criteria.

To address this issue, some of our attendees called for a more unified approach across councils for putting together a scheme, using expertise from each other. The Greater London Authority was cited as a body that could provide the resources for this.

However, others argued that the devolution of licensing powers to local authorities is needed to truly make the system more efficient.

A national landlord register

All of our speakers welcomed the idea of a national landlord register, which could collect basic data about all landlords.

They argued that property licensing and landlord registration should be two parts of the same regulatory framework – the national register could work like vehicle registration, while licensing could work like a driver’s license. This type of model has been proposed by various housing campaigners and researchers.

As well as collecting details about landlords and their properties, some attendees suggested that mandatory training for all landlords should be part of registration. This is already a feature of Wales’s national landlord registration system. However, others were concerned that training for all landlords might be unrealistic.

Another suggestion was for each landlord to be given a unique registration number, which would be required to be displayed in all property advertisements, as exists in Scotland. This would enable tenants and councils to easily identify landlords, and prevent issues with landlords providing vague or incorrect names to licensing authorities.

A final suggestion was to link registration to a declaration stating that landlords’ homes meet the Decent Homes Standard.

Conclusion

Further funding for councils for enforcement, information sharing between local authorities, and devolution were some of the solutions proposed by our attendees to help property licensing reach its full potential in London.

Though we are yet to see what the government’s ‘Property Portal’ will look like, our discussion highlighted that together with licensing, landlord registration could help create an effective regulatory framework to improve conditions for renters.

Through our research project, License to Let, we are investigating:

  • how local licensing has worked across the country
  • how licensing could interact with a national landlord register
  • and how to design a licensing system that works best for London.

If you’re interested in getting involved with the project, please contact Jon Tabbush.