Context
Three types of mandatory licensing were introduced on 6 April 2006 as part of the Housing Act 2004; mandatory HMO licensing, additional HMO licensing and selective licensing.  Properties with three or more floors and five or more tenants belonging to two or more households  are required to hold a licence from their Local Authority.

Licensing aims to raise management and amenity standards in the HMOs  where tenants are often young or vulnerable people and where the very worst of housing standards have been found including poor fire safety standards, overcrowding, inadequate facilities and poor or unscrupulous management.

Landlords, and agents working on their behalf, will have to demonstrate that they are “fit and proper” against criteria set on the licence application form.

Unfortunately recent press scaremongering and misleading advertising has led to high levels of concern amongst some landlords and tenants.

RICS view
RICS believes that the rationale of mandatory licensing, to raise standards, is sound but there are legislative and implementation challenges to be faced.

RICS is concerned that with no centralised policy for licensing, including fee capping, Local Authorities not only have the ability to set their own licence fee but also to alter the minimum standards of compliance if it is felt necessary.  This could result in an un-level playing field across Local Authorities. 

We are also concerned about the potential adverse effects on the rental market either due to the cost of the licence and work required to bring a property up to standard being passed on in higher rents or landlords being  put off leasing to sharers and therefore reducing the rental stock available.  In Scotland, where licensing was introduced in 2003, the market did remain stable but we still believe the situation should be monitored.

Enforcement measures also appear limited and rely heavily on policing by tenants who may not be aware that they have rights such as rent repayment.

RICS also recognises that landlords or agents may face challenges in trying to ascertain tenant relationship as it may be felt to breach privacy rights.

Likewise ascertaining whether properties such as maisonettes should be regarded as a licensed HMO may prove complex.

Also with only 3 months available for landlords to apply for a licence RICS is concerned that some properties will not be checked by their Local Authority for some considerable time, especially in areas of high HMO concentration.

Ultimately RICS is concerned rogue landlords will simply slip under the radar as it will be easier to monitor those who sign up for licenses rather than those who do not.

RICS recommendations
RICS would welcome a more uniform approach and detailed specifications for licensing as well as a strong campaign clearly stating the rights and expectations of tenants and landlords of HMOs. We will be monitoring how the system develops.