The London Borough of Newham is holding a consultation on the introduction of selective licensing across the whole borough. It currently only operates selective licensing in one small pilot area. Selective licensing is a byproduct of the HMO licensing provisions in the Housing Act 2004. It permits a local authority to licence all landlords in a specific area where that area is one of low housing demand or anti-social behaviour, the local housing authority can show that there are problems which are in part due to poor housing management, and they can show that a licensing scheme will alleviate the problem. Part of the process requires a consultation with stakeholders and affected parties. Originally there was also a need to seek the permission of the secretary of state but that has now been removed.
However, a consultation is not as simple as merely asking a few pertinent questions. There is guidance from the government on what is required of a consultation. The courts have been clear (in R(Peat & Others) v Hyndburn BC) that a licensing consultation must follow that guidance. One of the key parts of the guidance states:
During consultation, LHAs must give a detailed explanation of the proposed designation, explaining the reasons for the designation, how it will tackle specific problems, the potential benefits etc. For example, in the case of selective licensing, LHAs must be able to demonstrate what the local factors are that mean an area is suffering from low demand and/or anti-social behaviour, how those factors are currently being tackled and how the selective licensing designation will improve matters. Affected persons should be given adequate time to give their views and these should all be considered and responded to.
It does not appear that Newham has followed the guidance correctly. Their consultation contains loaded questions with no explanation of the meaning. For example there is a question about whether poor property management is a problem. However, this cannot be asked without specifying that the question is confined to landlords in the private sector and giving some idea of what is meant by poor property management. Another question asks if landlords should be obligated to take steps within their powers to deal with anti-social behaviour by their tenants but without outlining what the scope of those powers are.
Licence Terms
The consultation goes on to give an outline of how Newham will operate its licensing scheme. Newham state that they intend to charge one fee for landlords who licence early and a “penalty” fee of nearly ten times that sum for those landlords who have been prosecuted for failure to have a licence. It seems inappropriate for Newham to levy these penalties when there is already a perfectly proper system of prosecuting landlords who fail to get licences with fines levied by the magistrates court. This allows the landlord to defend the matter and to produce a plea of mitigation. The Housing Act 2004 also requires that Newham can only levy charges that reflect the costs of running the scheme. Newham will no doubt say that they are only charging what it costs them but are loading the cost onto those who cause then the most problems. However, they will need to show that the balance is fair and is a genuine reflection of the different costs of licensing landlords who have and have not been prosecuted. This might be hard for them to do.
In addition, Newham have set out a list of standard conditions they propose to attach to licences under the scheme. Firstly, the Welsh RPT has ruled that standard conditions which are automatically applied to all properties are inappropriate and conditions must be applied on a case by case basis even though there will often be a strong similarity in conditions among properties in the same area. While this is not a binding decision few other tribunals would stand against it. There are also legal restrictions on conditions which can be imposed. For example, a proposed conditions Newham wishes to impose is one:
Requiring the licence holder to provide each occupier with a written statement of the terms of his occupation which must contain anti-social behaviour clauses.
But HA 2004, s90(7) states that no condition can be applied to a licence which requires or intends to secure a change in the terms of the terms of the tenancy or licence that the property is occupied under.
Newham has every right to impose selective licensing but if it is serious about doing so it must do so within the law. There is an urgent need to rethink the terms of the scheme and to amend the consultation to bring it into line with guidance.
Anthony Gold has solicitors with experience of challenging local authority licensing schemes and in defending landlords who have not obtained property licences.
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