Nottingham City Council (NCC) announced their intention to conduct a 10 week Selective Licensing consultation from January to March 2017, with the scheme being implemented in February 2018.
In summary, NCC believes the private rented sector suffers from significant deep rooted problems particularly around anti-social behaviour and property disrepair and a citywide selective licensing scheme will complement existing measures in dealing with these issues.
The scheme if sanctioned by the Secretary of State for CLG will mean the licensing of 26,250 rental properties across Nottingham City. (In other words every rental property which is not already licensed under HMO licensing)
Each property licence will cost £600 and the council will employ an additional 74 officers to handle the administration and property inspections under this scheme.
However East Midlands Property Owners (EMPO) have seriously questioned whether such a scheme offers real value to landlords, tenants and the city in general. In a detailed reply, which should be of interest to other landlord groups fighting similar schemes across the country, they say:
Nottingham City Council – A proposed Citywide Selective Licensing Scheme for all private rented housing.
I am writing on behalf of East Midlands Property owners (EMPO), to make representations in response to the Council’s proposal for a landlords’ licensing scheme for all private rented housing across the City of Nottingham.
EMPO is keen to work with Nottingham City Council on examining ways to develop a working relationship to improve property standards and reduce levels of antisocial behaviour (ASB) in the most problematic parts of Nottingham. EMPO believes the proposed scale of this scheme is not feasible and will have wide ranging consequences on buy-to-let and institutional investment, rent levels and housing supply in Nottingham.
General Concerns
- The council reports between April 2013 and December 2016 the City received over 4500 complaints with a significant number from private rented sector (PRS) tenants, complaining about landlord management/property disrepair. What the council cannot offer in supporting evidence is the exact number of complaints arsing from the PRS and information around the legitimacy of these complaints as inspections visits only formed part of the responses.
- Nottingham is the 8th most deprived district in the Country. However little detail is provided on how a citywide scheme will improve this problem. The proposals contain little supporting evidence to deal with how the scheme will improve levels of crime/ASB and what resources will be employed alongside the scheme to promote economic opportunities for tenants and regeneration across the City.
- The council claims in its proposals “licensing brings greater responsibility for landlords to manage their properties better, including the behaviour of tenants.” It is well documented in the Dunkirk & Lenton ward, where significant numbers of properties are established licensed student HMOs that ASB levels are on the rise. The Lenton Drives Residents Association, The Park Residents Association and NAG recently stated to EMPO “we are seeing unprecedented levels of antisocial behaviour across Lenton.” This despite most of the housing in the area being licensed under mandatory and additional HMO schemes.
- The proposals advocate a selective licensing scheme will assist the council in ensuring decent & safe homes are available in the PRS for their homeless and housing benefit tenants. This assumption does not match with landlord reality. An accelerating and declining number of private landlords choose not to provide housing for such people. Increasingly, landlords are realising they do not possess the skill sets necessary to deal with the complex challenges these types of tenants present, particularly around ASB and money management. EMPO along with its partners recommend landlords signpost low income tenants to Nottingham City Council where there is the expertise and infrastructure to deal effectively with such challenges. This will become more of a priority if the scheme is implemented.
- The licensing fee and associated costs will ultimately end up being paid by tenants in respect of higher rent.
- For many years both the City’s accreditation partners who do not exclusively operate in Nottingham have been under resourced. They rely on a small number of mainly self employed staff to undertake accreditation inspections when it is cost effective to do so. This together with inadequate funding from the council to promote accreditation has been a major factor influencing the lack of awareness in the City and therefore poor uptake from landlords to become accredited.
- As always it is the compliant landlord who will be affected by the scheme. They pay the high fees involved but do not need regulation of this kind.
- A citywide designation will increase investor’s reluctance to invest in much needed residential development and give the impression the City is an unattractive and dangerous place to live. This means younger, aspirational people at the beginning of their “housing career” who are not ready to buy will be put off settling and working in Nottingham. Accommodation was a major factor influencing perceptions, with students and alumni due to an over-supply of student accommodation and a distinct lack of city centre housing for young professionals. (Source: Nottingham Business School @NTU-The Great Nottingham Debate 21st April 2016)
- The Extent of the Scheme
The scale of the scheme seems insurmountable in respect of having an ambition to license over 26,000 properties in a 5 year period. Under the 2014 additional licensing scheme, the council announced the licensing of 3200 properties now revised down to 2900 properties The scheme’s proposal documentation states that in almost three years the council has received 2236 applications under additional licensing whilst averaging just 34 property inspections a month. Under this proposed scheme which is nine times larger the council will need to potentially inspect over 400 properties a month to keep on track. Even if the council inspected 50% of properties, resources would be stretched beyond breaking point.
We believe this is not a realistic proposal. It would seem far more sensible to concentrate resources on phasing in a scheme area by area starting with the most problematic areas. This way the council can focus resources and be more effective in achieving its desired outcomes and buy in and co-operation from all types of housing providers operating in the PRS.
- Ashfield District Council
In parts of Sutton in Ashfield and Stanton Hill selective licensing comes into effect on the 1st February 2017. Ashfield District Council will operate an ‘early bird’ application process until 1st May 2017. The cost for a five year license is £350.00 reduced to £250.00 if you are an accredited landlord.
We endorse the approach adopted by Ashfield, in dealing with problems of ASB and property disrepair. The approach is all about introducing selective licensing in phases across their housing area to ensure adequate council resources are available to effectively tackle the specific issues selective licensing is designed to address.
Ashfield’s approach is more likely to bring the desired outcomes than a blanket approach. We fail to understand how a smaller council sixteen miles from Nottingham can introduce a significantly smaller selective licensing scheme and do so without the economies of scale Nottingham enjoy at just £250.00 per property.
- Licensing has not reduced incidents of anti-social behaviour in Nottingham
Despite the council having licensed the majority of HMOs in the City, ASB complaint numbers across the City have not declined but significantly increased based on council flare data released to EMPO in 2013 and 2017.
As a general rule, landlords cannot be made responsible for the actions of their tenants, provided they have not ‘authorised their tenants to behave in an anti-social manner. Whilst having the power to seek a court order for eviction when tenants exhibit ASB, private landlords are free to decide whether or not to take action against their tenants. The question of whether a landlord can be held liable for the nuisance of their tenants by a council has been considered in a number of cases.
O’leary v London Borough of Islington- “it was held that a term to enforce nuisance clauses could not be implied into a tenancy agreement. This indicates that landlords cannot be sued for breach of contract unless there is an express term in the tenancy agreement that obliges him or her to “take all reasonable steps to prevent any nuisance”. Even where such a clause exists, the courts have been reluctant to find the landlord in breach.”
ASB poses considerable problems for landlords. They can rely on Section 21 to evict but only after six months. Otherwise, we have to rely on a discretionary ground and it is notoriously difficult to make a Judge make an order on these discretionary grounds. Landlords are also faced by problems of gathering evidence and getting people to come to Court.
We feel a blanket scheme is a naive approach if the council is assuming it will significantly improve levels of ASB. If landlords are forced through licensing to take responsibility for tenant behaviour, we will recommend landlord’s serve a section 21 possession notice at the first notification of ASB; therefore not risking having their licenses revoked.
We strongly request the council examines the complex causes of ASB and the offenders and not the landlords who take the risk to let their accommodation to them.
- Housing investment
A citywide scheme is simply telling “property investors” including the “Build to rent sector” and “good landlords” that Nottingham is a highly regulated and “problem” city. Mortgage companies and institutional investors will become more cautious about making loans on any type of residential property/development. This will have the impact of driving investment into neighbouring areas and Cities such as Broxtowe, Gedling, Rushcliffe, Derby and Leicester. Institutional investors and good landlords will look to develop and buy in areas where they can secure uncomplicated funding and operate in a more relaxed regulatory environment.
- Professional Agents
Shouldn’t there be allowances made for qualified professionals who manage properties? The issue with schemes like this is the good landlords and regulated agents are the ones that fill out the applications to begin with. The criminal landlords don’t. There is little budget to target the criminal landlords so all the resources are spent on dealing with the applications from the good landlords rather than targeting the bad ones.
- Complaints data
The council provide complaints data for the period April 2013 to December 2016. During this period they received 4509 complaints, a significant number from private tenants complaining about housing standards in their rented accommodation. There was a further 5571 complaints about bins on streets, refuse and noise during the same period. We see no accompanying data to verify the accuracy or tenure of this data as inspections and follow up visits were not necessarily carried out as a matter of procedure. In terms of the 4500 complaints received the proposal documentation suggests only 41% of the properties were visited. How can the council provide confidence around the legitimacy of these complaint numbers if the response did not include a follow up visit?
- Resources
There seems to be little detail in the business plan on bringing any extra resources into the worst affected areas; e.g. into providing environmental improvements. It is well recognised that selective licensing will only work where there is some intense application of resources from external agencies including the council itself. We would like to know if council intends to spend money and time putting intensive resource across the whole City to tackle problems such as ASB and deprivation. This would cost the council huge amounts of money and time and we doubt that this type of intensive intervention is needed across the whole of the City. Nottingham has seen massive investment and regeneration, so why do the council feel that a citywide selective licensing is needed, without piloting the scheme in one area suffering from high levels of ASB and deprivation?
- Monitoring
We would recommend the council choose just one pilot area over a period of time so they can measure if the scheme does have the desired impact before ploughing lots of resources and expense into rolling out a citywide scheme that hasn’t even been piloted. The proposal documentation mentions a targeted approach in the Radford Road area, where. 57 properties were inspected as part of this programme, of which 39 were unannounced raids in conjunction with the Police. This resulted in 34 Enforcement Notices being issued.
This needs to be the style of approach, a successful formula using targeted enforcement by area instead of a costly and ineffective blanket approach.
- Using the Decent Homes Standard as a measure in the PRS
Only 6% of all rented properties in Nottingham are accredited despite DASH and UNIPOL operating in the city for almost 10 years. The council’s business case states ‘Housing conditions are worse in the PRS with 42% of properties failing the Decent Homes Standard’.
The Decent Homes Standard is a wider political issue, what the council is failing to recognise here is that the average landlord only has a portfolio of between 1-6 properties. (A recent RLA survey found that out of 1,000 landlords 59% only owned between 1-6 properties.)
The Decent Homes funding was only accessible to social landlords. It is unfair to expect that private landlords will have the funding or resources to match the same standard as social housing without any additional funding to assist. Small scale local landlords do not have the same investment from public money as social housing providers; therefore it is unfair to compare them using the same standard.
Yet, despite such inequalities, in funding, the English Housing Survey (EHS) shows that more private sector tenants are ‘satisfied’ (84%) with their properties than social tenants. In addition, the EHS states that more private rented tenants are satisfied with the repairs undertaken on their properties than social tenants.
- Landlord Engagement & Training
Much emphasis in the proposal documentation refers to landlord initiatives being implemented to address ASB and property disrepair but failing due to lack of landlord engagement. Heavy reference is made to the City’s two accreditation schemes. The unfortunate reality is, for many years both the council’s accreditation partners have been under resourced; in fact their budgets have been cut resulting in only one FREE landlord training course being provided to Nottingham landlords over the last 12 months. In the same period the council has failed to organise or host any type of landlord forum with the exception of a few landlord forums around gathering data for their proposed selective licensing scheme.
The council’s failure to properly resource accreditation and engage with landlords has brought about a landscape of failure in respect of a working together agenda to deal effectively with issues in the PRS.
- The Housing & Planning Act 2016
A citywide scheme is not necessary as many of the powers provided through the Housing & Planning Act 2016 will enable Nottingham City Council to address the problems it is seeking to do so with its proposed Selective Licensing scheme.
From April 2017 the Council will be able to issue Civil Penalties for certain housing offences, such as not complying with licensing legislation or ignoring an improvement or prohibition notice. These penalties can be kept by the Council and can be up to £30,000.
This legislation will enable the Council to issue Banning Orders to landlords who fail to comply with housing notices or licensing or have been convicted of certain offences involving fraud, violence, drugs or sexual assault. Essentially, these notices will last for a minimum of 12 months and prevent the landlord from continuing to manage rental property.
The legislation will require all rented properties to have Electrical Safety Certificates and will extend the Rent Repayment Orders to apply in relation to disrepair and/or illegal entry or eviction in addition to other sanctions.
As part of this legislation a revised “Fit and Proper person test” will be introduced where applicants will need to undertake a Disclosures and Barring Certificate check at a cost of £25 every 5 years. This check is all about ensuring applicants disclose their current and past criminal convictions, which applicants should be entitled to remain in the United Kingdom, and should not be insolvent or bankrupt. The aim of the provisions is to further identify potential rogue landlords and prevent licences being granted to them.
Other parts of this legislation will help Councils deal more effectively with the storage and disposal of household waste and extend mandatory HMO licensing to all rented property with 5 or more tenants.
With this legislation just around the corner it is simply inappropriate and unnecessary to consider a proposal for a citywide scheme, particularly as much of the legislation in the Housing & Planning Act 2016 duplicates the powers Nottingham are seeking under their proposed scheme.
Conclusion
EMPO is opposed to citywide selective licensing for the reasons outlined. However, the Association is keen to work with the council to promote a properly resourced accreditation process along with a scaled down selective licensing scheme linked to targeted enforcement; such as conducted in the Radford Road area. We would welcome regular dialogue with the council to explore how good landlords could effectively develop a partnership framework with the council; to deliver effective and regular agent/landlord training, meetings, community projects and awareness activities around promoting accreditation.
For further information please visit www.empo.co.uk
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