Landlords across England are experiencing escalating financial pressures as local councils intensify selective licensing schemes, new research reveals.
A study by Direct Line indicates that English councils are charging landlords an average of nearly £700 for mandatory selective licenses, with fees varying significantly across the nation. Leicester City Council demands the highest fee at £1,290, while Ashfield District Council offers the lowest at £350.
Rapid Expansion of Licensing Schemes
The adoption of selective licensing schemes by councils has surged. Sarah Casey, head of landlord insurance at Direct Line business insurance, emphasized the necessity for landlords to adhere to these regulations to avoid substantial fines. “It’s crucial for landlords to comply with all relevant legislation, as non-compliance could result in hefty fines. Our analysis highlights considerable regional disparities in licensing costs and an increasing burden from fines for non-compliance,” Casey said. She advised current and prospective landlords to consult their local authorities regarding existing schemes.
Increase in Council Participation
Direct Line reports that 47 councils now enforce these schemes, reflecting a 10% increase from 2022. Councils have also seen significant revenue boosts, with over £20 million collected in 2023—an 80% increase from the previous year. Notably, Liverpool alone generated more than £5 million of this total.
Non-compliant landlords face severe consequences, with fines reaching up to £10,000. Burnley Borough Council has imposed the highest fines, while Waltham Forest and Middlesbrough reported the most licensing offences.
Impact on Housing Conditions
Despite the financial strain on landlords, some councils, including Hartlepool, Sheffield, and Coventry, have discontinued their schemes since 2020, citing improved housing conditions under the licensing regime.
Who Really Pays?
The question is who really pays? Councils charge the landlords but in the end licencing fees are a business expense and are going to be passed on to tenants. Licencing fees are, at the end of the day, simply a stealth tax on some of the most vulnerable people in society – tenants. The alternative is that the landlord absorbs the cost and whilst that may happen initially it is not sustainable over the longer term.