Landlords in parts of Preston could soon be required to pay £1,050 for a selective licence for every privately rented property they own.
The proposed five-year scheme would cover the City Centre, St Matthew’s and Plungington wards. It would apply to ordinary homes rented to a single household, as well as smaller shared properties that do not already require an HMO licence.
Preston City Council says the scheme would improve housing conditions and help tackle damp, mould, excess cold, disrepair and poor property management.
Few responsible landlords would object to effective action against unsafe housing or criminal operators.
The real questions are whether another expensive licensing scheme is necessary, whether the proposed fee can be justified and whether tenants understand that they will ultimately help pay for it.
£1,050 per property is not a minor administrative charge
A £1,050 licence might be presented as the equivalent of £210 a year over five years. That makes the figure sound more manageable, but it avoids the reality facing landlords.
The fee is charged for each affected property.
A landlord with five properties in the proposed area could therefore face a licensing bill of £5,250. A landlord with ten could face £10,500.
Preston’s proposal reportedly offers no discount for responsible or accredited landlords and no option to pay by direct debit or instalments. The fee would instead be divided into two substantial payments during the application and licence-granting process.
This comes on top of mortgage costs, insurance, repairs, safety inspections, taxation, letting expenses, energy-efficiency improvements and the rapidly expanding cost of regulatory compliance.
Councils cannot continue adding thousands of pounds to the cost of providing rented housing while pretending that none of that money will eventually be recovered through rents.
Tenants will ultimately pay
Landlords do not operate in an economic vacuum.
When the cost of supplying rental housing rises, landlords have a limited number of choices. They can accept lower returns, reduce future investment, sell properties or seek to recover at least some of the additional expense through rent.
Some landlords may absorb a proportion of a licensing fee, particularly where market conditions prevent an immediate rent increase. But across the sector, repeated increases in licensing, taxation, finance and compliance costs inevitably feed into rental prices.
A £1,050 licence may appear to be a charge against a landlord. In economic terms, it becomes another cost attached to providing the tenant’s home.
Tenants may initially welcome the idea of landlord licensing. It sounds reassuring. It suggests that their landlord and property have been checked, approved and placed under council supervision.
They may be less enthusiastic if they realise that:
- the fee is likely to be reflected in the cost of renting;
- councils already have statutory duties and extensive powers to deal with unsafe housing;
- the licensing payment does not necessarily mean their property will receive a full inspection;
- responsible landlords who already comply are required to pay alongside everyone else; and
- the worst operators may continue to evade both licensing and enforcement.
A tenant paying an extra £15 or £20 a month over several years because of additional landlord costs may reasonably ask what tangible improvement they have received in return.
Councils are already mandated to enforce housing standards
Local authorities are not being asked to perform an entirely new public service.
Councils already have legal responsibilities and enforcement powers relating to housing conditions in the private rented sector. They can investigate complaints, inspect properties, identify serious hazards, serve improvement notices, prohibit the use of dangerous accommodation and impose civil penalties or prosecute where appropriate.
These are fundamental local authority functions.
Licensing is therefore not creating the principle that councils should protect tenants from unsafe housing. That duty already exists.
The argument for selective licensing must consequently be more sophisticated than saying it will allow a council to improve standards. Councils should explain why their existing statutory powers are inadequate and precisely what additional outcomes the licensing scheme will deliver.
Landlords should not be expected to pay £1,050 per property merely to fund work that councils are already legally required to undertake.
What exactly does the £1,050 purchase?
Licensing fees are supposed to cover the legitimate costs of establishing, administering and enforcing a scheme. They should not become a general revenue-raising mechanism.
Preston should therefore publish a clear and detailed breakdown of how the proposed fee has been calculated.
Landlords and tenants are entitled to know:
- how much it will cost to process each application;
- how many properties will receive a physical inspection;
- how many additional officers will be employed;
- what proportion of the fee relates to administration;
- how much will be spent identifying unlicensed landlords;
- how the council will pursue those who refuse to pay;
- what measurable improvements are expected; and
- whether any unused income will be returned or carried forward.
Without this transparency, £1,050 risks looking less like a carefully calculated regulatory fee and more like the maximum amount the council believes landlords can be required to tolerate.
Councils are issuing fines—but failing to collect them
The demand for more licensing income becomes even harder to justify when councils are failing to recover the penalties they already impose.
As NetRent recently reported, Freedom of Information data showed that English councils issued almost £30 million in civil penalties against landlords over two financial years.
Only around £7.5 million was actually collected.
That means approximately three quarters of the value of the fines imposed remained unrecovered.
Some councils were reportedly unable even to confirm how much of the penalties they had collected, while many others had not issued a single civil penalty during the period examined.
This raises an unavoidable question.
Why should responsible, easily identifiable landlords be charged substantial licensing fees when councils are failing to collect millions of pounds from those they have already determined have broken housing laws?
A council may argue that licensing provides the resources required for better enforcement. But if its enforcement system cannot recover penalties after wrongdoing has been established, there is little reassurance that collecting more money from compliant landlords will solve the underlying problem.
The danger is that councils take the easiest route.
Responsible landlords submit applications, provide documents, respond to correspondence and pay fees. They are straightforward to locate and regulate.
Rogue operators ignore the licensing scheme, evade contact, conceal ownership, fail to pay penalties and continue operating until effective enforcement action is taken.
The result is a system in which the compliant landlord funds the council while the criminal landlord continues to avoid both regulation and payment.
That is not a level playing field.
Why not use the fines already imposed?
Civil penalties are intended to punish wrongdoing and can also help support future enforcement.
If councils had recovered the outstanding millions already imposed, that money could have helped fund inspections, enforcement officers, intelligence gathering and action against unlicensed properties.
Instead, councils appear increasingly keen to create guaranteed income by charging every identifiable landlord in a designated area.
Licensing fees are predictable. Compliant landlords can be invoiced and pursued relatively easily.
Recovering money from a determined rogue operator is more difficult.
But administrative convenience is not a valid reason to shift enforcement costs from offenders to law-abiding businesses.
The first priority should be collecting penalties from those who have broken the rules—not creating ever larger charges for those who have complied with them.
The compliant pay while the criminal evade
This remains the fundamental weakness of many selective licensing schemes.
The landlords most likely to apply are generally those already operating within the established system. They obtain gas safety records and electrical reports, protect deposits, conduct repairs, maintain records and communicate with tenants.
They are visible, contactable and comparatively easy to regulate.
The worst landlords may be letting properties illegally, ignoring safety requirements, concealing their identities or refusing to engage with the council.
A licence application from an already responsible landlord does nothing by itself to improve conditions in a property owned by someone who refuses to apply.
The effectiveness of a scheme must therefore be measured by:
- previously unknown landlords identified;
- unlicensed properties found;
- serious hazards removed;
- poor operators stopped;
- penalties successfully recovered;
- tenant complaints resolved; and
- demonstrable improvements in housing conditions.
The number of licences issued is not, on its own, evidence of success. It merely proves that the council has processed a large number of payments and applications.
Why are councils rushing ahead of the national landlord system?
The timing of this rapid expansion in selective licensing is especially questionable.
The Renters’ Rights framework already provides for a national Private Rented Sector Database. Landlords and their properties will have to be registered, prescribed information will need to be maintained and councils will be able to use the system to support enforcement.
Landlords will also face the national redress scheme, stronger council enforcement powers, greater information-sharing and substantially increased financial penalties.
A national system of landlord and property registration is therefore already being established.
Why are councils rushing to introduce separate local licensing schemes before the national system has been given an opportunity to operate?
Why should a landlord have to:
- register themselves nationally;
- register each rented property;
- pay any associated national fee;
- join a national redress system;
- comply with council information requests; and
- then pay another £1,050 for a local licence covering much of the same property and ownership information?
This risks creating two overlapping regulatory systems, both funded by landlords and ultimately supported by tenants through their rent.
Local registration on top of national registration
The forthcoming national database is intended to help councils identify landlords, locate privately rented properties and see relevant compliance and enforcement information.
Those are also among the principal justifications commonly given for selective licensing.
If the national system performs as promised, councils should be able to identify rented properties and their owners without creating separate local registration structures.
Local authorities may argue that licensing allows them to impose additional conditions and carry out more proactive inspections. But that does not justify duplicating every aspect of the national system.
Before approving new schemes, councils should have to demonstrate exactly what information or enforcement capability they will gain that will not already be available through the national database.
They should also explain how landlords will be protected from paying twice for overlapping administration.
Central scrutiny has been reduced
Councils in England can now introduce selective licensing schemes of any size without obtaining separate confirmation from the Secretary of State, provided the relevant legal requirements are satisfied.
The removal of that additional approval stage has made it easier for councils to create and expand large schemes.
The predictable consequence is a growing patchwork of different:
- fees;
- licence conditions;
- application systems;
- documentation requirements;
- discounts;
- renewal arrangements; and
- enforcement approaches.
A landlord operating in two neighbouring council areas can face completely different costs and rules for providing essentially the same type of accommodation.
That is not coherent national regulation.
It is regulation by postcode.
Licensing should not replace targeted enforcement
Preston says evidence indicates higher levels of poor housing conditions and housing-related problems within the three proposed wards.
If particular properties contain serious hazards, the council should identify them and act against their owners.
If particular landlords are ignoring repair obligations, the council should use its enforcement powers.
If illegal or unlicensed HMOs are operating, they should be investigated.
A blanket licensing scheme should not become a substitute for intelligence-led enforcement.
Nor should deprivation, the age of local housing or the proportion of privately rented properties automatically be treated as evidence that every landlord in the area needs an additional licence.
Poor housing must be addressed, but the response should be proportionate and focused on the people and properties responsible for the problem.
Charging a good landlord £1,050 does not repair a dangerous home owned by somebody else.
Do tenants know what licensing actually provides?
The word “licensing” can create the impression that every property has been fully inspected and formally approved as safe before a licence is issued.
That may not reflect how every scheme operates in practice.
In a large scheme involving thousands of properties, councils may rely heavily on application forms, declarations and documents supplied by landlords. Only a proportion of properties may receive an early physical inspection.
Tenants should therefore be told clearly:
- whether their individual property has actually been inspected;
- what the inspection covered;
- what standards were verified;
- how often further inspections will occur;
- what they should do if conditions deteriorate; and
- how much the scheme is costing the rental sector.
Licensing should not be sold to tenants as a guarantee unless the council is genuinely providing one.
If a landlord pays £1,050, uploads existing safety certificates and receives a licence without a comprehensive inspection, tenants may reasonably question what practical benefit the payment has produced.
Where is the evidence of tenant benefit?
Before imposing a scheme, councils should publish measurable objectives and commit to independent reporting.
They should disclose:
- how property conditions changed;
- how many Category 1 hazards were removed;
- how many rogue landlords were identified;
- how many unlicensed properties were discovered;
- how many penalties were issued;
- how much penalty income was actually collected;
- how quickly complaints were resolved;
- how many properties left the rental market;
- what happened to local rent levels; and
- how all licensing income was spent.
Too often, the number of licence applications is presented as evidence of success.
It is not.
A licensing scheme should be judged by improved homes and successful enforcement—not by the volume of fees collected from responsible landlords.
There should be no blank cheque
Responsible landlords are not an unlimited source of council funding.
A £1,050 charge may be manageable in isolation for some landlords. When multiplied across a portfolio and added to every other regulatory and commercial cost, it becomes significant.
Smaller landlords are particularly exposed. They cannot spread the cost across hundreds or thousands of properties.
Some will increase rents where the market allows. Some will postpone improvements or further investment. Others will conclude that letting property is no longer worthwhile and sell.
Reducing the number of rental homes will not improve affordability for tenants.
It will increase competition for those that remain.
Preston must justify the scheme and the fee
Preston may be able to demonstrate genuine housing problems within the proposed wards.
That does not automatically justify charging every affected landlord £1,050.
Before proceeding, the council should explain:
- why existing enforcement powers are insufficient;
- why the national landlord database will not meet its information needs;
- how the £1,050 fee has been calculated;
- why compliant landlords receive no meaningful discount;
- how many properties will be physically inspected;
- how duplication with national registration will be avoided;
- how unlicensed landlords will be identified;
- how penalties will be collected once imposed;
- what specific tenant outcomes will be measured; and
- what will happen if the scheme fails to deliver.
If councils expect landlords and tenants to accept the cost, they must provide more than broad assurances about improving standards.
They must provide evidence.
Tenants should ask who really pays
Licensing is often presented as a policy under which landlords pay and tenants benefit.
The reality is more complicated.
Landlords receive the invoice, but the rental market ultimately bears the cost. That can mean higher rents, reduced investment, fewer available homes or a combination of all three.
Tenants might still support licensing if it produces regular inspections, faster repairs and successful action against rogue landlords.
But they should be given the full picture.
They should know that councils are already required to enforce housing standards. They should know that millions of pounds in existing landlord fines have not been collected. They should know that a national landlord registration system is already being introduced. And they should understand that the cost of overlapping local schemes does not simply disappear.
It becomes part of the cost of their home.
Regulation must deliver more than another bill
Good regulation should be targeted, proportionate and demonstrably effective.
It should punish those who break the law, protect tenants from unsafe housing and avoid imposing unnecessary costs on responsible providers.
What it should not do is create an expensive parallel registration system, duplicate national regulation and rely on compliant landlords as an easy source of income while substantial penalties against offenders remain unpaid.
If councils cannot collect the fines they already issue, they should explain why landlords and tenants should trust them with millions more in licensing fees.
A £1,050 charge for permission to continue providing a rented home demands a compelling justification.
So far, the case remains far from convincing.