Private Sector Housing
Ruth Clark
January 19, 2022

Regulating the private rented sector: national or local registration?

Government proposals for a national Landlord and Property registration scheme in England are expected to be included in a White Paper in 2022.

Government proposals for a national Landlord and Property registration scheme in England are expected to be included in a White Paper in 2022.  So where does this leave English Local Authorities currently considering Selective Licensing Schemes (SLS)?

In England there have been more homes in the Private Rented Sector (PRS) than the social housing sector for nearly a decade and PRS accounts for 19% of all households.  PRS homes are most likely to fail the Decent Homes Standard, compared to social housing or owner occupied.  So any local authority concerned about housing standards needs to think beyond social housing and drive up standards in privately rented accommodation.  This is why many English local authorities have adopted Selective Licensing Schemes.  (Landlords in Scotland, Wales and Northern Ireland are already required to register with their respective national schemes).

The prospect of a national scheme leaves English local authorities with a dilemma of whether to start the process of introducing a SLS, or wait until further announcements are made on the national scheme, delaying benefits to tenants. 

The English Selective Licensing Scheme, has a well travelled process of building an evidence base, consultation on proposals and approval – either by Local Authority or Department for Levelling Up, Housing and Communities.  This process can be costly, particularly for larger schemes, where the costs of PRS projections and undertaking widescale consultation can quickly mount up – and if the scheme is refused cannot be reclaimed.

So it seems risky to embark on that journey if SLS is about to be scrapped.  But white papers do not always run to their timetable and in the meantime tenants need protection.  So is there a way to hedge your bets?

The existing national schemes vary.  Rent Smart Wales requires all landlords to register, and then has an additional licensing requirement for landlords and managing agents who are letting and managing properties.  Northern Ireland only has landlord registration – and at a cost of £70 per landlord for ALL the properties they own this is not going to raise as much income as Selective Licensing Schemes. It would, however, be a requirement for all landlords, not just those in the targeted areas of Selective Licensing Schemes.  

The Welsh landlord licensing scheme operates under the brand ‘Rent Smart Wales’ with Cardiff City Council taking a lead role as the licensing authority with a memorandum of understanding and service level agreements with the other 22 authorities.  Enforcement is delegated to local authorities.  In this scenario the English local authorities would not be able to set their own fees

So a new national registration scheme for England would remove the requirement for local authorities to set up their own registration schemes and administration teams but local authorities will most likely still have to undertake local inspections and enforcement.

Unless significant additional resources are made available, local authorities will have to make best use of existing resources to inspect and enforce against bad landlords.  In this scenario having good quality data and intelligence about the profile of their PRS, concentrations of poor quality PRS and analysis of enforcement activity will help to target resources.  This is the same sort of data which is crucial to build a case for Selective Licensing.  

Selective Licensing Schemes are required to be part of the local authority’s Housing strategy.  Reviewing the PRS strands of a Housing Strategy will make sure resources are being prioritised, whether that is enforcement against bad private landlords, supporting not-for-profit letting agencies to increase supply of quality housing or, reducing carbon emissions.  

The SLS process requires Local Authorities to demonstrate they have tried all other avenues to improve standards in the PRS.  Many local authorities formed a multi-disciplinary officer working group to prepare for a Selective Licensing Scheme application to establish locations of the PRS and test different initiatives to raise standards.  Knowing what works, what doesn’t work and the costs of different initiatives will help target resources in the event of a national scheme.

Engagement with landlords, managing agents and tenants are also essential for implementing both SLS and a national registration.  This could be promoting accreditation for landlords and managing agents, and to raise awareness of tenants’ rights and who to contact if they have problems.

Work preparing a Selective Licensing Scheme application will not be wasted even if a national landlord scheme is introduced in England.  But it might be prudent to hold off expensive largescale consultation exercises until it’s clearer whether the national registration scheme is included in the white paper.