Why letting agents need to stay on top of licensing this year

Why letting agents need to stay on top of licensing this year

15 March 2021

With existing licensing schemes expanding and new schemes being launched, how can letting agents help landlords remain compliant?

It’s no secret that the number of compliance obligations facing landlords has been rising steadily in recent years. Being a landlord is more time-consuming than ever and the financial risks are also higher.

As a result, helping landlords to remain compliant and up to date with changing regulations has become a crucial part of a letting agent’s management service.

With the support of a professional letting agent, landlords can remain compliant and increase their chances of smooth, long-term tenancies which generate regular rental income.

Licensing is a specific issue that many landlords are likely to need support from their letting agent on this year. Below we explain why and what you can do to help…

Overview – latest licensing developments and proposals

Over the last year, despite the impact of the pandemic, many local authorities have launched consultations or introduced licensing schemes.

A study carried out by Kamma revealed that in December 2020, some 44 licensing consultations were in progress across the country.

It also forecast that HMRC could collect £400 million in licensing fees and fines from landlords in 2021, plus an additional £2 million in unpaid taxes.

Since the report late last year, there have been further licensing plans announced by local authorities. Here is a roundup of some of the most recent and high-profile:

  • A consultation for additional licensing of Houses in Multiple Occupation (HMO) has been launched in Westminster.
  • Havering Council has pledged to continue with its latest licensing scheme rollout.
  • Lambeth Council has launched a consultation to double the size of its existing licensing scheme.
  • A consultation for additional landlord licensing in Newcastle closed at the end of January.
  • In Manchester, a consultation to license an additional 15,000 homes has been launched.
  • Liverpool City Council has lodged an application to license 45,500 properties.
  • Consultations for two licensing schemes in the Charnwood area of the Midlands have been launched.
  • Southend Council has launched a selective licensing scheme, which has attracted criticism for its “anti-landlord” wording.

Could there be a national landlord licensing scheme?

In response to calls for a national landlord licensing scheme, Housing Minister Christopher Pincher recently confirmed that the government is not planning to introduce a national scheme.

Instead, he said the government would continue to work with local authorities to raise rental sector standards.

Those in favour of a national licensing programme suggest it could lead to higher compliance rates and increased property standards.

They also believe it would reduce the complexity associated with local authority schemes and introduce a level playing field for all landlords.

In 2019, an independent review of selective licensing was commissioned by the Government. The report put forward several suggestions, including streamlining the application process and making the renewal process for existing schemes easier.

At the time, the Government ‘broadly welcomed’ the suggestions. However, there was never an official response so it seems likely the existing licensing framework is set to remain for the foreseeable future.

How can letting agents help landlords comply with licensing rules?

With so many changes to existing licensing and proposals for new schemes all over the country, landlords will require the help of letting agents to stay on top of their compliance obligations this year.

There are significant fines and the potential for prosecution for non-compliance with licensing schemes, so landlords won’t want to be caught out.

Landlords will need guidance from agents on how much any required licence fee costs, how long it lasts for and if any additional minimal property standards are expected.

On top of this, it’s important for agents to communicate news of any local consultations. As well as responding as an agency, it’s vital that all your landlords are given the opportunity to shape future policy that will affect them directly.

Support will also be required when it comes to completing applications, providing relevant paperwork and meeting deadlines.

Alongside tightening compliance obligations, landlords are also having to contend with the impact of the pandemic such as ongoing government restrictions and a higher risk of rent arrears.

As a result, landlords’ time is more stretched than ever while finances are also more precarious. The role of letting agents is therefore crucial in helping landlords to stay on top of all their responsibilities and protecting their finances.

Letting agencies that guide landlords through the complicated and time-consuming licensing process can add value and prove their worth as indispensable support for landlords.

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