Selective licensing in the private rented sector: a guide for local authorities

Question 1

1.  Introduction

Accepted Answer

1. The government values the private rented sector and wants to see a strong, healthy and vibrant market. Its aim is a private rented sector that offers a greater security of tenure and safer, higher quality homes for renters.

2. The government is keen to ensure that the sector is encouraged to meet, in a professional way and with decent quality accommodation, the demands placed upon it by the housing needs of the wide range of tenants it services. It strongly supports voluntary arrangements such as accreditation and landlords’ forums.

3. Currently local authorities have powers to introduce selective licensing of privately rented homes in order to tackle problems in their areas, or any part or parts of them, caused by:

low housing demand (or is likely to become such an area)
a significant and persistent problem caused by anti-social behaviour
poor housing conditions
high levels of migration
high level of deprivation
high levels of crime

4. Local residents, landlords, tenants, and any other person likely to be affected by the selective licensing designation, must be consulted prior to the introduction of a licensing scheme. Landlords who rent out properties in an area that is subject to selective licensing are required to obtain a licence from the local authority for each of their properties.

5. Together these rules enable local authorities to put in place effective licensing schemes to address specific problems arising in particular areas.

6. This (non-statutory) guidance explains the criteria for making a selective licensing scheme and discusses the type of evidence needed to support a designation. It sets out what a local authority would expect a scheme to deliver in terms of the economic and social conditions of the designated area and how during the period of the designation this will be evaluated. It also explains the processes that need to be complied with before a designation can be brought into force. This guidance applies to all designations.

Question 2

2.  General Approval 2024

Accepted Answer

7. With effect from 23 December 2024 a new General Approval came into force and local housing authorities in England are no longer required to obtain confirmation from the Secretary of State before implementing a selective licensing scheme of any size.

8. The local housing authority must, however, still satisfy all statutory requirements contained in Part 3 of the Housing Act 2004. In addition, local authorities will be expected to consult for a period of at least 10 weeks on the proposed designation – see section 7.

9. To support local accountability and transparency, alongside this change to the general approval, local authorities are also requested to:

include the mayor in the consultation on the proposed designation, where applicable – see section 7
provide MHCLG with data on their selective licensing scheme(s), upon commencement of the scheme, and on the scheme end date or within 12 weeks of scheme end date – see section 9
publish the outcome of any selective licensing review(s) undertaken pursuant to their legal duty to review the operation of schemes under section 84(3) of the Act on their website – see section 10

10. Local authorities implementing selective licensing schemes are expected to fully comply with all legal requirements of Part 3 of the Housing Act 2004, and the condition set out in the General Approval. The Secretary of State retains the right to change the General Approval arrangement in the future.

Question 3

3.  What is selective licensing?

Accepted Answer

11. Part 3 of the Housing Act 2004 (the Act) sets out the framework for licensing private rented properties^{[footnote 1]} in a local housing authority area. Under section 80 of the Act a local housing authority can designate the whole or any part or parts of its area as subject to selective licensing. Where a selective licensing designation is made, it applies to privately rented housing in the area. Subject to certain exemptions specified in the Selective licensing of Houses (Specified Exemptions) (England) Order 2006^{[footnote 2]}, all properties in the private rented sector which are let or occupied under a licence, are required to be licensed by the local housing authority, unless the property is a House in Multiple Occupation and is required to be licensed under Part 2 of the Act^{[footnote 3]}.

Question 4

4.  Conditions applying to selective licensing

Accepted Answer

12. A selective licensing designation may be made if the area to which it relates satisfies one or more of the following conditions. The area is one experiencing:

low housing demand (or is likely to become such an area)^{[footnote 4]}
a significant and persistent problem caused by anti-social behaviour^{[footnote 5]}
poor housing conditions^{[footnote 6]}
high levels of migration^{[footnote 7]}
high level of deprivation^{[footnote 8]}
high levels of crime^{[footnote 9]}

13. Should a local authority be considering designating an area on the following grounds:

poor housing conditions and/or
migration
deprivation
crime

then the local housing authority may only make a designation if the area has a high proportion of housing in the private rented sector^{[footnote 10]}. Nationally the private rented sector currently makes up 19% of the total housing stock in England^{[footnote 11]}. The actual number of privately rented properties in a given area may be more or less than this, and if it is more than 19%, the area can be considered as having a high proportion of privately rented properties. Local authorities should consult the latest available English Housing Survey or Census when considering whether an area has a high proportion of privately rented properties.

14. It is also a statutory requirement that the properties referred to are occupied either under assured tenancies or licences to occupy^{[footnote 12]}.

15. When considering whether to make a selective licensing designation a local housing authority must first identify the objective or objectives that a designation will help it achieve. In other words, it must identify whether the area is suffering problems that are caused by or attributable to any of the criteria for making the designation and what it expects the designation to achieve – for example, an improvement in housing conditions in the designated area.

16. Secondly, it must also consider whether there are any other courses of action available to it that would achieve the same objective or objectives as the proposed scheme without the need for the designation to be made. For example, if the area is suffering from poor housing conditions, is a programme of renewal a viable alternative to making the designation? In areas with anti-social behaviour, where landlords are not taking appropriate action, could an education programme or a voluntary accreditation scheme achieve the same objective as a selective licensing designation?

17. If the problems of anti-social behaviour are only associated with a small number of properties a local housing authority should consider making a Special Interim Management Order, rather than a selective licensing designation covering properties with regard to anti-social behaviour (see Annex below).

18. Only where there is no practical and beneficial alternative to a designation should a selective licensing scheme be made.

19. If the local housing authority decides there is no practical and beneficial alternative to the scheme, it must only make the designation if it is satisfied that the scheme will significantly assist it in achieving its objective or objectives, with other actions the local housing authority may be taking.

20. Any designation made must:

ensure that the exercise of the power is consistent with their overall housing strategy^{[footnote 13]}; and
seek to adopt a co-ordinated approach in connection with dealing with homelessness, empty properties and anti-social behaviour affecting the private rented sector as regards combining licensing with other action taken by them or others^{[footnote 14]}.

Question 5

5.  Making a scheme

Accepted Answer

Introduction

21. Before proposing a designation and embarking on a consultation, the local housing authority must identify the problems affecting the area to which the designation will apply and provide evidence to demonstrate the existence of the problems. It must also decide what other measures they will take along with other stakeholders to mitigate or eliminate those problems, enabling the aims of the scheme to be achieved. It should be noted that in making a selective licensing designation, the local housing authority must also take other measures to help address the problems. A scheme cannot be proposed unless those other measures are to be introduced (or continued).

Low housing demand

22. When deciding if an area is suffering from, or likely to become, an area of low housing demand, local housing authorities should consider the following factors:

The value of residential premises in the area, in comparison to the value of similar premises in other areas which the authority considers to be comparable (for example, in terms of type of housing, local amenities, or availability of transport);
The turnover of occupiers of residential premises (in both rented and owner-occupied properties); and
The number of residential premises which are available to buy or rent, and the length of time for which they remain unoccupied.

23. The scheme should state how it will help address the problems associated with low demand in the designated area, for example, through imposing conditions relating to the management of properties. It must identify how the scheme will work in combination with other specified measures that the local housing authority is taking to combat those problems.

24. The outcome of the scheme should be a reduction in or elimination of the blight of low demand, leading to identifiable improvements in the social and economic conditions of the area.

25. In deciding whether an area suffers from anti-social behaviour, it is recommended that local housing authorities consider whether private sector landlords in the designated area are effectively managing their properties or not. This would aid in combatting incidences of anti-social behaviour caused by their tenants or people visiting their properties. An area that suffers from anti-social behaviour as a result of a landlord’s failure to manage their property effectively would significantly contribute to that problem.

26. In considering whether the area is suffering from anti-social behaviour which a landlord should address, regard should be had as to whether the behaviour is being conducted within the curtilage of the rented housing or in its immediate vicinity and includes acts of (but not limited to):

intimidation and harassment of tenants or neighbours
noise, rowdy and nuisance behaviour affecting persons living in or visiting the vicinity
animal related problems
vehicle related nuisance
anti-social drinking or prostitution
illegal drug taking or dealing
graffiti and fly posting
and litter and waste within the curtilage of the property

27. The scheme should state what measures will be taken to address the problems associated with anti-social behaviour, for example by including conditions in licences requiring landlords to take action to deal with such behaviour or to ensure that properties are not let to persons with a known record of anti-social behaviour, or other conditions relating to the use of the property. It should also make clear how the measures taken in the scheme when combined with other specified measures will work together to combat the problems caused by anti-social behaviour.

28. The outcome of the scheme should be a reduction in, or elimination, of anti-social behaviour (caused by tenants in the private sector) in the designated area.

Poor housing conditions

Local housing authorities can address poor housing conditions through their powers in Part 1 of the Act, which are extensive. As mentioned below a local housing authority should not use its Part 3 powers (selective licensing) where it is appropriate to tackle small numbers of properties which are in disrepair directly and immediately under Part 1. There may, however, be circumstances in which a significant number of properties in the private rented sector are in poor condition and are adversely affecting the character of the area and/or the health and safety of their occupants. In that case, as part of a wider strategy to tackle housing conditions, the local housing authority may consider introducing a selective licensing scheme so that it can prioritise enforcement action under Part 1 of the Act, whilst ensuring through licence conditions under Part 3 that the properties are properly managed to prevent further deterioration.

29. Local housing authorities are required to consider the following factors to aid them in determining whether there are poor housing conditions in their area:

Whether a high proportion of those properties are in the private rented sector (this is a statutory requirement)^{[footnote 15]}.
Whether following a review of housing conditions under section 3(1) of the Act^{[footnote 16]}, the authority considers a significant number of properties in the private rented sector need to be inspected in order to determine whether any of those properties contain category 1 or 2 hazards. In this context “significant” means more than a small number, although it does not have to be a majority of the private rented stock in the sector. It would not be appropriate to make a scheme if only a few individual properties needed attention. It is a prerequisite to making a scheme that such a review has been carried out.

30. Local housing authorities may also consider carrying out an age and visual appearance check of properties in the area.

31. The scheme should state what action the authority intends to take under Part 1 of the Act if it identifies there are serious deficiencies with properties, including the timescale for taking the appropriate action and its enforcement plan for non- compliance with improvement notices or prohibition orders it serves.

32. The outcome of the designation, when combined with other measures, should be a general improvement of housing conditions in the designated area within the lifetime of the designation.

High levels of migration

33. Migration refers to the movement of people from one area to another. It includes migration within a country and is not restricted to migration from overseas. A selective licensing designation can be made, as part of wider strategy, to preserve or improve the economic conditions of the area to which migrants have moved and ensure people (including migrants) occupying private rented properties do not live in poorly managed housing or unacceptable conditions.

34. In considering whether an area is experiencing, or has experienced, high levels of migration, the local housing authority will want to consider whether the area has experienced a relatively large increase in the size of the population over a relatively short period of time. In assessing this, the local housing authority should consider whether net migration into the designated area has increased the population of the area. We suggest a population increase of around 10% or more over a 5-year period would be indicative that the area has or is experiencing a high level of migration into it.

35. The designated area must contain a high proportion of privately rented properties occupied either under assured tenancies or licences with a significant number of migrants to the area occupying them. In assessing whether the area is experiencing or has experienced significant migration the local housing authority will want to have regard to: the information it holds on households in the area; any significant increase in the call for, or in the provision of, local authority services in the area; any increase in local authority or police intervention in the area; and any changes to the socio-economic character of the area.

36. The scheme should state what actions the local housing authority intends to take to ensure the preservation of or improvements to the social or economic conditions of the area. It should also state what measures it would put in place through licensing, to ensure proper standards of management of privately rented properties in the area are maintained, and to prevent properties becoming overcrowded.

37. The outcome of the designation should be to preserve or improve the economic or social conditions of the area during the lifetime of the designation and ensure that a proper standard of management of privately rented housing is maintained and that properties do not become overcrowded.

High levels of deprivation

38. A local housing authority may make a designation if the area is experiencing a high level of deprivation. It must, however, be clear that by making the scheme it will, together with other measures as party of a wider strategy, improve housing conditions in the private rented sector in that area.

39. In deciding whether to make a designation because the local authority considers the area suffers from a high level of deprivation^{[footnote 17]}, the local housing authority should consider the following factors when compared to other similar neighbourhoods in the local authority area or within the region:

the employment status of adults
the average income of households
the health of households
the availability and ease of access to education, training and other services for households
housing conditions
the physical environment
levels of crime

40. It is a matter for the local housing authority, having regard to the above factors, to determine whether the area is suffering from a high level of deprivation. Should the area meet the criteria, the local housing authority can then only make a designation if there is a high proportion of private rented housing in the area, occupied either under assured tenancies or licences.

41. The scheme should state what actions the local housing authority intends to take to combat housing problems associated with the deprivation; including, for example, through licence conditions to ensure properties are managed properly, and can contribute to an improvement in the well-being of the occupants and wider community.

42. The outcome of the designation should be (together with other measures) a reduction of the problems with housing in the private rented sector contributing to the high level of deprivation.

High levels of crime

43. In considering whether an area suffers from a high level of crime the local housing authority may wish to have regard to whether the area has displayed a noticeable increase in crime over a relatively short period, such as in the previous 12 months; and whether the crime rate in the area is significantly higher than in other parts of the local authority area or is higher than the national average. In particular, the local housing authority may want to consider whether the impact of crime in the area affects the local community and the extent to which a selective licensing scheme can address the problems.

44. The licensing scheme must be part of a wider strategy to address crime in the designated area and can only be made if a high proportion of properties occupied either under assured tenancies or licences in that area are in the private rented sector. In particular, the local housing authority may wish to consider:

whether the criminal activities impact on some people living in privately rented accommodation as well as others living in the areas and businesses therein
whether some of the criminal activity is the responsibility of people living in privately rented accommodation

45. The scheme should show what measures the local housing authority will be able to take through licensing (and such other measures as are being taken), to reduce criminal activity in the area, such as by imposing conditions in licences to ensure properties are safe from intruders.

46. The outcome of the designation (together with the other measures) should lead to a reduction in crime in the area.

Question 6

6.  Selective licensing as part of the overall housing strategy

Accepted Answer

47. Selective licensing is not a tool that can be used in isolation. While it is not a requirement to have a housing strategy in place, if the local housing authority has one they will have to show how such a designation aligns with their overall strategic local authority wide approach^{[footnote 18]}, and how it fits with existing policies on:

homelessness
empty homes
regeneration
anti-social behaviour associated with privately renting tenants

48. Local housing authorities must also ensure that selective licensing complements other measures. It should only be used where existing measures alone are not sufficient to tackle the underlying housing problems of a specific area. Local authorities should also carefully consider any potential negative economic impact that licensing may have on their area – particularly the risk of increased costs to landlords who are already fully compliant with their obligations. These additional costs can reduce further investment and are frequently passed on to tenants through higher rents.

49. Prior to licensing an area, due regard should be given to objectives set out in the Equality Act 2010, in line with the Public Sector Equality Duty.

50. The selective licensing scheme must be consistent with the overall housing strategy and co-ordinated with procedures for homelessness, empty properties, anti-social behaviour in the private rented sector, and housing market renewal activity.

51. Local housing authorities will also have to demonstrate the role of other partners (if any), such as the police or social services, in ensuring the designation reaches its goal.

52. The local housing authority must show:

it has considered whether there are any other courses of action available that might provide an effective method of achieving the objectives that the designation is intended to achieve, and
how the making of the designation will significantly assist the local housing authority in achieving its objectives (whether or not in conjunction with those other measures)

53. It is important for local housing authorities to demonstrate how licensing will work in conjunction with existing initiatives (such as landlord accreditation) and partnerships. Licensing in itself is not a stand-alone tool, and local housing authorities should take account of this. For example, landlords will need adequate support to help them deal with problem tenants. Local housing authorities should ensure that their schemes are adequately resourced and include services such as active outreach support programmes to engage with landlords and tenants who need their assistance.

54. It is also important for local housing authorities to consider some of the possible effects of making a designation, and to include any risk assessment they may have carried out. For example, there may need to be an assessment of the likelihood of possible displacement of unprofessional landlords to other areas within the local authority’s jurisdiction, or to neighbouring local authorities.

Question 7

7.  Consultation requirements

Accepted Answer

55. Section 80 (9) of the Act states that when considering designating an area the local housing authority must:

take reasonable steps to consult persons who are likely to be affected by the designation, and
consider any representations made in accordance with the consultation and not withdrawn

56. Local housing authorities are required to conduct a full consultation. This should include consultation of local residents, including tenants, landlords and where appropriate their managing agents and other members of the community who live or operate businesses or provide services within the proposed designation. It should also include local residents and those who operate businesses or provide services in the surrounding area outside of the proposed designation that will be affected. Local housing authorities should ensure that the consultation is widely publicised using various channels of communication.

57. In line with the condition attached to the General Approval^{[footnote 19]}, the local housing authority must consult on the proposed scheme for a period of at least 10 weeks.

58. The consultation should be informative, clear and to the point, so the proposal is readily understood. It should inform local residents, landlords, letting agents and businesses about the proposed designation, giving the reasons for proposing it, why alternative remedies are insufficient, demonstrating how it will tackle specific problems together with other specified measures, and describing the proposed outcome of the designation. It should also set out the proposed fee structure and level of fees the authority is minded to charge (if any). Consultees should be invited to give their views, and these should all be considered and responded to.

59. Once the consultation has been completed the results should then be published and made available to the local community. This should be in the form of a summary of the responses received and should demonstrate how these have either been acted on or not, giving reasons.

60. As part of the best practice guidance included in the General Approval, local housing authorities in mayoral strategic authority areas are requested to include their mayor in the consultation process on the proposed designation.^{[footnote 20]} Local authorities are expected to consider any representations made by the mayor, whilst retaining the final decision making process themselves.

Question 8

8.  Duration and notification of a selective licensing scheme

Accepted Answer

61. A designation cannot come into force until 3 months after it is made.^{[footnote 21]}.

62. The introduction of the scheme may be delayed up to an additional 3 months, if need be, to prepare for the scheme’s implementation. This is to avoid an excessive delay between the consultation and the scheme’s introduction, to ensure consultation requirements are met and persons who are likely to be affected by the designation have been consulted.

64. A designation may be made for up to 5 years^{[footnote 22]}.

65. Section 83 of the Act requires local housing authorities to publish a notice of the designation once it has been confirmed. A local housing authority must:

publish a notice within the designated area within seven days of the designation being confirmed
notify all those consulted on the proposed designation within two weeks of the designation being confirmed

66. Further information on the publication requirements relating to additional and selective licensing designations can be found in the Licensing and Management of Houses in Multiple Occupation and Other Houses (Miscellaneous Provisions) (England) Regulations 2006.

Question 9

9.  Providing data to MHCLG

Accepted Answer

67. As part of the best practice guidance included in the General Approval, local authorities are requested to provide the following data to the department on their scheme(s) (a) upon commencement of the scheme and (b) on the scheme end date or within 12 weeks of scheme end date.^{[footnote 23]}

68. On the scheme commencement, local authorities are requested to provide details of:

the dates of the scheme
location of the scheme (postcodes or wards)
whether the scheme is new / a renewal / part renewal
number of PRS properties and as a % of total housing stock within the designation
what proportion of the authority’s PRS stock or area will be covered by licensing once the scheme is in place
the criteria the designation has been made under
details of the licensing fee(s)

69. On the scheme end date (or within 12 weeks of scheme end date), local authorities are requested to provide details of:

total number of licenses issued; and as a % of eligible properties
total value of licensing fees
total costs associated with the scheme
details of how the scheme has addressed the issues it was designed to address. This can include details of performance against KPIs, case studies, or outcomes of any review (see section 10).

The information requested above should be e-mailed to: selectivelicensing@communities.gov.uk.

Question 10

10.  Local authority review of a selective licensing scheme

Accepted Answer

70. Section 84 (3) of the Act require local housing authorities to review the operation of a designation made by them from time to time. As part of the best practice guidance included in the General Approval, local authorities are requested to publish the outcome of any reviews that they undertake in respect of the selective licensing scheme(s) in a timely manner on their website.^{[footnote 24]} If following a review they consider it appropriate to do so, they may revoke the designation.

71. Selective licensing is not intended to be an end in itself. It is a means to an end. It is about improving management standards in the private sector in areas where improvements in those standards are sorely needed, for the benefit of occupiers and the wider community. Therefore, after making a designation, local housing authorities must continue to monitor designations to show that they are achieving the desired effect. For example, if a selective licensing designation is deemed to have worked, and the problems it was brought in to tackle have been resolved in an area, the local housing authority may consider that the designation is no longer needed and should be revised or revoked. Alternatively, if a designation is failing to tackle the issues it is meant to address, the local housing authority may consider that the designation should be revised or revoked, and alternative measures considered for addressing the issues. The government recognises that licensing may have to be a long-term strategy and that it will not provide instant solutions. It also appreciates that, if in the initial phase there has been little improvement in an area, this does not necessarily mean that a designation is a failure.

Question 11

11.  Renewal of a selective licensing scheme

Accepted Answer

72. There are no additional conditions in legislation relating directly to the renewal of a selective licensing scheme. We do however recommend that a summary of outcomes is provided where possible, explaining whether the desired outcomes in the previous scheme were delivered or not. As a local authority is expected to review a designation from time to time under section 84(3) of the Act, we encourage them to use the outcome of such reviews when deciding whether to renew the scheme, and in assessing the success of it.

Question 12

Annex: Special Interim Management Order

Accepted Answer

It will not be appropriate to make a selective licensing designation to address isolated individual problems of anti-social behaviour which nevertheless seriously impact upon the local community. In such cases local housing authorities should consider making a Special Interim Management Order (SIMO) under Part 4 of the Act.

A Special Interim Management Order transfers the management of a residential property to the local housing authority for a period of up to 12 months and can only be made if approved by the First Tier Tribunal (Residential Property). The tribunal may not authorise a Special Interim Management Order in respect of a property unless, in the case of non-Houses of Multiple Occupation, there is anti- social behaviour emanating from the property, the landlord is failing to take appropriate action to deal with the problem, and it is necessary to make the order to protect the health, safety or welfare of persons occupying, visiting or engaged in lawful activities in the locality of the house.

Selective licensing in the private rented sector: a guide for local authorities

Applies to England

1. Introduction

2. General Approval 2024

3. What is selective licensing?

4. Conditions applying to selective licensing

5. Making a scheme

Introduction

Low housing demand

Poor housing conditions

High levels of migration

High levels of deprivation

High levels of crime

6. Selective licensing as part of the overall housing strategy

7. Consultation requirements

8. Duration and notification of a selective licensing scheme

9. Providing data to MHCLG

10. Local authority review of a selective licensing scheme

11. Renewal of a selective licensing scheme

Annex: Special Interim Management Order

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Applies to England

1. Introduction

2. General Approval 2024

3. What is selective licensing?

4. Conditions applying to selective licensing

5. Making a scheme

Introduction

Low housing demand

Anti-social behaviour

Poor housing conditions

High levels of migration

High levels of deprivation

High levels of crime

6. Selective licensing as part of the overall housing strategy

7. Consultation requirements

8. Duration and notification of a selective licensing scheme

9. Providing data to MHCLG

10. Local authority review of a selective licensing scheme

11. Renewal of a selective licensing scheme

Annex: Special Interim Management Order

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Help us improve GOV.UK

Help us improve GOV.UK